In my bathroom cabinet is my new toothbrush. I signed up for a toothbrush on subscription. The company will mail me replacement brush heads every three months, as dentists recommend, so I can stop telling myself that it’s perfectly fine that I only change mine every six months. In addition, I am looking at similar services to replace my current razor. My husband and I joined a movie theater chain’s service that lets us see three movies a week for a monthly fee. I predict that we may see a future where all television channels move to a subscription model, with the exception of the handful of broadcast channels that have existed since the dawn of television. Businesses of all kinds are moving to a subscription-based model.
If you haven’t tried a subscription service, think of it the same way you do a magazine subscription – you pay a yearly (or twice yearly, or monthly…) fee and the product comes to your home on a set schedule. There are subscriptions for pet products, makeup, clothing, grocery items, podcasts…the sky is the limit. For many businesses, the benefit is obvious. Customers are purchasing regularly, without even thinking about it, except for perhaps once a year when they decide whether or not to renew. A customer who may balk at spending $50 on a product that they buy one time, and never again, may feel more comfortable with paying just $5 a month…which ends up being $60 a year. Subscription-based models shift away from the goal of customer acquisition into the goal of customer retention.
A growing market
One expert says that this type of business has grown by more than 100% per year. In 2011, subscription services accounted for $57 million in sales. In 2016, that has ballooned to $2.6 billion. Some experts are advising companies of all kinds to find a way to shift into a subscription-based model. They warn that those who don’t could be left in the dust.
Technology has made creating and utilizing these services easier than ever. I signed up for my toothbrush online and will get a handy email telling me when they’ve shipped my first replacement brush head. My effort is minimal – I don’t even have to think about it. I even prepaid for a full year (which saved me a bit of money). My name will stay on the customer list as long as I continue to be satisfied with the product.
Actual, material products aren’t the only thing I’ve noticed a growth in. Monthly classes for every subject you could dream up are the wave of the future. It’s ideal for anyone who has something to teach. Produce one video a month and people pay to access the content. Minimal effort leading to maximum return. Software is also an easy thing to provide by subscription, especially when customers can continually access the latest and best version just by being a regular subscriber.
There are still risks
Some business owners may be concerned that they will initially see a drop in revenue, which may be true, as the costs increase to produce the product on a more consistent basis. However, some experts say that eventually, revenue will climb once again, after the costs of labor and production level off.
Customers have concerns that these types of services may compromise their privacy. Data selling is a big business in our technology-driven society. Signing up for multiple services has the potential to expose customer information to a wide array of companies. It is certainly a point to take into consideration, but there are businesses who do right by customers and stop using their data once a customer terminates the relationship, or who give customers the option of opting out of data sharing.
Call and subscribe today!
No matter what you think about this type of business model, there is no denying that they’re going to be a big part of the market going forward. Whether you’re a business owner or a consumer, you’ll need to decide whether you want to take part. For some companies, it could be their salvation.