Subscription models are popping up everywhere, from the business model that started with SaaS to streaming media, and now in consumer goods where folks are purchasing physical products on a recurring basis.
“Subscription models are what enable this customer choice, because it’s an ongoing relationship,” Clark says. “We see this evolution going from one-time purchase moving further into a long-term connection with your customer through their purchasing habits and creating an ongoing revenue stream.”
The benefits of a subscription model
Companies are recognizing the major economic advantages of the subscription model itself, the first being a predictable recurring revenue stream. Rather than building a product with no guarantee that there will be a market for it, and then having to wait until you sell that out in order to reinvest in the business, a company with a subscription model can start every month with an installed base of revenue that you can then reinvest in the business.
The second big benefit, Clark says, and the reason why we’re seeing, in particular, a lot more of these customer-forward, direct-to-customer businesses utilizing subscriptions, is that the subscription model simply delivers deeper customer relationships and customer brand loyalty.
An example of that is Uber and Lyft, which have both started testing out subscriptions. It’s not necessarily that they’re not generating the revenue they want to see. It’s because they compete head… Read More