Subscription products and services are so popular right now! Is your business taking advantage of this stable and profitable business model?
The advent of mobile applications designed with the sole purpose of locating and helping you cancel subscriptions you may unknowingly be paying might just be an important clue. Subscription-based products and services have become an ingrained part of our culture.
From that monthly makeup you receive in the mail to your fitness app and everything in between, there has been a seismic shift in the United States’ business landscape in 2020, bolstered, of course, by the COVID-19 Pandemic. So does the rise of the subscription economy all boil down to the convenience of having products and services made available easily, negating the need to actively go out and purchase them, or is there maybe more to the story?
There is no doubt that the subscription economy will be around for the long haul. Today we’re diving into some of the top reasons the subscription economy is here to stay and what that means for your business.
The Subscription Economy by the Numbers
The numbers don’t lie. Subscription-based products and services have become outrageously successful in recent years.
Here are just a few statistics that will bear out just how dominant it has become in commerce today:
- all new software companies, and 80% of older companies as well, are now offering subscription services on their products
- 53% of all software revenue generated in this country is due to subscription services
- by 2022, the car subscription market is expected to mushroom by 71%
- 69% of American households have a subscription to at least one streaming service
- 70% of all business leaders consider the subscription model to be a central component of their future strategy
- 41% of all households subscribe to at least one music streaming service
- the average subscription billing service in this country is experiencing annual growth between 30% and 50%
These numbers should make it clear that the subscription model is not only gaining momentum but has already assumed a hugely significant role in influencing how consumers buy goods and services today.
Are Subscription Payments Right for Your Business?
The subscription business model isn’t just for SaaS companies and huge corporations – it can work for a great many small businesses. A number of them have already discovered that. Even brick and mortar institutions like coffee shops have successfully offered coffee club subscriptions to their followers, and the same is true for products like jellies, teas, and cheeses. All have been provided on a recurring basis to consumers by enterprising small business owners with great success.
Subscription payments work especially well for these kinds of businesses:
There are many kinds of businesses that have already adapted their offerings to be provided on the basis of recurring payments.
Here are just a few of the products and industries that have seen significant success with subscription models:
- Fashion and clothing
- Health and wellness
- Home maintenance
- Home fitness
There are plenty more examples of businesses that have at least offered the option of a subscription-based service, and in future years there will undoubtedly be many more added to this list.
Benefits of Recurring Subscription Payments
There are quite a few benefits that make the subscription model so appealing for a business owner. It provides predictable monthly recurring revenue (MRR). It also promotes customer loyalty and helps to establish long-term relationships, which is solid gold for a business owner. Subscription offerings allow local businesses to expand well beyond their immediate service area and penetrate new markets, which might become lucrative.
There’s also an administrative advantage since it saves a great deal of time and effort on invoicing and billing. In some cases, it might even reduce the need for hiring more personnel to manage those administrative tasks.
2 Key Things to Consider if Your Small Business Needs Subscription Payment Processing
If your small business is ready to include subscription-based offerings as part of its overall business strategy, there are a couple things you simply must get right in order to be successful.
Ensure that your subscription service clearly identifies what is included in your service agreement with customers and makes your cancellation policy very clear.
If there are any disputes about these, you can point out the exact phrasing in your policy to customers, so they can see what they signed up for. More importantly, perhaps, having those elements clearly outlined can save you if faced with a chargeback or dispute.
Secondly, make sure to choose a reputable and efficient payment processor. Not all these companies are created equal, and you won’t want to partner with one that you can’t live with, or which falls short of your expectations. Do some research and choose the best payment processor for your small business.
The business landscape has been changed profoundly by the advent of the subscription economy. Since both parties benefit from this model, there is no doubt that it will remain with us for quite some time. Consumers enjoy the convenience of the subscription economy, and business owners love having a predictable income source. Establishing long-term customer relationships is the Holy Grail for businesses. That fact alone will firmly entrench subscription services as part of the future business landscape for years to come.