By: Marcus Corbett
It’s a Friday afternoon in 2008. On the way home from elementary school your mom takes you to Blockbuster Video where you get to pick out one movie. Your first-choice film was sold out, so you settled for a different one. Once you get home, you open up iTunes, and listen—on repeat—to the 30-second preview of “I Gotta Feeling” by the Black Eyed Peas. Life was good.
It could have been better.
Thanks to the innovation driven by competitive commercialism, subscription entertainment services have become both the norm and the future in our modern market. For any hopes to stay competitive in the market space, businesses must quicken the evolution of their current business structure to a subscription-based model. Consumers now demand instant access, ease of mind, and established cost.
Here are some ways you can take your business to the next level by converting your business into a subscription.
I can do anything you can do, but faster
The combination of getting something without limiting quantity, time, or place is attractive to the human mind. Our culture has become one of instant gratification where companies gain a competitive edge by doing things more quickly than their competition.3
Anybody looking to start a business or to improve a business should consider ways to improve both their speed in delivery and their service to the customer.
This can be seen in food delivery services such as DoorDash and Uber Eats as they offer instant food delivery to almost anywhere. The instant access to services such as subscription car washes gives the customers the ease to drive right up to the exclusive entrance and be immediately let into the line ahead of their fellow single-use customers.
The subscription-based model allows the customer to save time by putting a single monthly payment on autopay while also saving the business money by eliminating the need for a checkout before each purchase.
Gone are the days of the necessary payment process each time a product or service is requested.5 Working a seamless checkout process into your business’ vision will eliminate excess time and resources required and, in turn, add value to your consumer.
I can do anything you can do, but easier
Planning your weekend around a 24-hour movie rental is now a foreign concept. The ease of mind that is incorporated in a subscription service is attractive to consumers.
Any person considering how to structure or restructure their business should focus on making their product easily accessible by offering it though a subscription-based business.
Companies such as the Dollar Shave Club have capitalized on this ease-of-access incentive by delivering toiletries to customers’ homes each month. For a low, monthly payment, customers can eliminate the stress of remembering to buy the essentials.
Amazon is another company that appeals to the customers’ ease of mind by providing subscriptions to common products. Users can set up a schedule for their products to be sent to their homes on a recurring basis.
Business owners of today’s age must identify the stress that their customers experience when purchasing their product. By implementing a subscription service to eliminate that stress, customers will be willing to choose you over your competitors.
Repeat customers add ease to the business as well. Let’s continue to look at the Amazon example. Amazon offers a lower price because it acts as an incentive for customers to subscribe long term. Amazon is concerned with the Customer Lifetime Value rather than the one-time profit margin on their products.1
By locking the customer into a subscription, businesses can project greater overall profit from that customer over the course of a few subscription periods. All businesses should recognize and capitalize on the advantage of locking in sales in the future through subscription sales.
I can do anything you can do, but steadier
An established cost each month for a particular good or service acts as insurance against subscribers using the product more than usual.
Companies, both new and old, can improve their service and product by providing it at a steadier price. Think about how your customers react when they have unexpected costs or wait times and develop strategies to mitigate those discrepancies.
An example of this is Amazon Prime, a flat monthly fee that provides customers with free two-day shipping for all products. By charging a flat monthly rate for unlimited express shipping, people are incentivized to buy because they feel that the subscription gives them the freedom that they need with no fear of paying a higher shipping cost.
Those who subscribe can eliminate the burden of determining where to buy the product because they know the shipping cost has already been covered. Although Amazon may miss out on a bit of the profits, if they charged shipping for each item they sold, they can make up for the lost profits with the customer loyalty through the subscription.4
Companies in this type of situation ultimately sell more stuff to more people and gain their profits back from the increase in total sales. By using this model, other businesses can gain an advantage in the eyes of the people and gain lifelong customers in the process.2
Anything you can do, subscriptions can do better
Incentives of subscriptions, such as immediate availability, peace of mind, and set monthly fees, are both attractive to consumers and profitable for companies. If you are looking to start a business, consider making it a subscription-based venture.
Moving faster than competitors, making the process easier for consumers, and being steadier in your business are all values you can add to your business through the option to subscribe.
It would be a shame to be stuck back in 2008; that 30-second iTunes sample is getting annoying, and the afterthought movie just isn’t going to cut it anymore.
- AboElHamd, Eman, Mohamed Abdel-Basset, Hamed M. Shamma, Mohamed Saleh, and Ihab El-Khodary. “Modeling Customer Lifetime Value Under Uncertain Environment.” Neutrosophic Sets & Systems 39 (January 2021): 10–30.
- “ESoft Accelerating Transition to Subscription-Based Business Model.” 2000.PR Newswire, Jun 19, 1.
- Gardner, Marilyn. 1999. “Life in the Express Line.” Christian Science Monitor, March 31.
- Johnston, Lisa. 2019. “Amazon Prime Members: 103 Million & Counting.” TWICE: This Week in Consumer Electronics 34 (8): 8.
- Kurek, Kasia, Peter A. Th. M. Geurts, and Hans E. Roosendaal. 2006. “The Split between Availability and Selection: Business Models for Scientific Information, and the Scientific Process?” Information Services & Use 26 (4): 271–82.