7 Questions Before Entering the Subscription Economy
You’re not in a subscription today but you may be interested in knowing if your business is suitable for subscription and what it takes to get started. We have gathered 7 highly relevant questions to guide you before entering the subscription economy.
Customers today want a convenient, hassle-free and ongoing buying experience that supports the tendency towards a growing subscription economy. A tendency we’ve seen companies embrace from small enterprise to corporate level over the last couple of years.
Fast Company, a magazine specialized in innovation, announced in 2016 the seven most innovative companies in the world:
…all supported by a subscription- and/or member based economy model.
Can you compare your business towards these 7 mastodons?
Not easy — but it does highlight the importance of choosing the right business model to secure MRR (monthly recurring revenue).
If considering the subscription model, we have gathered 7 highly relevant questions to guide you before entering and/or converting your business into a subscription-based business.
1. What is your target market?
Is your market suited for subscription? Are some of your competitors doing it or will you be first to capture the advantages?
If competitors already embrace subscription-based models, map how and what. Consider if your target market could be subscription based, perhaps just in some areas of the world or to some types of customers and/or special types of product offerings, as converting an existing business model takes time and often impacts current cash flow.
2. Who is your ideal customer?
The ideal subscription customer may not be the same as your “traditional” business but could be. The ideal customer in any business can’t live without your product, but a subscription customer is more eager to engage if payment is simple and convenient.
3. How do you attract and maintain customers month after month?
It’s all about building a trustworthy relationship to your customers solving their need with easy access to your offering. Whether you sell household items to private consumers or support B2B companies through a SaaS-based platform: it’s all about providing the right service at the right time, for the right price — just like “traditional” business.
4. What do you want to sell?
You know your offerings but are they subscription-friendly?
A subscription friendly offering is something you can sell on a regular basis. Try to think of one that you can’t sell on subscription — hard, right?
5. How are you going to make money?
We know it’s difficult to imagine, but in a subscription business pricing is no longer the customers primary focus, time and convenience is. If your offerings to satisfy your customer needs in how what and when, your customers/subscribers will pay more on a monthly agreement than buying upfront.
6. What are the technical aspects to enter a subscription economy?
Your website and customer service must provide a reliable, enjoyable time for customers subscribing to your offerings. Having a website with eCommerce capabilities or a content management system (CMS) that supports subscription-based goods, is the first thing you should ensure.
A seamless signup process, reliable payment gateways and security of both parties data are the three most important technical aspects your website should contain.
7. How to manage your subscriptions?
If you read our “build vs buy” guide, you will capture the essence of keeping a focus on your main product, while fine-tuning it for your customers. Make sure to add a subscription management system supporting your ERP and CRM with useful data through automated integrations, making subscription management a game.
Answering the questions above will tune your mindset into a subscription-mindset. Depending on the answers, you will be ready to begin your journey towards the subscription economy.