Every business is full of numerous challenges. Meeting customer demands on time and providing better services is the need of the hour for every business. Online tools and automated processes have added to the level of competition in the business environment.
A subscription based business model ensures that a business has a customer base that transacts on a regular basis. There are a host of other advantages for businesses to opt for a subscription based model :
Cash Flow
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One of the key benefits of a subscription based business model is smooth cash flow. This business model ensures regular monthly revenues from existing customers. New signups are important for business growth, the model ensures that the business is more secure in the long run.
Stronger Customer Relationships
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A subscription model allows the business owner to grow a relationship with their clients by catering to their needs on an ongoing basis. It helps in creating a strong bond between them.
Revenue Forecasting
A subscription based business model facilitates the business owner to forecast revenues more accurately. Regular subscriptions helps the owners know, where their business is headed, in advance. It makes the decision making process easier with easy business analysis.
Easy Stock Management
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The business model helps in easy prediction of the volume of stock that will be needed every month. This can be very useful for e-commerce businesses. The cost benefits of simple inventory management can be huge, if the business vertical is heavy on inventory.
Customer Convenience
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This model gives the consumers the convenience of a regular supply without any disruption. This helps in reducing costs of buying and negotiations.
Up-Sell and Cross-Sell Options
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Cloud services companies, using subscription based business model, can improve their bottom lines through up-sell and cross-sell opportunities. Clients can upgrade their subscriptions whenever they want, all to the benefit of the company.
Easy Shipping
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In e-commerce business, when the product is same every month, shipping becomes easy. It makes business management much more simple. This also reduces shipping costs in the long run as one can get into long term contracts with the vendor.
Measuring Satisfaction
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The model also offers a number of methods to measure customer satisfaction. Increase in subscription value is clear indication of a happy customer. Customer feedback forms can be sent out on a regular basis. This is helpful in gauging the level of customer satisfaction and adding more features to the products and services.
More Investors
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The model helps the business owner to forecast his revenue better, which attracts more investors for the business.
Easy Financial Management
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The model helps in having a more accurate picture of the monthly finances of the company.
This helps in managing the finances better.
Retention Of Customers and Employees
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A healthy retention rate plays a key role in the profitability of a successful business. Be it customers or employees, the subscription model offers overall stability to the enterprise.
Less Resources
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By automating all the processes, a subscription model saves time and resources for the company.
Rewards Innovation
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Another benefit of a subscription based business model is that it drives innovation.
Innovative products and services can be introduced with ease and revenues can be driven to higher levels.
ROI Driven
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A subscription based business model helps in tracking ROI from different marketing initiatives with ease. This helps in making the business more profitable in the long run.
Automated Supply Chain
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Through subscription billing, one can automate various processes like orders, inventory fulfillment etc. One can set-up a system for automation of invoicing, CRM and SCM. This is helpful in improving upon the economies of scale.
Novelty
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The Market usually considers a subscription based services, novel. This can be used to drive initial sales from the benefit of low cost publicity.
Dominate The Market
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A business owner can dominate the market with higher company valuation and good market perception, and a subscription based business model can improve all of these.
It can be easily seen, why the subscription model is hugely beneficial to both consumers and producers. Consumers get better services because producers are focused to retain them and producers have customers who are satisfied with the services and will happily share and recommend them. This model can be a fast route to a healthier financial future of the business.
