The online subscriptions economy is booming. Previously ruled by mediums like newspapers, magazines, gyms, and telecommunications services, more products and services are being offered to people today through subscriptions than ever before. Consumer behaviour is also changing.
Customers today have a new set of expectations -they want rewards, not ownership, personalisation, not generalization. Globally, the subscriptions business has been growing significantly, attracting more that 11 million subscribers from the U.S and the entire industry itself has been growing at 200% annually since 2011.
This has led to the creation of new business models specifically designed to keep customers engaged in long-term relationships with businesses.
Closer to home, millions of Indians now pay monthly for regular deliveries of everything from meals to clothing and makeup. And every day another of these subscription-based companies enter the fray.
Popular ones include; Bombay Shaving Company, providing personalised monthly shaving kits, Raw Pressery, a subscriptions business plan providing daily cold pressed juices and SugarBox, serving up curated makeup and daily use item boxes for women.
Companies like Ola, Flipkart and Zomato have also diverted serious focus on the subscriptions business model in India. Flipkart introduced Flipkart First and Amazon India launched Amazon Prime, which are annual subscription services for frequent shoppers providing special delivery privileges and exclusive offers.
Ola Cabs launched Ola Select, which is a premium subscriptions service for Ola users to get yield plenty of perks ranging from no peak hour pricing to airport lounge access. And recently Zomato Gold took the country by storm, through a subscription program offering subscribers access to complimentary drinks and food at over 1,200 restaurants.
Netflix launched its services in India, providing us with a plethora of American TV shows and movies through a monthly subscription model. Hotstar similarly offered it’s Indian viewers TV serials and movies in regional languages.
There’s a reason why the subscriptions economy has picked up in India and is growing. The subscriptions business model benefits both the customer and a merchant; for the customer, the ease at which a product or service renews itself automatically or is delivered to your doorstep is the biggest advantage.
For a business, its more lifetime value that they can extract from a converted customer.
Provide your customers transparent and flexible price plans
What is the cost per month? Are there different plans that cover a range of usage patterns? A successful subscriptions pricing plan is one that addresses the needs of potential customers.
Offer your customers flexibility in plans depending on usage and budget, while giving them transparency into what each plan entails. Provide discounts for longer commitments or upfront payments. Give customers the option to migrate from one plan to the other as usage increases.
Be absolutely transparent with how your billing and invoicing works and clearly inform customers of what they’re being charged for and when. The goal is for the customer to have a calculable and relatively predictable cost, which insures that they don’t need to revisit the charges month-on-month and are comfortable with auto renewals.
Razorpay Subscriptions, allows businesses to set and schedule for multiple business models like usage or fixed periodic charges.
Let your product sell itself
A great way to acquire customers on a subscriptions platform is by providing them a Freemium solution or complete Trial of the product for a limited period. This allows your prospective customers to experience the benefits of a long term subscription without having to make an investment.
Adopting this approach should be supported by analyzing the usage of customers undergoing the Trial and collecting feedback from those who fail to convert.
Netflix, famously offers all prospective customers a free 1 month trial. Research has shown that roughly 1 out of 3 trial users end up subscribing to their service.
Identify and track the right subscription related metrics
Tracking metrics should be a high priority and a religious core focus. Research and determine the important and trackable metrics that apply to your business and inculcate the processes and tech needed to constantly track them.
Key metrics can include customer retention rate, revenue growth, cost of customer acquisition, customer lifetime value etc.
Businesses adopting subscription models can also track the benefits of adopting the model by tracking new customers acquired via subscriptions or the percentage of total revenue from subscriptions.
Enable self-service to provide a seamless customer experience
While building your subscriptions business focus on friction-less service for your customers. The expectation of subscribers these days is to be able to self-service changes in their plan, update payments methods, add features and cancel or downgrade their service, without any need for support or delay.
Razorpay Subscriptions provides an agile billing system which handles various exceptions like card expiries and changes without impacting the end user experience.
Iterate continuously to stay ahead of your competition
Rapid iteration involves reacting promptly to new or evolving market trends and to signs that your strategy is not delivering the desired results. You can effectively complement the iteration with tools and access to key metrics that help make the right business decisions.
Take for example, the introduction of UPI as a mode of payment in 2016.
At Razorpay we anticipated the increased adoption of UPI and added UPI as a payment mode for all our customers free of cost, before demonetization.
Know your customers and keep them happy
Acquiring new customers typically costs 5 to 25 times more than retaining one. Being in the subscriptions business means that customer service is of utmost importance as customers aren’t locked in to your product or service for a long term.
You should provide your customers with a great support service, as well as have a customer success and outreach strategy. Closely monitor customer usage and adoption and take measures to check drops. Use technology and research to understand what customers like and dislike about your product or service.
The key to success is the subscriptions business is not renewals but retention and delight of your customers.