In the past, the only subscriptions available were for newspapers or magazines. Today, the subscription model has changed to accommodate consumer demands. You can find razors, makeup, food, music, educational classes and more on a subscription basis. We’ll explain the subscription business model, share how specific industries are thriving with it, and offer tips for incorporating it into your organization.
The subscription model has been around for decades. It’s a straightforward process: Consumers pay a fixed amount at regular intervals, such as monthly or annually, to receive a product or service. The consumer receives items or services when needed, without having to place additional orders. The business benefits from recurring subscription revenue.
Not every industry will necessarily be suited to the subscription model, but there are more opportunities than you might think. Check out these four examples of fields currently thriving with this strategic approach.
The traditional teaching model places one teacher in a classroom with 25 or so students and provides a textbook with relevant content. While this model is still standard, online learning is flourishing, allowing new ways for people of all ages to access educational and personal development resources. The COVID-19 pandemic hastened the adoption and popularity of online learning, spurring innovative ventures and learning platforms.
Some online learning businesses use the subscription model to provide educational resources to their customers:
Subscription-based online learning resources help anyone learn new skills and explore unfamiliar subjects without ever leaving the comfort of their home or office. Furthermore, subscription prices allow for unlimited consumption. It’s like buffet-style learning.
Consider offering your employees access to an online learning subscription as a professional development opportunity. They can learn new skills while honing existing hard and soft skills in the workplace.
The streaming music industry was one of the first to embrace the subscription business model. Apple Music had 88 million subscribers in 2021, according to Business of Apps, with Spotify more than doubling that with 188 million subscribers, according to Statista.
In addition to streaming music, subscription-based services like Netflix, YouTube TV, HBO Max, Hulu, Apple TV and many more have changed how viewers access and watch entertainment.
The growth of subscription streaming is the direct result of the increased availability of internet-powered devices. There’s no longer a need to purchase individual songs or movies when you can stream unlimited entertainment from various channels and sources at any time.
The beauty and cosmetics industry is uniquely suited to the subscription model. Birchbox was one of the first leaders in the field. It launched in 2010, delivering boxes of curated samples directly to doorsteps for just $10 per box. It now offers an array of personalized beauty and skincare products with a range of subscription options.
The subscription-based health and beauty arena has since exploded, with businesses like the below:
These are just a few examples of the myriad beauty and health products available on a subscription basis. Consumers can find the products they need and subscribe so they never run out.
The food and beverage industry has made huge inroads using the subscription model, with dozens of new services arriving each year. This segment thrives on consumer convenience, helping busy individuals stay healthy and keep their cabinets stocked.
Here are some examples of mail-order ingredient and meal services:
Consumers can also subscribe to services that regularly deliver coffee, beer, wine, tea, spices, barbecue sauce, vitamins and much more.
By now, your mind is probably racing with how you can implement a subscription model in your business. When you’re ready to start, keep these tips in mind:
The subscription approach owes its success to the balance of value it offers the company and to the customer. Customers get desired products or services conveniently, while businesses are able to rely on recurring sales to help predict revenues.
Specific benefits for businesses and their customers include the following:
The subscription approach is a scalable model. Scalability is a massive benefit to businesses and customers alike.
Customers and businesses benefit from the subscription model’s predictable nature.
Subscription services enhance consumer trust and customer loyalty.
A business considering adding a subscription model to its offerings should conduct a marketing analysis to understand its competitors. From there, it should try to improve on deliverables, price or both to impact its niche.
The subscription business model will continue to grow as customers and businesses benefit from the setup. Many feel that COVID-19 forever changed the subscription economy, making it a long-lasting model for consumers to get what they need conveniently.
While some subscription-based industries may dwindle as market leaders emerge, many more companies will likely move into subscription-based models to generate consistent revenues and build loyal customer bases.