Subscription-based businesses have exploded in popularity in the past decade and for good reason.
They not only provide needed stability in an often chaotic marketplace but also connect brands and customers in new ways that would be the envy of retail prior to this.
The best part about this model is that it can be part of an overall brand strategy that seeks to maximize returns on investment as well as returning customers.
Another important factor that is not to be missed in the equation is the MRR one or the so-called in the industry “monthly recurring revenue”. A vital core business element of any successful subscription-based business.
Much of the growth in e-commerce and subscription-based businesses has been driven by innovations in digital banking and fintech which makes payments processing and currency conversion more painless than ever before. Very important business growth factors affecting both the client and the business.
Expert analysts have identified three major salient factors that underpin this business model which we will discuss here.
All About the Experience
One thing that many retailers admire and envy about the subscription business is that it happens to be incredibly resilient. A huge part of that is because it is an “experience” more than anything else. Think about places like Disney World and the like. Though part of a major operation that spans way more than just theme parks, the entire brand is predicated upon an experience.
Whether in the theaters or beyond, there is an “experiential” aspect to Disney that is nearly impossible to replicate with another company. You can knock off their products and movies, but you can’t capture that essence that customers latch onto and which drives them to spend barrels full of money on the company and its products.
Subscription services are much the same way. They make customers feel like they are a part of something and that guaranteed return on emotional and financial investment brings them back year in, year out.
Personalization is Everything
Part of the resilience of subscription-based businesses is that they personalize everything for the customer. This is from product selection to the way the platform interacts with that customer. How is this done?
Through the reams of data generated by online activity. Websites can monitor what a customer looks at, what they buy, what they return, and then use this collected data to fashion a customized experience that is geared towards selling products but without the heavy-handedness often associated with that process. In other words, the customer feels like they are in control of the experience.
Taming Market Volatility
All of that combines to create a stable and healthy revenue stream for companies that withstands market temperaments and provides a reliable source of income for the platform servicing it.
Not to mention the numerous potential partnerships and other things that could result from having such a “captive” audience. Though a subscription-based business model does require a nimble and agile mindset when it comes to products, companies often find that this expenditure is vastly outweighed by the benefits of basically “selling to a list” of qualified leads.
Beyond just market volatility, the reassurance this approach gives to suppliers and vendors – the knowledge that they will have a consistent stream of product to move – cannot be underestimated when it comes to bargaining on price and other arrangements.
Because subscription business models can guarantee a certain sell-through, vendors would be foolish not to cater to this growing segment of the retail market.
A number of subscription-based businesses that have embraced those essential have also chosen our reliable and flexible solutions in the digital payments industry over the conventional ones offered by traditional high street banking. The Monneo’s software platform allows merchants to access and control multiple Virtual IBAN accounts, executing payments in 34 different currencies. Contact us to learn more about how Monneo can help you with digital payment solutions or apply directly for your virtual IBAN on our website.