Why is the online subscription payment model one of the most profitable in 2021?
Over the last decade, subscription-based payment companies have experienced tremendous growth and increased ROI. In fact, during the COVID19 crisis, subscription-based e-commerce sales grew by 41.0%.
According to Telecoming, subscription industry revenues will double to $80 billion by 2025. It will also see an average growth of 23% year-on-year and a 15% increase in registrations; reaching 4 billion subscriptions worldwide.
Given these numbers, it is not surprising that more and more companies are adopting a subscription-based payment model.
Here we will explain how you can join this business model and the benefits you will get from it.
Advantages of the subscription payment model
As we saw earlier, the metrics of the subscription business model have exploded in popularity and will continue to grow. There are several reasons for this, but perhaps the most important are convenience and low cost.
Subscribers can access and pay for products and services in the most convenient way (monthly, quarterly). Some companies even customise their offers according to customer preferences. This is to make it a more attractive and desirable option for them.
Other benefits of the subscription model include:
- It is a way to achieve more predictable revenues and greater customer loyalty.
- It simplifies the payment process for customers, as well as helping to control their budgets.
- It is an opportunity to dive into untapped markets and often avoid the ups and downs of the market.
- It is a type of business that guarantees low rates of return.
Subscription payments can be collected through a variety of methods, which include e-wallets and applications such as PAYMENT46.
Who benefits from subscription payment models?
Both customers and businesses benefit from subscription payments. Let's see how:
- For customers, subscriptions can be convenient, as renewal is automatic and with the option to unsubscribe at any time. In addition, they have access to a great value offer for a low investment.
- For companies, it is an economic model that allows them to grow and generate predictable revenues, as well as build deeper relationships with their customers as they meet their demands.
How to join this new economic model?
Applying this business model is all about finding the right tools and strategies. We have put together three proven strategies to get you started. Here they are.
1. Determine your goals in advance
What exactly do you want to achieve with subscriptions - more revenue, accelerate the growth of your business? Like any business, the success of a subscription payment model requires clear objectives from the start.
By defining your objectives, you will be able to create a specific pricing strategy for your business. You will also be able to develop a target buyer model and structure prices according to their characteristics.
2. Develop strong relationships with your customers
The subscription business model is based on long-term, sustainable relationships with customers. If your subscribers are not happy or are not regularly reminded of the value of the service you offer, they will cancel. Focus on keeping them as long as possible by nurturing those relationships.
3. Drive procurement with a better experience
It's a simple equation: more customers = more revenue. That's why signing up for your subscription service should be as easy as possible. And this also applies to the payment process.
Today's customers, your potential subscribers, want to pay as they see fit. As a result, they expect you to offer them a wide range of payment methods.
Did you know that offering different payment methods is closely related to the growth of your business? In fact, among other things, it reduces friction during registration.
According to the Subscribed Institute, another benefit of offering more than five payment methods is that your business will grow faster. It will also reduce the rate of returns:
Companies that provide more than 5 payment methods have a 28% return rate; while those that accept three or less have a 33% return rate.
On the other hand, implementing different online payment alternatives will also allow your subscribers to pay more efficiently.
PAGO46 is your best ally in online payments.
PAGO46 is the fastest, easiest and safest cash payment network in Latin America. With us, your subscribers can pay online and in cash, anytime, anywhere.
You also do not need a credit card to pay for your subscription services. With our network you will be able to pay for your subscriptions without any problems and get the same benefits as with any other payment method.
Conclusion
Undoubtedly, convenience and low cost make pay-per-subscription one of the most profitable. However, an important aspect of success in this business, as in any other, is the payment process.
The payment process is the recurring point of contact with the customer in a subscription business. Therefore, the collection process must be localised, flexible and tailored to the customer's preferences.
Dispensing with these functions may result in the cancellation of the subscription at the time of registration and may also result in the customer cancelling the subscription at a later date.
If you need a strategic payment method to grow your subscription business, contact us. PAGO46 is an on-demand payment service that relies on cash payments for e-commerce.
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