There’s a reason that the saying: “Give a man a fish and you feed him for a day, teach a man to fish, and you can keep selling hooks to him forever” sounds almost like it actually exists.
Businesses that successfully adopt the subscription-based payment model can look forward to:
Increased customer loyalty, and consequently, higher customer lifetime value
Much more stable and predictable revenue
Improved customer and market insight
Better marketing and sales funnel optimization
Process automation, leading to much lower costs and elimination of human error
...as well as a number of other potential benefits, depending on how successfully the model was conceived and implemented. If you want to find out what that means exactly, and what you would need to do to avail yourself of some of those benefits, do read on.
Step 1: Explore your limits and your options
Whether you are just starting a business of this kind from scratch, or you are simply moving to a subscription-based model, you need to get the lay of the land before making any major moves. This means doing a thorough research and analysis of your:
Competitors
Potential customers/audience
Unique Selling Proposition (USP) and product or service in general
Discoveries you make in one of these areas should not be examined in isolation. These segments are heavily mutually-dependant, and should be treated as such.
For instance, you might be perfectly pleased by your customer/product fit, however, you can’t be sure that the numbers you are seeing are good until you compare them with what your competitors are recording. Alternatively, you might feel like you have some sort of an advantage over a competitor, but you can’t be sure about that until you analyze your shared audience’s feedback.
Step 2: Offer the best product or service you can
Once you have a clear, informed idea of what the industry standards are, you’ll know what it is that you need to do in order to exceed them.
We’ll cover some of the less direct ways to make your offer more appealing later, but for now, you should focus on ensuring that your product or service are as suitable for your audience as they can possibly be.
Research you’ve performed during Step 1 (and that you should keep doing at least periodically from then on, if not continuously) should have informed you what your customers want, and what your competitors are failing to provide; now’s the time to cash in on that knowledge.
Step 3: Time to think about pricing
Once you know what you’d like to offer if you had all the freedom in the world, you need to find a way to get as close to that ideal as you can, while ensuring that you’ll also turn a profit. While initial competition and audience research should give you some idea of what price ranges and models are most common, you won’t be able to make a final decision regarding pricing before you actually get a chance to test different options directly with your existing customers.
Some trial and error might be necessary when taking this approach, but that doesn’t mean that you shouldn’t do everything in your power to minimize the guesswork. Each price change can have adverse effects on your existing customers, so before you go tinkering around, make sure that you are ready to track the consequences of your changes in detail and minimize waste.
Step 4: Allow for secure and convenient payments
The price/product quality ratio is not the only factor that will determine the popularity of your offer.
For one, despite the fact that online payments are not exactly a new thing, people are still sometimes wary when they need to provide their payment details to someone they have never dealt with before.
The only thing some of your customers will crave more than security is convenience. You might offer a perfect pricing model, however if you don’t provide your customers with a reliable direct debit system for payments, you could be missing out on those who value a secure payment experience with the added convenience of multiple payment methods to suit their needs best.
Finally, your pricing should be as flexible as you can allow. Offering a tiered payment model, with packages suitable for all of the customer profiles you are hoping to attract is essential if you want to draw them away from your competitors.
Finally, keep surprising your customers
Doing careful market research; improving your product; experimenting with pricing, and making the entire process as secure and simple as possible, are all obligatory steps if you want to create a successful subscription-based business, however they are not enough on their own.
Some of the other ways to improve your customer acquisition and retention include:
Offering free trials
Giving discounts to those with longer subscriptions
Improving your customer service to reflect the higher level of commitment to each individual customer
Vigilantly gathering your audience’s suggestions and feedback
As long as you remember to implement these changes incrementally, in as controlled environments as possible, and to keep a close eye on your performance metrics all the while, experimenting with ways to improve your pricing model can be amazingly lucrative, while only posing minimal risk.