Today’s marketplace is switching away from the prohibitively high upfront costs of software and services of the past. These price tags did little to discourage counterfeiting and instead encouraged competitors to seek cheaper, more accessible products, even if the quality wasn’t always comparable. Instead, subscription-based services are becoming popular, giving consumers an affordable price and the ability to make changes as needed.
This has created an explosion of growth within the affected industries. However, the new obstacle facing subscription providers, whether it be for software or services, is how to maintain a base of customers who are always seeking the better deal. The secret is to provide them with something extra in order to create interest in the product.
By far, one of the greatest draws of subscription-based services are the low monthly access fees as compared to the price of a large single purchase. However, over the long-term, consumers may begin to question whether the value of these monthly fees is still worth their compounding cost.
In response to this concern, many companies are leveraging their subscription fee against a selection of add-on features and bonus content available only to subscribers. For instance, Adobe offers cloud hosting and discounted stock photography to their Photoshop subscribers in order to encourage them to continue using the product, as well as to raise its perceived value.
In addition, the trend of monthly ‘boxes’ has provided a new template for web-based commerce. Boxes usually consist of a monthly selection of products that generally fall under a particular theme and are delivered to a subscriber’s door. Many of these start-ups host monthly contests to a select number of subscribers per month, enticing them with free offers and more products. The renewed interest helps maintain volume while encouraging new customers through targeted advertisements featuring the prize packages. These types of tactics are proving to be a reliable source of short-term growth for young companies.
Over the long-term, many retailers are leaning toward tiered subscription platforms and deep discounts for multi-month subscriptions. While this isn’t a new concept in its entirety, it is beginning to be applied in new markets. Virtually every monthly service allows its customers to save money by committing to a longer term of service, providing security for the business and a sense of value for consumers.
In a similar vein, in addition to or in lieu of discounts for long-term contracts, many businesses are now turning towards customizable plans that offer consumers the ability to tailor their services to their current needs. This goes a long way toward preventing cancellation when a package of lesser content will often do, and gives consumers the option to upgrade when they feel underwhelmed by their current options.
Regardless of how you approach the subscription platform, the key to attracting, maintaining and satisfying customers is to give them a sense of value that grows and changes as they do. A subscription service is a ‘buy it and forget it’ business model that suffers from threat of stagnation in the mind of the customer.
With a never-ending influx of competitors who can provide similar products at better prices, it’s most important to treat customers like individuals, rather than large groups. Customizable offers and the ability to access bonus content not available elsewhere can be the difference between a long-term subscriber and a cancellation notice.
Speaking of strategies to build a successful subscription business, our Retry Strategy guide walks you through another one. Download it today to get simple steps you can take to increase your LTV: