Subscription based selling
Every type of business can integrate some form of subscription based selling, and doing so has tremendous upside. This is one reason we love e-commerce as much as we do, because it sets a foundation for building subscription based selling models --- and for getting the most out of them.
Good selling models provide better value to either the customer or the seller. The best selling models provide better value to both.
Examples of subscription based selling
models Have a service or maintenance plan that comes with a product you sell. If your product provides a better value to your customers when regularly serviced, you can assure they always achieve their optimal value by getting service/maintenance when its needed, and only when its needed. You may even be able to offer them lower rates, because you can better handle the logistics of service calls scheduled well in advance.
Have automated & regularly-scheduled shipping for recurring consumables. If your customers are buying the same consumables over and over, you can reduce the time and effort they have to put into it. This also has the advantage of giving customers useful data in the form of consumption rates. Your customers can ensure they never run out but never overstock. By dialing into the ideal quantity and frequency
Loss-leaders or value-leaders. When you deliver value up front, your customer has essentially already entered into a relationship with you. They may not be fully committed yet, but if you can hook them up with something they value, they always feel that they’re “money ahead” in the relationship. Subscription selling offers the possibility of a value-leader in the form of a free trial. Note: keep in mind that red tape and hassle will reduce the appeal of a free trial.
You can back-load the costs in a subscription based model, so coming on board is less painful for the customer. If you can gain the commitment of a customer, you can offer a high-value product and recoup your costs gradually over time. One way to do this is to offer a manageable monthly fee for access to content/courses, rather than an expensive one-time purchase for a single course. Its a more on-demand type of arrangement that gives the customer a great return. Basically, you offer a lower signup rate in exchange for long term recurring sales.
Consider the customer’s perspective
Never run out of something important that you use regularly
Reduce time and hassle by never having to order manually
Simplify your budget/expenses: pay a flat rate each
month for just the right amount and JIT delivery
Make it easy to track and adjust consumption over time
Consider the seller’s perspective
Automate sales and fulfillment
Never miss a sale because a customer forgot about a need
Provide higher convenience and value
Ensure revenue (predictable revenue)
Increased customer retention
More accurate projections for your own budget
Easier to sell in some ways
We want to eliminate any resistance an otherwise qualified customer might have between them and your product. For example: Let’s assume that a customer knows about your product, and knows the value of it, and knows that they are better off with your product than without it. Is there still some possible resistance between the customer and the product? Indeed:
---they’re busy, and if procurement is an investment of time and effort, the purchasing process will be less appealing and easier to deprioritize
---having to think about spending money can be painful for some people, even when they know its the responsible thing to do. We can eliminate this pain for them.
---the process of deciding to make a purchase, even a necessary one, is not necessarily enjoyable. There may be a lot of information to consider, some of which we can help eliminate, like consumption rates and quantities needed
If they’ve already decided they should part with their money, we want to reward their thinking by making the process effortless and maybe even enjoyable. Think about the immense satisfaction of fresh razor blades arriving on your doorstep the day you realize you’re about to run out. This is fun, while navigating parking lots and aisles for a single item is an inconvenience. Subscription based selling offers us a way to eliminate the procurement process almost entirely.
The best SBS model, we think, is scalable and offers flexible terms. You don’t want to compromise the value that you offer, or receive yourself, by being too flexible and scalable --- but you also don’t want to turn down good relationships, because you failed to offer terms that could work for both them and you. So be open to customer’s needs and feelings, and be creative. View the terms as part of the value your product offers. We want to be able to give customers more of what they want, and less of what they don’t.
