By 2023, it’s estimated that 75% of organizations selling directly to consumers will offer subscription services. This means business owners will face more obstacles than ever before as they strive to compete in a crowded marketplace.
Consider these 5 obstacles when developing and growing your subscriber-based business.
As your subscription business grows, your back-end solution must, too. Infrastructure must be reliable and scalable (especially if your subscription business is a SaaS).
Legacy technologies can be costly to move away from, which could result in price increases or reduced profit margins, not to mention disruptions to service that could impact customer experience.
The cloud offers a flexible infrastructure for building a safe and fast product. Look for solutions that allow you to scale on your terms without unnecessary requirements like vendor lock-in.
The focal point of any subscription-based business has to be customer relationships. A poor experience in other business models might lead to the loss of one sale. But in a subscription model, your customer makes the choice each month or year to renew their services. The challenge, no matter the subscription or product you offer, lies in making sure customers feel they got their money’s worth time and time again.
Relying on data and giving customers direct access to leadership are two ways to keep customers happy. New tools like machine learning can make sifting through and organizing data easier.
Building your revenue base by adding new customers is a wonderful thing. One perk to the subscription model, after all, is the stable revenue base can boost a business’s valuation drastically, especially when compared to other models.
That said, nearly 1 out of 5 customers (statistically) has a failed payment each month due to expired credit cards, misconfigured gateways, merchant blocks, and more. So while growth is exciting and potentially profitable, investing time and resources into making sure payments go through is also worth your while.
We’ve all experienced it as a consumer. A company we love starts to grow, then slowly but surely it starts feeling like they aren’t offering the same product or service they used to. As a result, you feel less loyal and might ultimately decide to move on.
Rapid growth can take leaders and team members away from their core services and products. With so much competition vying for market share, prioritizing customer needs and being innovative is essential for growth in 2022 and beyond.
As it stands, the average U.S. consumer has two to three subscriptions, while members of younger generations may have as many as six or seven. The subscription model is clearly effective and here to stay—but mainstream popularity could pose a challenge to emerging and ambitious subscription businesses.
Subscription fatigue refers to the very real threat of some consumers tiring at the thought of adding new subscriptions. It’s the, “Do I really need another monthly subscription?” question in the back of their mind every time they come across a new product or service.
Honing in on your marketing and really leaning into customer retention are two ways to combat this issue. But ultimately, adding new customers comes down to making potential customers an offer they can’t refuse.