The subscription marketing model has taken e-commerce ventures by storm. Stores such as Japanese Candy and the Dollar Shave Club are among the businesses that have adopted the subscription model. Due to its effectiveness, more e-commerce businesses are embracing it.

Consumers appreciate the convenience that this model brings to the table. As soon as customers enter their credit card details, they are free to access various products and services without visiting the stores physically.

The subscription model provides value to both the store owners and consumers. Health & Beauty as well as the Food & Drink businesses benefit significantly from this model. Here are some of the benefits of using the subscription model;

Ease in obtaining a high customer lifetime value

In the transaction model, a customer may buy once from a particular store. But how do you get them to buy from the store regularly? The store owner has to put in more effort to make a first-time customer return.

It may be quite difficult to tell which customers will eventually come back and why. However, the subscription model gives you more traction in such scenarios. You just need to figure out how long they keep the subscription. Once you identify the average time a consumer stays on the subscription, identify how much you need to spend on the customer’s acquisition process.

Transactional customers need to decide whether to buy from your store each time they want to purchase. As for the customers who are already subscribed to your services, the decision on whether they should purchase something from your store is much easier. They don’t need to go through a difficult decision-making process to purchase from you.

Makes it easy to predict your business's monthly growth and revenue

With the subscription model, you can tell how long your average customer keeps buying from you. It also improves your customer retention rate.

In terms of revenue, you get a clue of what to expect in a set duration. Therefore, you are in a position to approximate how much is likely to be spent during the customer acquisition process, so that you can generate revenue from them, and grow your business.

Predictable shipping patterns

Shipping is challenging, especially where transactional customers are involved. Fortunately, in most e-commerce stores, only one product is sold but at different levels. This makes it easier to predict the number of packages that need to be prepared for shipping.

As the store owner, you have a better chance to forecast your profits by predicting shipment costs.

Fewer options for the customers

When you store a range of products, customers find it difficult to choose what they need because of the overwhelming options.

This doesn’t happen with the subscription model as choices are kept at a minimum. Customers have a better shopping experience as they don't have to navigate through an overwhelming variety of products.

Makes it easier to focus on the core buyers

The subscription model is much more targeted as it focuses on core buyers. While setting it up, you have to narrow it down to the consumers who are more likely to buy your products. Besides that, most people who take their time to subscribe are interested in your products or services.

Understanding your potential customers helps you to address their needs more effectively.

Case studies

5-Hour Energy

5 hour Energy is reaping huge benefits from recurring billing. How did the people behind this brand do it? This brand has an incredible product. It sells liquid energy shots that help keep the customers revitalized for longer periods.

Having an incredible product wasn’t enough for this brand. So it went ahead to incorporate a relevant subscription model in its online store. They relied on the ReCharge app to pull this off. This made it easy for their customers to not only subscribe but also manage their subscriptions. As it turns out, this strategy grew its base at an approximated rate of 10% per week.

Death Wish Coffee and Jimmy Club are other brands that have adopted unique subscription models to drive their revenue.

Subscription models best practices

·             Always consider using a separate marketing strategy with your subscription model. This could range from loyalty programs to social media

·             Create brilliant marketing content for your subscription model. The Dollar Shave Club has had unprecedented success by using outstanding video marketing content

If you’ve tried out different strategies to grow your store's revenue without success, give subscriptions model a shot. This strategy will undoubtedly make a difference for your e-commerce business.