Using Subscription Services to Scale Growth

If your business model is based on a one-and-done transaction strategy, you’re leaving money on the table. Worse yet, you’re not doing everything you can to build a strong relationship with your customers.

What Is a Subscription Service?

A subscription-based business model provides monthly or yearly recurring revenue, focusing on customer retention and relationships rather than just on customer acquisition. In other words, with a subscription-based model, a single customer continues to pay for access to a good or service weekly, monthly, or yearly.

This is a long-running and highly successful business model, which was introduced back in the 1600s by newspaper and book publishers. Now, thanks to technology, many e-commerce businesses are moving from single purchases to subscription-based models with great success.

Generally, subscriptions are automatically renewed and create not only recurring revenue but strong customer relationships. And when done right, this method is a powerful tool for growing your business as it allows you to capitalize on the compounding value of your relationship with your customers while providing greater ease, convenience, and cost savings for them.

So how is this “done right”?

The Subscription-Based-Model Advantage

There are numerous advantages to operating and improving a subscription model, such as:

• Creating Predictable Revenue: Attracting and converting new customers is hard—and expensive—work. Depending on how effective your current promotion, this pay-once model can be time-consuming and result in unpredictable sales. Will this month (or year) lead to feast or famine?

With the subscription model, you can smooth out sales cycles and create more predictable revenue. Once a customer signs up for a subscription, you’ll receive payments on a regular basis. And because that amount is determined in advance, you can better predict your monthly revenue and confirm you have inventory and supplies to ensure your customer receives their orders on time and as expected.

You’ll also enjoy a higher revenue stream than you would from a single purchase—many times higher. 

• Cut Customer Acquisition Costs: Every customer acquisition comes at a cost. In fact, many companies can spend hundreds of dollars for each new customer.

With ongoing subscriptions, though, the customer acquisition costs decrease as long as your customer stays connected with you and your brand. That’s a win for both of you as you also have a big incentive to keep them happy. You can then focus on maintaining and strengthening your relationship by providing offers to encourage them to return month after month. 

• Opportunities to Up- and Cross-Sell: Building a foundation of trust with a new customer isn’t easy. Fortunately, when a customer signs up for regular communications, products, or services, you can use data to better market additional or complementary products or services. Because you better understand your customers’ wants, needs, and values, you can customize offers they’re more likely to find appealing with various upgrade opportunities or loyalty rewards.

Choosing the Right Fulfillment Partner

If you’re one of the over one-third of e-commerce businesses that expect order fulfillment to be your biggest challenge, it might be time to upgrade your fulfillment service to better support subscription-based order processing and subscription box assembly and shipping.

Reach out to QuickBox to discuss your unique needs. We don’t make you fit into our “Box”—we build a “Box” to meet your changing needs!