3 imperative steps of a sustainable subscriptions business

Subscriptions eCommerce continues to be a fast-growing way of buying online. In fact, the subscription business grew more than 300% in 2012 to 2018, about 5 times faster than revenue of S&P 500 companies according to Business Wire. An eCommerce…

subscription boxes

Subscriptions eCommerce continues to be a fast-growing way of buying online. In fact, the subscription business grew more than 300% in 2012 to 2018, about 5 times faster than revenue of S&P 500 companies according to Business Wire. An eCommerce subscription study by Recharge Payments also recorded a 31% average increase in customer base across different verticals resulting in a steady influx of new subscribers in 2021.

When done right, the subscription business can provide consumers with value and convenience while fostering growth and profitability for businesses.

However, launching in an unfamiliar channel may come off as an experiment that risks creating reputational damage. Having a committed approach for a sustainable subscription business is imperative to success.

Actionable steps to maximize your subscription model business
Here are three critical steps to keep in mind to pave the way for a sustainable digital commerce subscription business.

1. Identify pain points

The first step in maximizing your subscription model is making sure you run an assessment of your customer’s unmet needs and provide the right offer to meet them. Adding a subscription to your existing line of products and services simply because it’s a trend is a disservice to your business and target market. The more strategic approach to launching and scaling an eCommerce subscription offer involves analyzing the pain points of your customers and testing subscription ideas to see if they meet the unmet demands of your audience.

Ecommerce companies would benefit more when grounding their subscription approach to facts by taking into consideration the unmet needs of users within their Potential Available Market (PAM). PAM Is the market that exists for your product or service without being limited by geography, logistics, and other related factors.

Subscription Pain Points

Doing so allows you to further understand the changing needs of your customers and be able to cater to the gaps in the market you are in. Once you do this, you provide a resolution to this demand and give way to the profitability of your business.

2. Create a value-driven approach

According to McKinsey’s Subscription Survey, 62% of consumers see “good value for the price” as the most important reason for a subscription sign-up. This is followed by 45% saying “high quality” and 41% stating “good variety of items or experiences.”

This means that the perceived value of your customers to your offering is one of the top ways to convince them to sign-up for a subscription. But customers have different definitions for “good value for price.” This can be a free trial, huge savings, convenience, and so on. These initial discounts, while part of the starting cost of customer acquisition, adds value to the business by bringing customers into a differentiated consumer experience that gives way to nurturing relationships and upselling.

Keep in mind that pricing alone is unlikely to convince consumers that a subscription is a good value. Let alone, regular payments for an experience that isn’t even great.

Consumers expect great experiences, not great subscriptions.

To keep customers interested in your subscriptions, make sure that your offering addresses a pain point and gives good value through experiential elements such as consistency in quality, variety and assortment, and even great after-sales service. In fact, the second highest-ranked reason that subscription customers remained subscribed is “high quality” at 48%, falling 4 points behind ”good value for price” at 52%.

3. Adapt to consumer needs with flexible pricing

Managing churn is one of the key success metrics in a subscription business. 43% of respondents say that “good value for price” is the top motivation to cancel a subscription, while 30% mention “new or fun items or experience,” and 23% state “variety of subscription or pricing options.”

All of these factors contribute to churn rate, but fortunately can be addressed by having flexible pricing options. One form of this is tiered pricing, prompting consumers to reset their subscription to a higher-cost or lower-cost plan. The key is allowing subscribers enough flexibility in how they use the service to motivate them to keep the subscription.

Another form is the usage-based subscription which combines a membership fee with a usage-based fee. This type of fee structure works best when consumption is high during some periods or light during others. For example, merchants are hinged on occasions and events will have consumers enjoy this type of subscription pricing model.

Finding the right price and offering at each tier is critical to balance flexibility for consumers, as well as lower churn rate and increase ROI for the business.

The subscription eCommerce market is growing quickly. Consumers have high expectations of companies to offer convenience, value for the price, and personalized options that contribute to an overall great experience.

A transactional relationship isn’t enough to create a lasting healthy relationship with your clients. What you need is to be able to create a personalized journey that speaks about your complete understanding of your customers’ needs. With subscriptions, you’re able to develop your relationship with your customers and create a customized experience for them while capturing residual revenue in the process.

WooCommerce Subscriptions lets you sell products or services and collect recurring payments. Its capabilities include built-in renewal functions, integration to over 25 payment gateways, detailed reports, and more, to let you have an eCommerce subscription model that complements how your business already operates.

Read more about how WooCommerce Subscriptions can help you >

As a fully certified WooExpert vetted by the WooCommerce Platinum membership program, we understand the nuance of an unoptimized shopping experience for your customers. We’re one of the very few agencies recognized by WooCommerce to uphold high standards of understanding, implementation, and customization of the WooCommerce platform.

Our team of senior experts consistently hone their skills to allow us to fully customize your online store from the ground up or migrate your website from another eCommerce platform without losing a single renewal.



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