Consumers sign up to subscription
Amazon is a marker of innovation and a rich source of early ideas that later become the standard. So it’s unsurprising that Amazon sellers have had the option to offer ‘Subscribe and Save’ on their products since 2007, nor does it come as a shock that Amazon’s own entertainment subscription service, Amazon Prime, has now hit more than 100 million users. And from Adobe to Microsoft, the world has also seen a wave of software products that have made the move from one-time purchases to monthly or yearly subscriptions; (Gartner predicts that by 2020, more than 80% of software providers will have shifted to subscription-based business models).
With consumers and businesses signing up to subscription in ever-increasing numbers, business owners should stand back and take stock as to how they might capitalize on subscription opportunities.
The benefits of doing subscription-based business
“Subscription-based businesses grew revenue 5x faster than companies of the S&P 500”
The commercial advantages of subscriptions are wide and varied. Beyond convenience for the consumer, businesses are discovering new ways to monetize their offering, and are uncovering regular sales, cross-sales opportunities and predictable cash flow in the process; subscriptions are also thought to improve customer retention where there’s already an established relationship with those who sign up.
Subscriptions are now reaching into every industry, from coaching to food shopping, onto recipes and valet services. So if you thought that subscription wasn’t right for you, you may want to think again.
“The critical part is to choose a payment setup that will allow you to capitalize on subscriptions. That should mean no redirection, a smooth payment experience and robust security.
Merchants must also be aware of the few disadvantages of recurring payments, such as card expiration, declined authorization and spending limits”. Jon Loveless, Payment Solution Pros
Making the (profitable) switch to subscription
E-commerce business owners of all industries should be paying attention to this fastest growing payment solution of all. When implemented correctly, promoted well and managed by a reliable payment provider, there’s convenience, cost-savings, and income predictability all there for the taking.