Estimated read time: 4 minutes, 16 seconds
The traditional software licensing model is outdated. And we’re seeing this reflected in the seismic shift in preferences on the part of both businesses and consumers to subscribe to services instead of outright buying access to products.
In other words, we are now in an era of subscriptions, in which businesses are progressively moving towards subscription-based business models. How is your digital business keeping up?
With subscriptions poised to disrupt the traditional business model, it’s only natural for you to wonder if offering a subscription model can benefit your business.
Here are three reasons why you can’t overlook subscription management services.
Incentivize customers to buy with flexible pricing.
Your customers don’t fit into one box. They have unique preferences that require personalized shopping experiences. Forcing your website visitors to shop with inflexible plans and prices can discourage potential customers from even considering purchasing your product.
Offering a usage-based or pay-as-you-go subscription allows your business to accommodate a variety of buyers and budgets. Your customers will certainly appreciate the flexibility of your pricing plans and will be compelled to continue their monthly subscription because they feel they are saving money with the array of options you offer.
Subscription billing models also open up the opportunity for your business to introduce a multi-tiered pricing plan. At its core, tiered pricing allows companies to offer differentiated “packages” at varying price points. This personalized approach to pricing ensures that you’re tailoring your product to more closely align with the needs (and budget) of your target customers. Appealing to multiple buyer personas helps ensure you’re maximizing your revenue potential by not leaving any money on the table. And if your current customers happen to outgrow their current solution, there’s an opportunity for upselling too since you can simply move them into a higher tier.
By partnering with FastSpring’s end-to-end ecommerce platform, Nelio Software was able to offer flexible subscription plans with discounts and gained customers from more than 80 countries around the world.
Learn more about Nelio’s partnership with FastSpring here.
Introduce another revenue stream.
Thanks to subscription billing, your digital business can begin earning recurring income that is more dependable and lucrative than the unpredictable cycle of one-time sales.
The recurring payment business model is designed to earn your business more money in the long term by maximizing the lifetime value (LTV) of your customers. Features like out-of-the-box dunning management help protect your subscription revenue by intuitively sending invoice notifications to your users when their credit card or payment information is about to expire or if it’s time to renew their subscription. Don’t waste time tracking your customers down to make sure they’re paying their invoices. Automate billing and allocate the time and energy you save towards improving your core product or service!
Offering subscription plans helps cut down on the uncertainty surrounding one-time sales. Because subscription business models can be set up on a monthly or annual billing schedule and given that customer payments are typically tied to the credit card they used for the purchase, there is a much higher chance that the renewal fee will be approved and processed without any issues.
With subscriptions, you can enjoy the peace of mind that comes with knowing exactly how much revenue your digital business is set to make each month!
Foster customer loyalty.
Always remember the number one rule of subscription businesses: it’s all about the relationship, and relationships are a two-way street. Thanks to subscriptions, traditional software vendors are now forming stronger connections with their customers. No longer can you think of your enterprise-level or SMB customers as one-time buyers or users, they are now “subscribers” of your business.
Cultivating the subscription experience means developing an ongoing relationship with your customers and making sure you continue to deliver delightful experiences. Accomplishing this involves making a proactive effort to listen to your customers’ frustrations and figuring out innovative solutions to their problems. By continually making updates to your product, your business can ensure that customers do not have to worry about working with an inferior or outdated solution.
This continued relationship of excellence is critical for the success of your business. As you continue to delight your customers, you begin to cultivate a sense of loyalty in your customer base–one that is critical for spurring renewals of your software or subscription service.
What’s next for the future of subscriptions?
It’s no secret that the interest in subscriptions has been growing over the past few years. As more software providers focus on providing cloud-based services, your digital business will need to consider the potential benefits of implementing a recurring subscription model.
It doesn’t matter if your business is selling digital content (like ebooks, music, photos or videos), software downloads, or software as a service. If you’re looking to drive more sales, introduce a more predictable revenue stream, and build a stronger customer base, a subscription billing model can work for your business.
Download this free checklist, 8 Essential Subscription Management Features to learn how a great subscription management platform can help your business succeed.