Subscription-based models are taking the center stage as more and more business owners are looking for annuity income. The pandemic and lockdowns have amplified the need for subscription businesses; people confined to their homes flocked to digital entertainment, delivery of food, clothes and other items they need regularly.
This unique approach of doing business is a win-win situation as it ushers recurring revenue, stronger customer relations for the business owners and curated experiences and convenience for the consumers. Read on to know how these advantages can be increased when the foolproof techniques of data analytics solutions are integrated.
What are subscription-based businesses?
As the name suggests, subscription-based businesses allow a customer to purchase a vendor’s products or services for a specific period of time, paying a recurring price. Subscription businesses commit to the consumers on a daily, weekly, monthly, quarterly or annual basis. This model which was previously dominated by industries such as newspapers, telecommunications, utilities, etc. is being adapted by all businesses owing to its numerous advantages.
When compared to traditional single purchasing, subscription businesses assure a constant and predictable revenue from the subscribers. It often guarantees payment in advance, reduces risk, uncertainty and offers a more accurate picture of the business’s future. Consumers are more likely to get connected to such products or services, ensuring an extended association with the brand and retention.
Leveraging Subscription Data
Tremendous amounts of valuable data is a by-product of subscription-based business and the proliferation of data has inherently changed how strategies are designed to take such approaches forward. Apart from its numerous advantages, subscription businesses give much deeper and more accurate data on what sells. Follow this link to know more about the increasing popularity of subscription businesses and the reasons behind it.
Just because it’s a trend, adding a subscription to every product or service that your business trades in might not guarantee success. To make maximum profit, businesses should identify which products are ideal for subscription services and which are not. Employing data analytics solutions on consumer trends and preferences will give you insights on products or services that could flourish under the tag of subscription. Data analytics services will help you to craft a sustainable subscription model based on accurate insights such as value proposition, customer pain points and your overall retail strategy.
2.Pricing & Product Strategy
The easiest and most effective way to attract more customers to your subscription business is by providing the right combination of pricing and offerings. How do you determine the optimum price of your products? There is no way around it but to rely on data of your competitors, costs, market and to deploy data analytics solutions on it.
The same applies to the products that you offer. For instance, Curated Subscription Boxes are one new trend under this concept that is catching on. Brands that offer this service send a curated collection of their products to their customers on a regular basis. When this is done right, businesses seem to yield increased AOV (Average order value). To design subscription boxes with products that fit every niche and to ensure customer retention, the insights from customer behavioral data are proven to help immensely.
To reduce churn, to maintain commitment from customers and to cope with increasing competition, subscription businesses should optimize their pricing frequently. According to industry experts, the factors that lead to cancellation of subscription are lack of innovative products or experiences, lack of multiple pricing options and perceived lack of value of products.
Lack of flexible pricing will point to the shortcomings of the subscription’s value proposition and this can adversely affect the business in the long run. Data analytics solutions help businesses to investigate, redesign and update the pricing strategies in tandem with customers’ expectations and industry standards.
4. Customer Retention
Good value, superior quality, originality of services and varied assortment are the key factors for customer retention. To drive your subscription business to success, data on what consumers perceive as the distinctive qualities of your offerings have to be analyzed. Administering data analytic solutions on such data will help you to be aware of the kind of products and services to deliver and to put focus on customer needs. The data can also shed light on potential gaps where the products or services are not meeting consumer expectations.
Do you feel that your business can reap the benefits of a subscription-based business model but lack the evidence to be sure of its prospects? Avail Site Lantern’s data analytics solutions and get a thorough analysis of your business data. Head to our website, glance through our data analytic services and find the right data solution for your business.