Forrester’s recent blog (The Rise of The Subscription Business Model. Forrester, 2020), is one of many that highlights how the subscription model is fast being adopted by disruptors and market leaders alike as consumer buying habits continue to adjust to the effects of Covid19.
In this blog, we bring together insights on this topic from thought leaders and commentators including, Forrester, Forbes, McKinsey and more; as well as our own commercial experience of building subscription businesses for Which.
At Upbeat we specialise in helping brands build and grow subscription income and entire businesses online.
We create and deliver viability tests, road maps, technology implementation, investment into UX or web design, and go to market launch strategies (acquisition, retention, referral). We have created and launched successful subscription products for Which for many years.
With everything from food boxes and razors to film clubs and toilet paper (or any other Amazon repeat purchase you choose) competing for a share of our monthly hard-earned income, brands need to look outside of the classic one size fits all model for a subscription business to succeed.
On the surface, a subscription model has many positive aspects especially economically. However, all subscription businesses will suffer with churn, often for reasons not obvious from customer data.
The more effective a subscription business can be in implementing methods that control the number of period churned customers, the less inactive populations will be on your platform and the more economic success potential it will have (Forrester).
Data powered customer analytics that allow for personalisation and prioritised intervention are key to reducing churn, as are incentivised referral, creating customer delight (and fun ways of sharing that) and fine-tuning what you deliver and how you deliver it to develop a subscriber-subscription relationship.
Two years ago, McKinsey was already estimating that the subscription market grew by 100% between 2013 and 2018, with 15% of online shoppers having signed up for at least one subscription service in that period (Thinking Inside the Subscription Box. McKinsey).
In 2020 they have identified three significant drivers for a subscription model:
As illustrated here: