Subscription models bring benefits to both sides of transactions

Today’s evolving and highly digital technological society demands convenience over nearly everything else. For this reason, subscription commerce companies are proliferating, as consumers want to eliminate the inconvenience of having to buy items over and over again.

In addition to convenience, many subscription models offer cost-saving advantages to end users, according to a report by JD Supra. Rather than paying expensive fees for every purchase, consumers prefer the low upfront expenses usually associated with buying goods or services through a subscription. Furthermore, the monthly or other periodic payments are often offered at a discount, enhancing overall satisfaction.

Companies also benefit from using a subscription model, as satisfied customers will likely return for future purchases, improving the relationship between client and business, JD Supra noted.

This is especially important for small businesses today, as the ongoing economic crisis is increasing competition in the private sector and making it more difficult for the little guy to survive. Fortunately, small firms have the same ability as enterprises to deploy subscription models, potentially giving startups a competitive advantage.

JD Supra said switching from a traditional single point-of-sale business model to a subscription strategy can result in increased sales as the concept appeals to many of today’s consumers. The transition can also boost long-term sustainability by creating more loyal clients and generating recurring revenue.

The need for recurring revenue was echoed in a separate study by Aria Systems, which revealed that nearly half of all businesses in the United States currently have, are in the process of creating or are looking into establishing a recurring revenue model.

“For companies who are either at or near the implementation stage, they need to spend time exploring how best to define their offering in addition to focusing on key elements such as application integration, content management and billing and collections,” Aria Systems president and CEO Tom Dibble said. “And for those companies who are not yet providing or considering offerings that generate recurring revenue, they need to consider doing so or risk getting left behind.”

By migrating to a subscription business model, companies may be able to generate more consistent recurring revenue, giving them a competitive advantage over rival firms still focused on a point-of-sale strategy.

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Editorial Team

The Forrester Wave: Subscription Billing Platforms, Q4 2015

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