A guide to the subscription business model

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According to a 2018 McKinsey study , 15% of Americans who shop online have signed up for one or more subscriptions to receive products on a regular basis. The number of companies implementing the subscription business model is growing. That's why we see this model in almost every industry today. You can read a more detailed story about the subscription business model below.

What is a subscription business model?
When a customer pays a company periodically for a product or service, the company is using a subscription business model. That is, the model provides for continuous purchases over a period of time, rather than a traditional one-time purchase. This model is not new to the business world. It has been around for years and is gaining ground in a growing number of areas. It is likely to continue to do so in the future.

subscription business model

The era of subscription models was started by magazines afghanistan phone number data newspapers, and continued by almost all industries. From food and beverage, to gyms and IT services. A key reason for this expansion of subscriptions is technology . The Covid pandemic has also played a role in the past year.

Advantages of this model
Customer loyalty is booming
Almost every customer prefers personalized products , tailored exactly to their taste. In addition, if you offer different variants of products (or services) plus the aforementioned personalization, expect greater customer interest in your offer. It is precisely the value you provide that creates better, long-term relationships with customers. In order to be able to personalize products, it is necessary to collect enough adequate data about customers. By monitoring customer behavior and needs, you can create greater value for products or services, and thus improve the user experience.

Take IPSY , for example , which delivers beauty kits to customers’ doorsteps on a subscription basis. As their mission states, “To inspire individuals around the world to express their unique beauty,” they successfully reap the rewards of personalization. For $12 a month, customers receive five beauty products delivered to their doorstep. But first, they have to fill out a survey so the company can determine what beauty products they prefer and tailor the package to them. The survey includes questions about the customer’s hair and eye color, skin tone, and more. Customers can rate the products they receive to further improve the package.