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The subscription economy is here, and it's not going anywhere. Subscription ecommerce has made its mark on everything from fashion to food and beyond. The convenience of monthly deliveries, the comfort of knowing you'll always have your favorite things on hand and the fun of watching your closet or pantry magically fill up with new goodies are just some of the reasons people are willing to pay for subscriptions. It's easy to see why: as consumers grow more accustomed to subscription ecommerce models, demand will only increase.
Subscription ecommerce presents a unique opportunity for brands to build recurring revenue, improve customer loyalty and reduce churn rate. The subscription economy has been growing for years, but it’s only recently that this trend has become part of the mainstream conversation. If you’re considering launching or expanding your own subscription business, here are some key factors to consider:
The rise of subscription ecommerce, a category that encompasses all types of recurring payments made by customers, has been rapid. According to research from L2 and PwC, the subscription economy as a whole was worth $1 trillion in 2017 and is forecasted to grow two-fold by 2021. Subscription ecommerce (also known as SaaS) is just one part of this overall sector; however it’s one that’s gaining momentum fast and may be the future for many businesses.
The concept behind SaaS isn’t new; it goes back decades with software vendors like Adobe and Microsoft offering annual subscriptions for their products. However, it has gained popularity in recent years with crop up companies like Dollar Shave Club (razors), BarkBox (dog toys) and FabFitFun (fashion items). These early success stories have helped increase awareness around what SaaS can do—notably how they can drive both customer acquisition costs down while increasing lifetime value through repeat purchases—and lead other companies into adopting this model themselves
Customers want convenience. They want to shop when, where and how they want. The subscription model allows you to give customers what they want, making it a great fit for ecommerce businesses.
Customers are willing to pay for convenience. If your product or service is worth the price of convenience, your customer base will expand and grow exponentially with the subscription model without fail
As a consumer, you probably want to feel special. You want to feel like you're getting something tailored to you. You want to feel like you are getting a deal, or that the company is giving more than what they're charging for.
Subscriptions help with this by offering customers a sense of exclusivity and ownership in their relationship with the brand; they show that brands care about them as individuals by providing them with something that no one else has access to. In other words: subscriptions allow shoppers who buy into them—literally and figuratively—to feel good about what they’re buying and how much it costs them!
Subscription ecommerce has made it possible for small and medium-sized businesses to enter the subscription economy. Not only can you save money on marketing, but you’ll also begin building a loyal customer base that will be eager to support your brand long after the campaign has ended.
This is a great way for small businesses to grow their business without breaking the bank or investing in expensive advertising campaigns. But how do you get started? It all starts with setting up an account on one of these services:
The global subscription market is huge and growing fast. Subscription ecommerce has seen a steady increase in popularity over the last few years, with more companies emerging every day. There are many examples of subscription businesses that have emerged as leaders in their respective industries: Dollar Shave Club, Casper Mattresses, Birchbox (formerly Sample Society), Trunk Club and Bombfell are just a few examples.
One reason for this growth is the ability to scale quickly through recurring revenue streams - an attractive proposition for any business owner looking to expand into new markets or grow their existing customer base.
Subscription payments require a payment processor, which is a third-party service that processes the transactions. Payment processors are responsible for ensuring that all parties involved in the transaction—the buyer and seller, as well as the issuer of the card being used to make the purchase—are protected from fraud.
As you might expect from their name, payment gateways receive information about your customers’ credit cards before authorizing a transaction. They can be PCI DSS compliant (or not), depending on how they handle this information; if you don’t want people to know what cards have been used for purchases on your site, then you should probably go with a gateway that is not PCI DSS compliant.
While there are dozens of other types of subscription payments out there (like recurring mortgages!), these two options represent most people's needs when dealing with subscriptions.
In the subscription economy, customer retention is king.
This is different from customer satisfaction, which can be achieved through a variety of methods—including marketing campaigns and email marketing. In order to achieve customer satisfaction, you need to know what your customers want and make sure they get it.
Customer loyalty is another way of saying "customer retention" without using so many words. Loyal customers are people who return to purchase from you again and again (and again). In order to create loyal subscribers, you need to create a product or service that meets their needs as well as make them feel good about buying from you in general.
Finally, when most people talk about "customer retention," what they're really talking about is keeping existing subscribers happy enough that they continue paying for your services or products on an ongoing basis instead of switching providers.*
If you're looking to acquire new customers willing to try your products, there are a number of strategies you can use.
Free trials, sample offers and free shipping offers are all effective in getting people to commit to trying your product or service for a limited amount of time.
Discounts and coupons are another way to encourage trial. If someone knows they'll get a discount on their next purchase if they sign up now, this offer can be quite tempting.
Another strategy that works well is making customer reviews available online on third-party sites like TripAdvisor or Yelp, as well as directly on your own website or store. This gives potential customers more information about what they might expect from using your product/service before committing money toward it—and can help build trust between buyer and seller before any sale takes place!
If you're interested in social media advertising then be sure not only that this is an effective channel but also one which aligns with your overall marketing strategy as well!
Subscription ecommerce is not a passing fad. It's here to stay, and it's an opportunity for you to grow your business.
The key to success in subscription ecommerce is customer retention, which requires learning how to welcome new customers, keep them around for the long haul and make the most of your marketing budget.
The subscription economy is here to stay. The key to success in the subscription ecommerce world is understanding your customers and making their experience as seamless, personalized and convenient as possible. In other words, you need to focus on retention from the very beginning of your business model so that you don't end up with a ton of churn later on when things get tough.
This article will offer MRR insights for SaaS and subscription companies. From results to overhead, consider it your all-in-one resource for Monthly Recurring Revenue.
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