With new data analysis capabilities, advanced payment technology and more sophisticated logistics, subscriptions are rapidly becoming the newest way for brands to tap into incremental revenue opportunities. The subscription model enables brands to extend their reach, secure ongoing revenue streams, and develop customer loyalty. As consumer behaviours and needs change, brands must adapt their models or risk becoming obsolete.
The value of the experience
The rise of the subscription model is predicated on the evolving shift towards a post-ownership economy in which consumers value paying for access over buying a product out-right. Although Millennials are largely leading this trend, companies shouldn’t make the mistake of side-lining it just because they might not consider Millennials to be their target market. Society generally is going lukewarm on ownership. Generation X (age group 34-50) and Baby Boomers (51-69) are becoming less materialistic too, according to Deloitte’s Technology, Media and Telecommunications research.
The fundamental shift that brands have to consider is moving away from monetising products to monetising relationships and experiences. Emphasising service over products allows brands to tap into the new consumer values of the post-ownership economy. “They’re turning to a new set of services that provide access to products without the burdens of ownership,” note the authors of Millennials: Coming of Age from Goldman Sachs Global Investment Research.
New value for a new relationship model
The connections between brands and their customers are becoming more personal as the subscription model both demands and supports a higher frequency of communication. Companies can still use tailored communications to reflect consumers’ unique preferences, making them feel valued and respected. But brands can up their game by using subscriptions to fuel customer loyalty beyond simple individualised interactions.
Brands have a golden opportunity to use regular communications to create a ‘club’ feel for subscribers, whose valuable membership gives them access to services that non-subscribers can’t access. The most successful brands will transform feelings of exclusivity into feelings of inclusivity, where consumers feel they have extracted maximum added value from a brand. If customers feel like a valued member of the club, they are more likely to maintain brand loyalty as well as become a brand advocate.
To make the model work, brands must start considering subscribers as members of a club and treat them as such. The Dollar Shave Club clinched the essence of commitment by using ‘club’ in its name. The implication is that something special lies within, that members of the club are given access to deals, offers, or some other treatment that separates and distinguishes them compared to everyday customers. Brands that can transform transactions into feelings of inclusiveness will see enormous benefits from long-term customer relationships.
Does the subscription opportunity sound too good to be true? Let me know your thoughts.