This article is for you if:

  • You want to learn about the history of subscription businesses
  • You want to learn how to enhance customer service in your subscription business
  • You want additional strategies for reducing customer churn
  • You are looking for a dynamic subscription management system

A steady stream of recurring revenue sounds enticing to every entrepreneur. That’s why more businesses are leaning toward subscription models. Some are launching subscription ventures from scratch, while others are finding ways to incorporate them into their existing frameworks.

The concept is simple. When a brand offers a product or service that enhances the lives of those who use it, customers will want to keep it around. In this lies the opportunity to turn sporadic one-time sales into repeat automatic payments.


A brief history of subscription businesses

Early newspaper and magazine businesses are to thank for introducing subscriptions to the world. The business model dates back to the 15th Century, coinciding with the invention of the printing press. Publication companies realized recurring revenue gave them the consistent capital they needed to print more products, fueling an ongoing cycle that benefited both the customer and the company.

The invention of the telephone in the late 1800s is another early example of a subscription service. For a monthly rate, households were given access to landlines that allowed them to make calls to other landline telephones. The invention of the Internet fueled the next phase of the subscription economy with businesses like Netflix and Pandora coming onto the scene.

Although subscriptions take on many forms today (think makeup boxes and food kits), the software industry is one of the most robust examples. Purchasing desktop apps was once the norm, but the Software as a Service (SaaS) subscription model has breathed new life into the technology sector. More and more, companies are realizing that smaller recurring transactions add up to more money over time than lump-sum sales.

The modern subscription economy has been an evolutionary process, and new subscription-based businesses can benefit from the trial-and-error strategies companies before them have tested. Regardless of what type of subscription business you own (or are thinking about starting), there are three things you can do to help ensure your endeavor stand the test of time.


1. Put the customer at the center of absolutely everything

customer service

While there is massive potential for profitability with subscriptions, online retail is all about the customer in 2020. We already know subscriptions are something customers seek out because they benefit them in the following ways.


Subscriptions allow people to put many aspects of their lives on auto-pilot. A person who subscribes to StitchFix eliminates a trip to the mall to find the latest fashion trends, while a Plated subscriber knows dinner is already planned. Customers of the Dollar Shave Club know their razors will not go dull before a new one arrives.

The potential to save money

Many subscription businesses offer special pricing on products when they are delivered on a subscription basis. A skincare product that costs $100 when purchased one time may only cost $80 with a subscription. Additionally, many companies leverage incentives for customers who recruit their friends to sign up.

A sense of fun and anticipation

For businesses that offer physical products, receiving a delivery of subscription goods can feel like Christmas every week, month or season.

Access to the latest and greatest resources

As new products and services emerge, subscribers are often the first to experience them with their regular orders. SaaS companies, in particular, have the opportunity to release updates and new features to customers instantaneously.

Because subscriptions are ongoing, brands have the opportunity to interact with customers more regularly, and this is something they should take advantage of. More contact equals more opportunities to provide positive experiences.

Brands that embrace a customer-centric mindset will be the ones that enjoy prolonged subscription success. In our previous post about B2B trends in 2020, we touched on the ways brands should appeal to customers in the modern age. Innovation and personalization are essential when interacting with customers today. Building a professional and courteous customer service team is another quality control measure that always pays off in the eCommerce space.


2. Obsessively track analytics and act on them

data analytics dashboard

With the advanced data analytics tools available today, there’s really no excuse not to use them to your benefit. However, tracking analytics is not enough. You must take action on the metrics as well.

Google Analytics is one of the most popular tools for measuring audience behaviors. Built-in metrics on social media platforms can also provide key insights for guiding future decisions. The data can help answer the following questions.

  • What content are customers engaging with?
  • How long are they spending on a particular page?
  • How many unique visitors are coming to the website?
  • How many people clicked on a particular link?
  • What is the bounce rate on a page?
  • How many new followers did we gain this month?

With these questions answered, strategies can emerge that will help businesses get closer to their goals.

The Salesforce Customer Relationship Management (CRM) system is another powerful tool that can benefit eCommerce merchants in many ways, including data. The system gives a 360-degree view of every customer that helps make the unique decisions needed for individual cases.

One of the most essential uses for data is the ability to detect when a customer’s business is slipping away. Key performance indicators such as repeat purchases, product returns and time between purchases can all be telling of where your relationship with a customer stands. If you feel a customer churning away from your brand, it is time to implement strategies to draw them back in (such as presenting them with an exclusive offer).


3. Adopt a reputable subscription management system

A quality subscription management system is essential for the success of any business that centers around recurring revenue. Customers in today’s online shopping realm expect flexibility and control when it comes to their orders. Will they receive products monthly, seasonally or annually? Can they skip a shipment or cancel at any time? Are there special add-ons they can take advantage of?

Take the following scenario into consideration.

George, a candy store owner, saw an opportunity to bring in a steady stream of recurring revenue by providing tailored subscription candy experiences to his customers. Charlotte placed an order for 20 white chocolate bunnies that were to be delivered monthly. The next day, she returned to George’s website to order a weekly delivery of 10 jelly worms. She also decided to splurge on two chocolate bears and a caramel yeti that would be delivered every other month.

The complex scenario above details the reason businesses need a subscription management system that can handle a variety of situations. George’s website is hosted on the Magento platform, so he chose the mPower subscription management solution from PowerSync. In addition to ensuring Charlotte gets her products at the right time, the system minimizes missed payments and collection issues.

Without a quality subscription management system, businesses may not be able to offer the flexibility customers want, or they may struggle to keep up with their demands.

The goal for any subscription-based eCommerce venture is to increase the customer lifetime value, or the forecasted net profit from a customer relationship. Adopting a customer-first mindset, tracking and acting on analytics and investing in the right subscription management software are three strategies that will help maximize recurring revenue.


Do you want to learn more about the mPower subscription management solution?

If you want to see our powerful and dynamic subscription management solution for Magento 2 watch this little demo of mPower! You can also schedule a complimentary call with one of our e-commerce experts to discuss a potential fit.