Online sales of goods and services are growing at dizzying speeds. Along with the growing number of consumers shopping online, so are their expectations and requirements for the shopping experience. A growing market demands greater availability of goods and services than ever before. At the same time, the purchase procedure itself should be relatively unnoticeable for the customer. The answer to this is the growing interest in subscription sales.
Subscription trading is not a new phenomenon. This business model comes from the turn of the 20th century and the sale of press publications. The subscription model is where customers become members of a club of people using certain products or services. Importantly, membership is paid automatically in specific cycles. Currently, it is the most important e-commerce trend on which giants build their empires and smaller players build a competitive advantage.
The subscription model is companies' answer to consumer trends. I am involved in a collaborative trend where customers can use certain resources without having to own them exclusively and ultimately. It is especially applicable where shared resources have a relatively high price and are not available to a wide audience. This is why target group subscribers are becoming more and more numerous.
Types of subscription sales
We distinguish between two basic types of subscription sales, which we differentiate according to the type of payment:
- Subscriptions paid in advance, where the subscription amount is fixed and unchanged, and the customer receives the ordered goods or service only after paying the fee and for as long as the subscription is paid. This model is used mainly in the case of the sale of intangible goods, e.g. software and services, e.g. training and training, as well as streaming of music or movies.
- Subscriptions paid "in arrears", where the subscription amount depends on the value of the ordered products or services, and the customer makes the payment after the end of each billing period. This model is mainly used when the subscriber decides on his own the scope of use of a given offer and is accounted for the specific consumption of a given product or service, e.g. telecommunications services, coffee subscriptions for companies, electricity or gas supply.
Due to the type of offer available under subscription, we distinguish: model discovery (revealing, allowing access to goods or services not fully known to the buyer, e.g. boxy cosmetics or food) and model convenience (being a convenience by ordering the same, constantly used product or service, e.g. music streaming).
Automatic Payment - Condition for Successful Subscription Sales
Choosing an offer in the subscription model allows you to relieve customers of the obligation to take action every time they decide to buy the same product again. The transaction is mechanically generated with little buyer's effort. Thanks to the automation of the payment process, the seller is guaranteed maximum collection of liabilities. Without the need to incur costs related to debt collection and payment reminders.
The basis for the functioning of subscription trading, regardless of its type, is the regularity and automation of payments made using e.g. payment cards or recurring transfers made by banks (standing orders or direct debits). The tool that is intended to encourage customers to subscribe is online marketing.
Although payment automation solutions greatly facilitate the use of subscriptions, buyers often have the option of paying their debts in the form of periodic transfers. However, this requires constant monitoring of payment deadlines and amounts, and the seller must have to send any reminders and collect arrears.
Consumers more and more often pay recurring receivables electronically. The growing popularity of online payment cards and e-wallets is visible. Customers appreciate these forms because of their convenience and safety.
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Good practices in subscription sales
Subscription sales are based on the relationships between brands and customers. Success is guaranteed by the customer's trust, loyalty and loyalty to a given brand. It is repetitive, but not necessarily cyclical, delivery of goods or services. Therefore, it is important to offer quality that customers are used to every time.
A prerequisite for subscription is the conclusion of a contract that obliges the buyer to pay the fees on a regular basis. Its conditions should be clear and legible and formulated in such a way as to protect the interests of both parties.
From the perspective of the buyer, the subscription model provides, above all, peace and comfort. Customers do not have to remember about purchases, and thanks to automatic payment also about payment. Thanks to subscriptions, they are able to use goods or services that, due to the high price, are unavailable to them in the standard purchase model.
From the sellers' perspective, the subscription model is a way of stable revenues and flexible modification of the offer. It is also a way to increase customer loyalty, which over time becomes much easier to get used to a given supplier and is reluctant to change it to competition.
Companies that decide to operate in the subscription model must maintain the right balance between concern for customer satisfaction and reasonable development of their offer, focused on acquiring new users. The role in this area is not without significance reference marketing. The subscription business often requires the efficient combination of various sales channels. It is imperative to provide customers with a consistent buying experience, regardless of the channel they choose.
While subscriptions are applicable to many industries, they are not a one-size-fits-all solution. In order to conduct subscription sales, you need to significantly modify the offer and adapt it to the realities of the market and the needs of recipients. In the subscription model, the customer pays for access to services or products. And the subject of the transaction is the relationship with the seller. Accepted communication strategy should take this aspect into account.