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Exploring New Entrepreneurial Avenues: 5 Advantages of a Subscription-Based Business Model

Exploring New Entrepreneurial Avenues: 5 Advantages of a Subscription-Based Business Model
The Siliconreview
06 Febuary, 2020

If it seems like everyone is offering a subscription service, your perception is correct. The subscription model is no longer just for magazines. Many online stores offer subscription services for everyday items so your dish soap and toothpaste arrive at the same time each month. Many businesses only offer subscription services where you can order groceries, makeup, clothing, and more.

Why are so many businesses turning to subscription service? Because they work. There are several advantages to arranging a subscription service. These are five of them:

1. Regular revenue

When you offer a subscription service, you receive regular payments. You can use a payment gateway so your customers know exactly what they are getting when it is arriving, and when their payments will be processed. You know when the money is coming in, so you know when you can pay your bills. What business wouldn’t want to know what money is coming in and what day it is arriving?

2. Customer retention

When you offer subscription services, customers sign up and receive their items. As long as you keep everything consistent, they will stick around. It is important that you do not forget about your customers, but you should send them occasional offers so they feel valued. Thank them regularly and ask them for feedback. With so many businesses offering subscription services, the only differences involve price and customer service. You can distinguish yourself by providing the customer service that is second-to-none.

3. Marketing opportunities

Businesses can set up intriguing marketing opportunities when they create subscription services. If you know which customers prefer to order vegetarian foods, then you can upsell products that fit their food preferences. With subscription services, you learn about your customers and where they are willing to spend money. You can market to them via email and within the boxes, you ship to their addresses.

4. Easy to understand

Subscription services are easy for businesses to explain and for customers to understand. The process is simple. You offer a product that arrives at a regular interval. Then, customers pay for the product to be shipped to their homes.

In many situations, the customer creates a profile that shows their preferences. Then, the business uses that profile to send products that they expect the customer will love. Part of the joy for the customer is opening the box and being pleasantly surprised by what is inside. As long as customers continue to want what you offer, they will continue to pay for the regular surprise.

5. Build customer relationships

When you have regular customers, you can build relationships with them. Businesses can interact with their loyal customers through email and through social media. Customer relationships can be more than just another way to make more money. You can learn about your strengths and weaknesses by building relationships with loyal customers. You can offer loyalty rewards to your customers, especially if they bring more customers to you. When you show you care, your customers will stick around.