Subscription Business Strategies to Level Up Growth
A thoughtfully designed subscription model can create stable income streams and growth opportunities for business owners while offering consumers value, ease, and personalisation. From insurance to automobiles and banking, subscriptions are disrupting traditional industries with entrenched revenue models. Time to experiment?
Is your industry or product subscription-ready?
Industries and products evolve at a varying pace. For many consumer, services and technology companies like China’s consumer electronics giant Xiaomi or Singapore’s popular transport, food delivery and digital payments super app Grab, the inflection point for subscription-based models has already come. There are often bigger barriers to entry in capital intensive industries, but industrial manufacturers, automotive OEMs and airlines are also testing out subscription models.
1. Think Convenience and Usership
While the first wave of subscription models emphasised convenience and cost savings for products that needed monthly replenishment (think automated recurrent purchases for diapers, razors, pharmaceuticals or groceries with the promise of annual and seasonal discounts), more recent entrants capture distinctly millennial and generation Z zeitgeist: usership instead of ownership. With cars, clothes or houses, ownership is no longer a necessity. Faced with this evolving cultural phenomenon, companies are embracing the ethos by offering subscribers all-in-one subscriptions that include debt-free ownership, vehicle insurance, roadside assistance, and maintenance for a monthly fee.
2. Can You Build In Value? Exclusivity? Or Variety?
The ability to discover and try out a variety of products or services at a fixed price — everything from video games to food — without the financial burden of having to buy it all individually is exactly where the subscription model thrives. Freedom to select, personalisation and variety are powerful value propositions for consumers. With Google Play Pass, subscribers enjoy access to 350+ games for $4.99 per month — a great price point for variety. Freshly’s all-natural meal options do all the work so you don’t have to. The brand targets busy people looking for variety in their diets without the work involved in cooking. For others, members’ only perks are a draw. Subscriptions do well in creating a community of members who vouch for you, and bundling an array of products as part of a single membership. For consumers looking for value, exclusivity and variety, subscriptions are a way to find and explore new products, with none of the leg work.
3. Can You Price It Right?
The global subscription market is projected to reach $904 billion by 2026, up from $120 billion in 2022. As Asia Pacific embraces subscription models, multi-subscription households are now commonplace. It’s important to note that the addition of subscription services doesn’t have to replace a company’s core service; they can complement it. It means moving away from thinking in terms of quarterly revenues to a focus on underlying trends among subscribers. For businesses looking to experiment with subscriptions, begin by determining if a subscription model is a good fit, develop a comprehensive understanding of users and their needs, then explore how pricing impacts long-term profits. Subscriptions can add predictable sales outcomes to your business and increase customer lifetime value — just as long as you price it right, and deliver an experience that’s hard to beat.
Are you ready to design your subscription model?
Our free strategy call is the perfect way to understand how a subscription model could improve your business. Discover Spectra’s Marketing as a Subscription service. We’ll take a deep dive into your business, get to know your goals, and develop a custom subscription model.
Don’t miss out – book your call now!
