Top Reasons Why Subscribers are Better than Customers

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A customer that regularly buys your products and services is good. However, subscribers are even better as they pay for your regular delivery of products or services in advance or at once they have received their subscription billings for a month or even a year. 

This is the reason why many businesses are switching to the subscription model. This type of business will allow you to forecast where your business is headed and helps you create a steady flow of revenue. 

Here are the reasons why turning your customers into subscribers is a great step to grow your business:

They increase the value of your company 

Acquirers typically pay up to three times more for a business with a steady flow of revenue compared to the same business within the industry using a typical business model. For instance, private equity acquirers these days pay around 75 cents for each dollar a security company earns from installation. On the other hand, they pay two dollars for every dollar of recurring revenue for “monitoring.” 

It increases the customer’s lifetime value 

If you are selling an app where a customer pays for an installer and uses it for two or more years, turning your app into a service where a subscriber has to pay yearly will earn more. Think about Microsoft that turned their old MS Office offline software into a cloud-based Office 365, whereas people pay annually instead of paying for a piece of the installer. 

A subscription lets you manage the demand 

Many businesses are seasonal. For instance, a typical florist makes a fortune every Valentine’s day and makes less on regular days. On the other hand, a subscription-based flower shop sells subscriptions to other businesses in the area where they regularly send fresh-cut flowers all year round. 

You’ll save a lot from market research 

A subscription-based business doesn’t need to spend thousands of dollars on market research to know what’s on their customers’ minds. This type of business allows you to have direct contact with your existing customers, and you can ask them what they think about your product or service. 

It makes the collection of your receivables automated  

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Normally, a subscription company will divide a large bill into smaller monthly recurring fees. This could be processed on the customer’s credit card, saving you from hiring another employee to chase the customers with overdue payables. 

It locks in the most frugal customers 

A store will always have a customer who always settles for the items with the lowest price. You can stop them from shopping around by locking them into a subscription. Through subscription, your customer will save time, energy, and money by getting the items they want without exerting any effort. On the other hand, you protect your business from losing a customer who is likely to go and check another store for something cheaper. 

Subscribers are likely to buy more 

Subscription can trigger changes in your customer’s buying behaviour. Once a customer subscribes to your product or service, they are more likely to buy more to “get their money’s worth” after paying their subscription billings. Amazon Prime is one of the best examples for this type of subscription. 

Turning your customers into a subscriber has tons of benefits in terms of increasing your revenue. Moreover, switching to subscription will save you a lot from spending on business process and marketing strategy planning.  

 

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