Improve Sales and Customer Loyalty with Subscription Model


Many people incorrectly assume that the subscription model only applies to specific types of business and miss out on the benefits it provides. The business that is closely associated with subscription model is newspapers and magazines. After all, magazine industry was the first one to introduce subscription business model. A number of other industries have since adopted this model including health clubs, DVD rental (Netflix), cell phone companies, etc.
The subscription model creates a win-win opportunity for both business owners and customers. Businesses benefit from subscription model because they get guaranteed sales. In some cases, they also get advanced payment for the services that customers will enjoy over a period in the future. Subscription model also builds a customer loyalty and reduces the marketing / customer acquisition cost for small business owners.

The customers also benefit because their overall price is lower than if they bought the products or services individually. It is also less hassle for them because they don’t have to remember to make a payment periodically. By giving the businesses their credit card number they are automatically charged a certain amount every month.
As mentioned earlier, the subscription model can be applied to many different types of businesses beyond the ones people traditionally associate with. Here are some of the ways in which you can implement it in your business.

  • Product of a Month Club – If you are an owner of a pizza shop you can create a “Pizza of a Month” club by which the customer gets a different pizza every month at a substantial discount. You can require customers to pay upfront thereby guaranteeing the sales for the entire year for your small business.
  • Annual Coupon Book – Another twist to “Product of a Month Club” is an annual coupon book where the customer pays a small amount to buy a coupon book that gives them discounts on various products throughout the year. Those who are familiar with Entertainment Book know how this works. The customer benefits by getting large discount even after factoring in the amount paid for the coupon book.
  • Pre-paid Services – This technique applies to professional services business. The way it works is like this – let’s say you have a legal or accounting practice. You can ask the customer to pay a certain amount upfront that entitles him to certain hours of service without additional charge. The incentive for the customer is their total cost is lower than what it would be if they “paid by the drink”.
  • Product for a Life – In this version of subscription model the customer pays upfront for the services that they can use for the “rest of their lives”. Many professional clubs have a lifetime membership option. If you are running a business where incremental cost of serving an additional customer is low you can provide lifetime membership option to the customers.

As you can see subscription model is not limited to certain businesses. Different variants of this model can be utilized by those businesses that normally don’t think about this.
Have you used any other methods to increase sales with the use of subscription model?

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