The Future of Subscription Business Models: Trends and Predictions

The subscription business market is becoming saturated with every passing day. Initially, the knowledge of people regarding subscriptions was limited. For them, subscriptions were meant to be only for Netflix or Disney Plus.

However, time has changed. Many businesses that work on subscription business models have entered the market for which no one could ever think can run on subscriptions. Also, they are giving quite a competition to other retailers in the market. 

So, it is already tough for small businesses and startups to maintain their standing in the market and grow with time. 

Here we are with tips that can help you beat the competition in the subscription business markets.

#1. Offer Value

Whether you offer a SaaS product or an eCommerce item, you need to offer customers value. For instance, at the time of covid, many retailers entered the market to offer unique subscription boxes. These subscription boxes were quite of interest to customers.

Retailers offered subscription boxes that contained masks, sanitizers, and handwash. However, such subscription boxes are no more in demand. 

So, in the subscription business market, you not only need to offer value and continue doing so. Realize the changes in the market, and in accordance with that, make changes in your subscription boxes, product, and services.

Companies that offer subscriptions for SaaS products or services need to improvise with time. The SaaS market operates in a different way. Here, the changes are abrupt and big.

Offer your subscribers add-ons, integrations, and cross-sell options so that they continue enjoying the same value and stay longer on board. 

#2. Know Your Target Market

The subscription business model is the leading business model for SaaS companies that offer services as well as products. They design and develop technical products and services.

Now that they have developed a product for the digital world, they mostly need to find customers in the digital arena. However, identifying and reaching out to the right customers is not easy.

First thing first, know your targeted customers well, then communicate with the sales and marketing teams. 

When you have identified the targeted audience, you need to monitor the customer data to understand customer behavior, preferences, and interests.

When you have this information, it becomes easier to reach out to the target customer because now, you know where to find your customers and what to offer them.

Of course, you have a SaaS product with certain features, however, customer preferences enable you to pinpoint and highlight those features for the customers that fulfill their needs.

Also, you can tell customers that SaaS platforms are flexible and scalable to make adjustments as per customer needs and demands. Also, keep monitoring the competition in the market so that you know how your competitors hunt customers. 

#3. The Right Pricing Strategy

In the subscription business market, retailers can opt for the pricing model of their choice. Pricing is linked with billing and payment processing.

You need to do pricing rightly so that you get paid on time. However, the pricing models that subscription businesses can opt for are the following:

The choice of the pricing model streamlines the flow of recurring revenue to the revenue stream. Also, whatever the pricing strategy, you need to be clear about it to your customer base.

Do not keep anything hidden that you will need to reveal at the eleventh hour. Hidden rates and charges affect customer relations adversely. 

#4. Offer Diverse Subscription Plans

One of the secrets to the success of the subscription business model is the diversity that subscription businesses offer in their subscription plans. These plans help to cater to a diverse customer base. The commonly offered subscription plans include:

Offer flexible billing options to accommodate different customer preferences and affordability. For example, you can offer monthly, quarterly, or annual billing options. This allows customers to choose the billing cycle that works best for their budget and needs.

#5. Engage and Retain Customers

Customer retention is the foundation of a subscription business. Here, retaining customers is more important than finding new customers in the market.

And to retain your customer, they need to be engaged and retained. Customer engagement needs a robust strategy. Here are some of the tactics to retain subscribers:

Provide regular updates, exclusive content, and personalized offers to keep customers engaged and subscribed.

#6. Analyze Data and Metrics

Customer data analysis is the most important to survive in the subscription business market. There are many important customer data metrics and KPIs that one must monitor to thrive in the competitive subscription business market. The following are some of the important subscription business metrics that one must monitor:

There are a lot more metrics and KPIs that help you analyze the health of your subscription business. Not only that but these KPIs also indicate subscription business trends that in the end help you strive for a better future for your business. 

#7. Marketing and Promotions

Never underestimate the power of marketing and promotions. Keep your marketing and sales teams on their toes so that they follow modern marketing trends.

No doubt customer retention is the base of a successful subscription business, but customer acquisition cannot be neglected. It is also a fact that you cannot minimize customer churn to zero. So, to fight to churn, one of the working strategies is to increase the customer acquisition rate.

And customer acquisition is possible with the right marketing strategies. You can even run a marketing strategy, and if it does not work the way you expected, make changes accordingly. Again monitor the performance, and follow the same process. 

Keep investing in marketing and promotions to cater to new customers. You will also need a strategy to onboard customers who left some of your competitors. Tackle these customers with care.

Offer these customers what your competitor could not. Utilize various marketing channels such as social media, email marketing, content marketing, and paid advertising to create awareness, generate leads, and convert them into subscribers.

#8. Customer Feedback

While in the subscription business market, never neglect the importance of customer feedback. If a customer finds something faulty, then it is faulty no matter how perfect it looks to you.

Customers are that important at present, especially in the subscription business market. There are various ways to collect customer feedback, some of them are the following:

This customer feedback improves your SaaS product, subscription plans, and customer retention rate.

#9. Churn Deflection

Customer churn is the number of customers who cancel subscriptions for your product or services. On the contrary, churn deflection is the strategy to minimize customer churn.

Getting more customers can be one of the strategies to deflect customer churn. However, the customers who have left, experts say, it is somewhat impossible to win them back. You can offer incentives to bring them back once again. 

First thing first, understand the reasons behind customer churn. Once you understand the reason, you have a better chance to mitigate these reasons to nip the cause of customer churn in the bud.

#10. Scalability

You need to plan for not only the present but also for the future. Businesses grow and scale with time. If you want to scale with time, then first, plan for the future. Second, opt for the tech stack that will push your subscription business growth.

Your tech stack should be flexible and scalable. It should integrate with other applications and third-party software so that you can continue improving business growth. Opportunities can knock on the door at any time. Your tech tools and applications make you ready to grab these opportunities.

According to Statista, By 2023, subscription e-commerce is expected to generate more than 38 billion dollars in revenue, more than double the amount registered in 2019.

So, the market is growing rapidly, and making an entry into this competitive market is not easy. Even it is becoming challenging for old players to survive and thrive. Still, these tips can be your guiding principles to make your subscription business a success.

There are subscription management platforms that are helping subscription businesses grow. If you run a subscription business, then one of the best platforms that will surely improve your business productivity is SubscriptionFlow. 

However, remember to continually adapt and improve your strategies based on customer feedback and market trends to stay competitive and retain loyal customers. 

Author Bio:
Jessica Wade is a senior writer specializing in SaaS and B2B software solutions at SubscriptionFlow. Her decision to focus on these two industries was spurred by their explosive growth in the last decade, much of which she attributes to the emergence of disruptive technologies and the quick adoption by businesses that were quick to recognize their values to their organizations.