From Netflix to Spotify, it seems nowadays almost everything in our lives is on a subscription basis. But what does this mean for your business? Here are our Top 5 reasons why you should turn your business into a subscription model.
5 reasons to turn your business into a subscription model
- No Lump Sum
- Flexibility & Scalability
- Customer Loyalty
- Cash flow is still King
- The technology is there!
5 reasons to turn your business into a subscription model
1. No Lump Sum
One of the greatest hurdles your customers often face is coming up with the payment for your services.
By removing any large upfront payment and replacing it with smaller regular instalments, you will be able to remove this hurdle for many potential clients.
This can often lead to customers engaging with you earlier as they don’t need to save up the money.
2. Flexibility & Scalability
Remember that one size doesn’t need to fit all. The beauty of selling a subscription-based offering for your customers is that you can tailor various levels at different price points. This will allow your business to attract and satisfy clients at various business stages and budgets.
Also, by allowing them to slide up to the next level when required, you can hold onto those customers as they grow.
3. Customer Loyalty
One of the key benefits subscription businesses find is that their customers are far more loyal than those who aren’t.
Once a customer engages with a business and is happy with the services being provided, they are far less likely to leave as the monthly amount is quite small.
Let’s take this example.
‘Accounting Practice A’ charges their clients $1200 once a year to do their annual tax returns. So every 12 months their client get the option of either paying them $1200 or going elsewhere. This may lead to clients doing annual reviews or quote comparisons.
In contrast, ‘Accounting Practice B’ charge their clients $100/mth instead. This comes directly off their client’s credit card once a month, and when their tax return is done every year, the business pays nothing more at the time. It is all part of the ongoing service.
You can see why a subscription service is appealing to both customers and service providers.
4. Cash flow is still King
By breaking down your income from all of your clients into smaller, regular monthly payments it allows you as a business owner to experience a level of cash stability you may have never had before.
Regular predictable income is the foundation of every successful business, and there is no easier way of doing this than via a subscription model.
5. The technology is there!
Online platforms such as WordPress and Woocommerce are making it incredibly simple to capture recurring payments from your clients. Whether they want to pay via PayPal or credit card, the technology exists nowadays to make it very easy and safe.
Further reading: Why not check out this article about the amazing success that Dollar Shave has had from its subscription razor offerings?
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