What Are Subscription Models?
Over the past few years, there has been increased interest in subscription services. We’re seeing more and more service providers moving away from one-time sales and transitioning towards a recurring billing model. These days, more people buy subscriptions instead of making one-off purchases.
Subscription business models are based on the idea of selling a product or service to receive monthly or yearly recurring subscription revenue. They focus on customer retention over customer acquisition. In essence, subscription business models focus on the way revenue is made so that a single customer pays multiple payments for prolonged access to a good or service instead of a large upfront one-time price.
Subscription business models were first introduced in the 1600s by newspaper and book publishers. With the rise of technology and software as a service (SaaS) products, many companies are moving from a business revenue model where revenue is made from a customer’s one-time purchase to a subscription model where revenue is made on a recurring basis in return for consistent access to the delivery of a good or service.
How Are Subscription Models Beneficial To Today’s Businesses?
The massive benefits of the subscription revenue model cannot be overstated. For today’s businesses, here are some of the advantages of hinging product offerings and sales on subscription services:
1. Consistent Revenue Stream: One benefit of implementing a subscription model is that it becomes easier to predict the revenue that your company will receive. When your customers actively subscribe to your business, what it means is that they’re making recurring payments so they can continue to get access to your products and services. Having more predictable cash flow also gives your company the confidence to scale knowing that you can depend on a steady stream of income to support your growth initiatives.
2. Pro-Customer Stance: The most profitable businesses in today’s economic climate are the ones that understand that building long-term relationships is the key to profitability. Implementing a subscription model helps shift the focus away from customer acquisition and more towards customer retention.
3. Reduced cost of acquiring new customers: When your customers sign up for subscription services, they are implied to repeat business. It ensures a consistent source of recurring income by allowing you to keep your subscribers happy.
4. Better inventory management: When you operate a subscription model, it becomes a lot easier to determine how much inventory to keep. You can anticipate demand and supply more accurately, resulting in a more consistent business process.
5. Improved customer engagement: When you run a subscription model, it gets a lot easier to implement regular engagement across several channels with customers. With an in-depth understanding of your customers’ preferences and usage behaviors, you can treat them to customized content. When you cultivate a strong relationship with clients, you can easily promote upsell and cross-sell opportunities.
How Paga Provides Ease In E-Commerce With Its Automatic Subscriptions
With respect to subscription models, Paga allows you to subscribe to recurring payments. This means that you can set up your account in a manner that it will be debited a specific amount at a specified time of the month for a particular service.
Examples of payments that can be sorted when you subscribe to automated payments include:
– Electricity Bills (EKDC, AEDC, IKDC)
– Cable Subscription (DStv, GOtv, Startimes)
– Mobile data plans (Spectranet, Smile, Swift)
– Recurrent Transfers
– UK Visas and Immigration
A recurring payment is designed to take away the burden of initiating a regular payment while ensuring you do not miss the payment. It is simple to set up. To do this:
– Log into your Paga account
– Select “recurring payments” from the list of services
– Create a new recurring payment
– Select the service you want to create a recurring payment for
– Fill out the details of the recipient/beneficiary
– Set up the schedule and fill all required fields
– Review the details and confirm the transaction.
When you set up recurring payments, you are authorizing Paga to debit your Paga Account, bank account, or saved debit/credit card, for the specified amount at the specified period. You can also permit a 3rd party to set up a subscription recurring payment to debit your Paga Account or saved bank account or debit/credit card.
Interest in subscription-based revenue models will only continue to grow as more businesses discover how implementing recurring payments can help them maximise their revenue potential and foster long-term relationships with their customers. Modern economies are tilting toward more subscriptions instead of ownership for cars, software, entertainment, and shopping. This current trend is not without its challenges – it can be difficult to provide customers with incentives to remain subscribed without cancelling after a while – but as far as business practices are concerned, operating a subscription model is the way to go.