Retaining an existing customer is 20% of the cost of acquiring a new one. Besides the increase to your bottom line, the more brand loyalists you can have, the better.
Offering product subscriptions, or even basing your entire business around them, is becoming a great strategy for many businesses. Gartner predicts that by 2015, 35% of Global 2000 companies will rake in 10% of their revenue from subscription models (and this isn’t even counting media digital services, like Netflix).
Subscriptions extend lifetime value and reduce customer churn. In turn, your brand a chance to cultivate a base of loyal customers who help your business grow. This stability also gives you better insights in production and logistics, which helps you control costs.
But are subscriptions the right strategy for your brand? At Symphony, we offer industry leading Subscription commerce services – pre-paid, customer editable, administrative editable – with features like pause, accelerate and change. We’ll ask a few questions to see if you have the kind of products that customers would want on a consistent basis.
1. Is your product consumable?
If your product is something that needs to be bought again and again, then it’s helpful for you customer to have a subscription option. Baby wipes, for instance, are great subscription products since they’re one-and-done products. Baby blankets are generally not, since there’s no reason for customers to subscribe to a product that’s assumed to last.
It’s an obvious question, but still important.
2. Do you have a lot of repeat business?
Being a consumable isn’t enough for a product to succeed as a subscription. It has to be a product that your customers keep coming back for.
As such, your most popular products are ripe candidates for subscriptions. If it’s something that consistently flies off the shelf, then you can safely assume that customers would gladly pay for the convenience to subscribe to recurring shipments of it.
Even better, take a look at your order history and see if your returning customers continue to buy the same product. These are the kind of customers you want to target subscriptions towards anyways, because they’ll be more likely to purchase the subscription and less likely to cancel them.
3. Do you have the resources to build infrastructure around subscriptions?
Offering subscriptions is tricky business. You have to have software that’ll keep track of the customer’s payment and shipping information while enabling orders in sync with the customer’s preferred subscription plan.
Subscription errors can lead to costly chargebacks and dissatisfaction that nullify the business-growing benefits that subscriptions offer.
There are a couple of ways to build proper commerce infrastructure around subscriptions. First, you can find a specialized subscription solution that can integrate with your current set-up. The best subscription commerce services enable various forms of subscriptions – pre-paid, customer editable, administrative editable – with features like pause, accelerate and change. Finding a partner that can handle the integration and maintenance is essential, especially as you look to scale.
Or you can deploy with an end-to-end solution that offers subscriptions as part of its solution, which makes the maintenance and stability of your subscriptions naturally scalable.
There are plenty of compelling reasons to consider expanding your business model to include subscriptions: Greater lifetime value from your customers; better forecasting for your inventory and logistics; and cultivating brand loyalty.
Just make sure your products are good fits for subscriptions, and take care to choose the right solution to help you build your subscriptions out. At Symphony, our industry leading solution powers subscriptions for many of the market’s fastest growing brands.
Want to learn more about how Symphony can help you get your subscription business off the ground? Let’s talk.