Subscription-based services are becoming increasingly popular. You’ll need to set yourself apart from all of the others who are starting subscription-based companies but who won’t do as good as yours because they didn’t read the tips below.
Subscription-based services are becoming increasingly popular: businesses offer regular deliveries of monthly shaving supplies, clothing, food and recipes. It is becoming a business model known for its flexibility and predictable revenue stream from customers, and starting one is relatively easy.
Such a great business model that’s easy to start should be a piece of cake to maintain, right? Wrong. You’ll need to set yourself apart from all of the others who are starting subscription-based companies but who won’t do as good as yours because they didn’t read the tips below.
Maintain Your Customer Relationships
Business 101: Keep your customers happy. This is especially important in a subscription-based company, as you most likely will be in negotiations with them monthly. Since many subscription-based companies facilitate a monthly interaction with customers, many businesses think that is enough. But it is not sufficient to speak with your subscribers once a month — and then only under the pretense of closing a transaction. In fact, lots of customers are discouraged by a payment taken out of their bank account every month and may unsubscribe to your business.
Talk to your subscribers to find out what you can be doing differently to make things easier for them. Building strong customer relationships comes from asking how you can make your business operations more convenient for them. Would they rather read and sign their documents electronically? Adjust the payment plans? Receive a different product? Remember that customers signed up to your subscription-based company for convenience and the niche of your products or services. Customers will appreciate your interest in their needs and will continue doing business with you if that interest is upheld.
Cash Flow Consistency
Financial operations are essential for any company, and subscription-based businesses are no different. However, with a subscription-based business, customer revenue is a constant — as they generally subscribe to receive your product or services monthly. Don’t forget about your other expenses: shipping and receiving, marketing, payroll, etc. Just as any other business, bad financial management will collapse your company.
It can put you into a false sense of assurance to know that you have a revenue stream that is constant. But if you have a lot of customers, things can get overwhelming having to handle all those invoices simultaneously — not to mention the latencies of withheld or disputed invoices. You’ll need to have a method to the madness to make sure you have punctual rate of payment. Cash flow consistency equals a smooth-running business.
Keep Your Customers Interested
The subscription-based business model isn’t geared toward the one-time customer. For this reason, it is imperative that you keep your customers interested in your product or services. But another aspect of your subscription-based business is that you’ve chosen a specific niche to cater to a specific target audience; there's no wiggle room for variety.
The truth is that you don’t have much wiggle room, but you can get creative to keep your subscriber’s attention. Own a wine or beer-of-the-month club? Change up the variety and make your own unique beer labels every month. For a meal-based subscription service, try seasonal or low-calorie ingredients. Whatever your niche, there's always room to get a little creative to leave your subscribers waiting for that package every month.
Managing a subscription-based service is proving to be a more attractive way of business as opposed to prior traditional business models. Customers know what and who they like, and they will subscribe to stay with a business that can provide this. It’s up to you to establish a product or service to supply consistently, yet diverse enough — walking the fine line between rigidity and flexibility for the product your subscriber signed up for but won’t become disinterested. The tips above will help you walk this line and manage your subscription-based business.