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      Building a Successful Subscription-Based Business: The Dos and Don’ts

      Apr 18, 2022

      4 minute read

      Back in 2019, Gartner had predicted that 75% of organizations selling directly to consumers will offer subscription services by 2023[i]. Given the effect that the pandemic has had on consumer psychology, we’ve seen this come true.

      The ease and flexibility that subscription-based businesses offer have been the main draw to customers. So, it’s no surprise that these businesses see a marked improvement in buyer retention and customer success.

      However, having a subscription-based model for your business alone won’t cut it in today’s competitive world. You need to follow the best practices and avoid pitfalls so as to ensure the success of your subscription-based business.

      5 Common Pitfalls to Avoid If You Have a Subscription-Based Business

      Without a doubt, the right subscription-model can benefit your business. Here are 5 common pitfalls to avoid:


      1. Creating an Ineffective Pricing Model: The common mistake that businesses make is to establish a flat rate for subscription services without any tiered option. It results in payment flexibility limits and prevents businesses from reaching the widest audience possible. For an effective pricing model, you can use A/B testing via digital promotional campaigns to measure which pricing gets the best response.

      2. Executing an Incomplete Promotional Strategy: Many businesses often lack a robust strategy for managing promotional offers, creating free-trial programs, and introductory rates. Also, they fail to measure the effectiveness of their promotional campaigns. Only after analyzing acquisition and engagement strategies, subscription-based businesses can see what works.

      3. Failing to Stay Connected: Once the service has been launched and users have signed up, it is crucial to retain customers by offering flexibility and revisiting your customer retention strategy.

      4. Ignoring Valuable Analytics & KPIs: Many businesses often put too much effort into the wrong KPIs while avoiding analytics that provides true insights. Identifying the right subscription metrics and running routine analytics helps get insights that can be used to refine and optimize service quality.

      5. Using Inappropriate Billing Systems: When businesses rely on a traditional billing system, they can limit the success of their subscription business. Therefore, having a subscription-focused billing system is crucial to support your business model, deliver superior customer experiences, and facilitate rapid expansion.

      Best Practices For Making Your Subscription-Based Business a Success

      Now that we’ve established what common mistakes can fail your subscription business, here are the best practices that you can follow to make your subscription-based business a success:

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      1. Create a High-Level of Personalization: For every aspect of your business, personalization is one of the strategies that can drive exceptional results. By implementing personalization in your subscription model, you can deliver personalized customer experiences. You can create a high level of personalization in your subscription pricing by:

      • Looking at the data (touchpoints across the subscribers’ lifecycle) to craft personalized experiences
      • Engaging customers through outreaching and personalized marketing
      • Anticipating customers’ needs and wants
      • Curating tailored content and products
      • Focusing on the web and app experiences

      2. Make Renewal Easy: No one wants to do the heavy lifting when it comes to renewing their subscription. Therefore, it is crucial for you to make your subscription process efficient. Here’s how you can make your renewal process easier:

      • Offer automated renewals and multiple ways to renew
      • Notify customers when it’s renewal time
      • Offer grace period if your customer forgets to renew (don’t just cut off their access to your software and erase all their data)

      3. Focus on Improving Customer Experience: Customers have many reasons to choose a brand. Perhaps, they believe in a brand’s values or they think that the quality is good for the price point, the reasons could vary. Therefore, you should focus on adding more value to your customers and provide experiences that they’ll never forget. To add more value to your customer’s life through your subscription pricing, you can:

      • Include the history and necessary information of product creation
      • Provide good value for the defined price
      • Nurture relationships and decrease churn with flexible pricing

      4. Emphasize Convenience & Uniqueness: To set your subscription model apart, you need to focus on the convenience and uniqueness of the services you offer. You can do this by:

      • Providing personalized customer experiences and adding value to your customers’ life
      • Making the payment and renewal process as smooth and efficient as possible
      • Providing products and services that address the needs of the customers

      The Bottom Line

      The opportunities for subscription models will continue to grow because businesses and consumers prefer subscription access to products and services rather than outright ownership. So, before you capitalize on your subscription model, make sure that you follow the best practices for better financial forecasting, inventory management, and the opportunity to foster meaningful relationships with customers.

      Wish to Make Your Subscription-Based Business Grow Better? Let’s talk!

      Our experts are equipped to help you build and nurture a successful subscription-based business. Additionally, we have Zuora-certified aces on board who can take your subscription-based businesses further up a notch. To explore more, just drop us a line at [email protected], and we’ll take it from there!

      Statistics References


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