The 5 benefits of subscription commerce

Subscription Commerce – What is it? Learn more about the 5 benefits of subscription commerce and how you can use them for your business.

Subscription Commerce – What is it?

The word “subscription” is hidden in the term subscription commerce. This means the regular purchase of a service for a fee. The term subscription is also often used when speaking of a subscription.

Put simply, your customers become subscribers if they receive your product or service at regular intervals at a contractually agreed price. Digital services, such as the use of a cloud, are among the services that are also often offered as a subscription model. Well-known examples of digital subscriptions are Spotify, Netflix or Adobe.

Especially in subscription commerce, a trend has developed over the last few years to offer care products on subscription. Well-known in this repertoire are companies such as Dollar Shave Club, Morning Glory or Estrid, which sell all shaving utensils through subscriptions. The steadily growing market of companies that, despite their competitors, only focus on individual products shows the immense potential of the distribution channel through subscriptions.

But what are the advantages of subscription products?

If it is a subscription model in online business, this is referred to as subscription commerce. The goods and online products that the customer wants can be obtained regularly at specific delivery times.

The 5 advantages:

  • Financial security for your company
  • Planning security for your company’s products
  • Achieve higher overall profits
  • Expand the customer base
  • Secure customer relationships in the long term and increase trust in your brand

1. Financial security for your company

Your subscriber usually pays you a fixed amount monthly, sometimes annually.

This source of income is of enormous benefit to your business. Because this monthly (annual) guaranteed income gives you sales that you can use to make new, future investments.

But make sure that you include possible subscription cancellations in your financial plan.

2. Planning security for your company’s products

If you offer a subscription model, you often know months in advance how many goods have to be ordered for your subscription, how long a delivery will take and, of course, which employees will be deployed where. This also applies to digital services.

In other words, you can plan many things precisely and optimize processes. In this way you can save yourself and your customers a lot of stress.

3. Achieve higher overall profits

Thanks to the planning security and the simplified processes of a subscription, you can save costs.

For example, you know the quantity of goods that you are sure to sell. So you can keep your profits high and your losses low.
You can also save costs if you order a large number of goods but are sure that you will sell everything.

Running an online platform gives you another benefit. Because you can offer a large amount of content that is only released to a limited extent depending on the subscription model.
For example, if your customer has taken out a basic subscription with you, they will only have limited access to the variety of content you provide. Often these customers are inclined to buy a higher priced subscription to get even more. Then, when your subscriber signs up for an expanded, more expensive subscription model, you can offer them a lot more content that you’ve already created.
Of course, you will continue to add new content, but you can access existing material without much additional work. As a result, your customers are satisfied and your sales increase.

4. Expand the customer base

The customer usually gets a lower price for products and services if he buys them as a subscription.

As a result, customers with a smaller budget are also inclined to take out a subscription. This opens up a much larger circle of potential buyers.
More and more people are interested in subscription models, especially in the digital sector. If you market it cleverly, you can attract many buyers through numerous channels and expand your customer base.

5. Secure long-term customer relationships and increase trust in your brand

Typically, customers who take out a subscription are long-term customers.

This is particularly evident in subscription commerce. Even if they have the option to unsubscribe on a monthly basis, in most cases they will remain your customers for a longer period of time.
If your subscribers are convinced of your product or your brand, they will forgive small mistakes. Unlike, for example, customers who do not have a subscription and disappear immediately if there are small errors.
Building trust with your subscribers will, in turn, encourage them to speak positively about your product or brand. For example, they will express their satisfaction through good customer reviews or social media channels and share it with family and friends.
And if the customers are satisfied with the subscription, they are also inclined to conclude further subscription models with you.

Conclusion on subscription commerce

More and more people are inclined to take out a subscription model.

This can be a great advantage for your company. But remember that good planning is part of it. So you have to think carefully beforehand whether it is worth switching to subscription commerce for you. It might also be worth offering subscriptions as an additional option with your product.
If this is the case, there can be many benefits for you. With the right subscription models, good sales and profits can be generated.

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