From subscription dog food to shaving products, e-commerce companies all over the world are turning to a subscription-based model, and for good reason. If you’re wondering what all the fuss is about, keep reading!
Why Choose a Subscription Model for your e-commerce?
Experts forecast that the value of the global subscription e-commerce market will reach $478 billion in 2025. The subscription-based business model creates recurring revenue – a dream for any business, but it also allows companies to grow and build brand loyalty.
Think of it this way, with a regular brick and mortar store, customers come in and purchase your goods or services once, and if they left really satisfied, they might come back again next week, or next month, but only if the weather’s nice, and they don’t forget.
But what if they subscribed to your product or service? Well, then every month, or year, they will pay you for a service, and as long as you keep them (customer retention), and gain new customers (customer acquisition), your profits will grow exponentially.
If that’s not reason enough, studies show that the cost of retaining customers is 5% less than the cost of acquiring new customers, while current customers are likely to spend more on your products than new ones. In fact, research done by Bain & Company shows that retaining just 5% of your customers can boost your profits by 25% to 95%.
Switching to the Subscription Model
Many existing e-commerce businesses looking to try out the subscription model fear that the process may scare off their current customers, or that it might be too complicated or costly.
The truth is, with the right payment gateway and subscription management platform, the subscription model process can be straightforward.
First, there’s no rule that says you can’t keep offering your product or service as a one-time purchase. In fact, it would be good practice to offer both alongside each other, with a discount for those who subscribe, further incentivising the long-term investment.
This brings us to the second point. Every business will need its own personalised pricing structure – it’s always a good idea to offer your customers a few different tiers, with opportunities for your customers to upgrade later.
But no two businesses are the same, which is why it’s important to pick a subscription management platform that you know you can customise to fit your store.
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A Payment Gateway and Subscription Management Platform for your e-commerce subscription model
In order to set up your subscription model, you’ll need to look at how you’ll receive payments, and how you’re going to manage your subscriptions.
Payment Gateway – a Necessity In E-commerce
In e-commerce, a payment gateway is the online payment portal that’s used on websites to take payments from customers. There are many payment gateway options available, so it’s important to pick the right one.
A good payment gateway will accept most popular payment methods to make sign-ups as frictionless as possible. It’s also a good idea to choose a payment gateway that will easily integrate into your current online store.
Security is another aspect that should not be missed. For example, Billwerk+’s payment gateway is compatible with most major credit and debit cards, online payment platforms such as PayPal, and wallet and mobile payment methods. In addition, Billwerk+ offers plugins for easy integration with your existing online store.
Offer More With Subscription Management
Subscription management platforms take care of several aspects of the subscription model, such as recurring billing cycles, statistics, dunning, and more, depending on which platform you go with.
For most e-commerce businesses that wish to offer subscription services, there are a few vital features you should look out for, including:
- Upgrades and Downgrades
- Price Adjustments
- Coupons and Discounts
- Pausing Subscriptions
Let’s take a closer look at some of these features.
– Upgrades and Downgrades
If you’re offering a subscription service, it’s important to give your customers the ability to easily manage their orders. Choosing a subscription management platform that will automatically handle upgrades and downgrades will save you a lot of time, effort, and potentially money.
– Price Adjustments
Not every customer is the same, and you should be able to adjust prices accordingly. Depending on what kind of product or service you’re offering, you may want to have the ability to give personalised pricing packages, or just make a one-off adjustment.
– Coupons and Discounts
Coupons and discounts can be a powerful tool when it comes to offering the best service possible. By using a subscription management platform that makes it easy to offer personalised coupons and discounts, you can use these tools for customer retention, to build brand loyalty, and to reward your brand ambassadors.
There are many reasons why e-commerce businesses should be looking at offering their product or service based on a subscription model. It’s the perfect way to gain a predictable income, and it opens new opportunities for expanding your growth by upselling or cross-selling to current customers.
By combining Billwerk+’s payment gateway and subscription management platform, you can set up a subscription model for your business easily. But don’t take our word for it, try it today with a free test account!
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