Benefits of a Subscription Business Model in Ecommerce and Ways to Boost Revenue
The subscription business model is increasingly gaining popularity, almost at the same pace as digital marketing. And whether you run an online store, offer digital products, or use the web to sell e-services, one thing is sure. The subscription model has various incredible advantages for the entrepreneur and the target market.
Read on for some compelling benefits of using the subscription model for your eCommerce business, alongside a few ways to boost your revenue when using one.
What’s a Subscription Business Model?
In the simplest of terms, a subscription business model is where a target customer pays to receive a product or a service for a predetermined period. For example, if customers pay for a flower delivery subscription, they agree to receive a certain type and amount of flowers monthly, quarterly, or weekly from the provider.
The client also has to sign a contract with the entrepreneur, which outlines how often subscriptions should be renewed and how they should be terminated. So, before anything else, make sure also to research the legal side of subscription-based businesses.
Benefits of Subscription Model in Ecommerce
Why exactly would anyone want to start an online subscription business? Below are a few benefits you can get from the model as an eCommerce entrepreneur.
It’s Easier to Predict Future Income:
While eCommerce has gradually become one of the most profitable industries in recent times, one thing holds. It is also increasingly becoming competitive with every tick of the clock. For many entrepreneurs, it’s thus challenging to tell or estimate how much you can make each month, quarter, or a year from your online sales.
One of the biggest benefits of using a subscription business model is that if well implemented, it is easier to foretell your expected revenues and profit margin at any given period – and will have a lower error margin!
Easier Cash Flow Management:
The other great benefit of using a subscription model in eCommerce is that it’s easy to maintain a stable cash flow in the business. For instance, you can set up automated recurring invoices and payment reminders monthly, quarterly, or yearly using billing and accounting software. This goes a long way in reducing the chances that a client delays payment or fails to pay entirely.
Moreover, the client benefits from payment convenience as they can set up automatic payments from their end so that it executes as soon as payment is due. This enhanced cash flow management creates further opportunities for growth almost automatically.
You Can Use It to Sell both Products and Services:
When the word eCommerce is mentioned, most people automatically think of businesses selling products through major platforms like Amazon, Alibaba, Aliexpress, eBay, etc.
The particular industry has evolved as we know it, with eCommerce business models the B2B, B2C, C2C, and B2B2C rapidly taking shape over the years. The subscription-based business model cuts somewhere in between and allows online entrepreneurs to sell both services and products.
The Growing Popularity of CMSs:
Unlike some years past, it’s now easier than ever to manage an eCommerce business. Popularly known as CMS, or content management systems, tons of content management solutions are available these days to help keep your daily operations from an eCommerce website stress-free.
With most features automated, you do not have to spend months or weeks learning how to make the most out of your eCommerce website.
Boosting Your Ecommerce Business Revenue When Using the Subscription Model
Besides getting smart on CMS, search engine optimization, and many other areas regarding digital marketing, there are various ways to boost revenue using a subscription-based business model quickly. Some of these include the following:
Using Subscription Bonuses to Lure In New Clients
Have you ever seen an app or web-based platform offering free subscriptions to premium services for a few months? Ever clicked on an online casino, betting site, or trading app ad that promised a free welcome bonus to get you started?
That’s the thrill and the deal. Sign-up bonuses can go a long way in helping get you to attract more clients to your business when using the subscription model. After all, giant streaming platforms like Netflix have used them for ages now, so why shouldn’t you?
Provide Offers and Discounts
This is among the best and simplest ways to draw potential customers to your website, especially if your business sells products online. Yes, subscriptions can be a cash cow, even if you’re not a company in the technology sector. Offering discounts and offers to existing customers can also go a long way in encouraging subscription renewals.
Keep Your Clients Up To Date
As your clients are hooked on the subscription, you must ensure they get updated information from time to time to make them feel comfortable with the relationship. A great strategy to do this is to maintain a website or blog where you can post information that will help keep your clients up to date.
Your social media pages could also serve the same purpose while helping you keep clients engaged.
Review Your Pricing Often
It’s always advisable to treat carefully when assigning prices for your subscriptions. Whatever your current price, if a client can’t afford it, you could lose them as a customer. Thus, when you begin your business using the subscription model, you must be honest with your clients and re-evaluate your pricing as the business grows.
It’s always wise to keep an eye on what your competitors are charging for similar subscription products or services from time to time so you can find ways to have an edge in the market.
While there are other business models to consider when running a successful eCommerce website, the perks of using a subscription-based business speak for themselves. And with the few tips above in mind, you can easily crank up your revenues without spending a fortune.