Throughout this blog post we will talk to you about subscription business models, some of their characteristics and advantages, in addition, we will tell you about a tool that will facilitate the management of subscriptions in your company.
The age of the internet has revolutionized the consumer behavior of customers, they are currently looking for products and services immediately, efficiently, safely and with various forms of payment, for these reasons business models have been constantly changing over time.
One of the models that has known how to adapt and has been constantly growing as the years go by is the subscription model, we are sure that when you think about this type of business, the first thing that comes to your mind is Netflix, Spotify and HBO, right?
These companies are great references in their sector worldwide, but something that is wonderful about the subscription model is that it adapts easily to any project, it is completely customizable for the company and for the users, in addition, it offers different advantages for those involved.
Below we will tell you what they consist of, their advantages and the types of modalities that exist.
What is the subscription business model?
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The subscription business model consists of selling access to products or services on a regular basis (weekly, monthly or annually).
The subscription model is well known in the digital age by content businesses (Netflix, Spotify, HBO, etc.) or digital services (Adobe, Odoo, etc.) but it has also been used by physical businesses for a long time (gyms, newspapers, telephone services). It is a business model that offers economic stability according to its type of product or service and that currently has led several companies to have great growth.
What are the biggest advantages of implementing this business model?
Recurring income stream: When you know how many clients the subscriber base is made up of and how much each one pays, you can know what the level of income will be month by month.
Customer loyalty: If it is possible to offer a quality service, it is ensured that the customer pays us every month, together with a good analysis of the data of each customer, we can learn more about the interests of the customer on the platform and offer complementary services. Offering you a quality service, knowing more about your interests and generating personalized offers create a long experience of the customer with the company over time. A great example of this is the Netflix content platform, which generates a database of movies or series that its subscribers have seen to offer them other related content and stay with them for longer.
It allows Cross Selling and Up Selling: As we mentioned before, the subscription model allows you to know more about your customers, and because you are in continuous contact with your customers, a strong bond of trust is created, therefore at the moment that the subscription fee has become part of their monthly or yearly budget they will start to see the additional features that you offer.
Greater control of the stock: It allows you to calculate the amount of stock that your business will need each month, by having a fixed client portfolio you will be able to control the lack or excess of stock each month.
Proof of concept: Businesses based on the subscription model may offer free versions to entice customers to subscribe to the full package or use their registration details to send them information that might convince them.
Great marketing opportunities: Because this business model allows you to know the interests and tastes of customers, this information can be used to generate campaigns of interest to your new and existing clients.
What benefits does the use of subscriptions have for the customer?
New products: There are subscription models where customers have the possibility to receive new products that are selected based on their tastes and interests and are able to discover new products month after month.An example of this is Bookish, which is a literary subscription that each month sends a box with a literary novelty (a book that has just arrived in bookstores) and accessories that generate a wide reading experience for customers.
Replenishment of products month by month: This type of subscription is about replacing the product already spent. An example of this is toothbrush replacements, where a new toothbrush is sent every 3 months to replace the old one. This brings benefits, since the subscription can offer discounts for replacing the product frequently.
Subscription modalities
There are different types of subscription:
Fixed subscription: In this type of subscription, a certain amount is paid to access a certain service. This type of subscription is seen a lot in the publishing world, where when you subscribe to a magazine, you pay an agreed amount periodically and also receive a copy with the agreed periodicity (Weekly, biweekly, Monthly).
Unlimited subscription: Once the customer pays for the subscription, they are allowed unlimited access to all services. This type of subscription is widely used in online environments, whereby paying you get full access to the content.
Subscription and payment for use: It is about the payment of an amount where you only have access to the service, and then it is paid based on the use that was given. This model is usually used by telephone providers, they charge a fee for access to their network (telephone) and also a charge that varies for its consumption in the month.
Strategies to start implementing a subscription model
Offer a free version: In the subscription model there is Freemium, where users are granted a fully functional service for free and are offered an option with more functions when acquiring a license or premium package. This strategy helps attract customers by offering a free alternative to a service.
Create a unique user experience: The best way to attract new subscribers is by generating a unique customer experience, that means that regardless of your business, you create an unbeatable experience from the moment of registration, arrival or use of the product / service until even after that so that each contract renewal is an unbeatable experience.
Make the billing process easy: Billing will be recurring in the subscription model, plan the processes involved, so that billing is simple and does not generate a bad experience for the user in that area.
How does the Odoo Subscription module work?
Regardless of the area of your company, the Odoo subscription module will help you with the management, administration and control of recurring invoices, it will provide you with clear contracts and automated invoices at the time they are required, avoiding any type of error.
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In addition, you can streamline the activity of your sales team with specific contract templates for your most frequent scenarios.
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You will be able to automate all your processes, you will know exactly when a contract starts, is renewed and ends. As well as creating invoices, speeding up the process once it has been configured with your customers' data.
The subscription model is an amazing way to get a recurring revenue stream, and it offers stabilization over time. Before starting, you must have a clear marketing strategy, an appropriate market segment in which you can carry out proofs of concept, and planning the user experience in all its stages in order to guarantee its success.