A subscription offers predetermined benefits on a continual basis in exchange for an ongoing fee. With a subscription, your customers will expect you to provide more value in the future, while you receive fees until they cancel their subscription.
To create a successful business that offers a subscription, you need to:
- Provide substantial value to every subscriber on an ongoing basis.
- Grow a base of subscribers, and regularly attract new customers to make up for those who cancel their subscription.
- Bill your customers regularly.
- Keep each customer for as long as you can.
Internet service is a great example of a subscription. The company will keep providing service as long as you make your payments. There’s no need to call the company every month to purchase another month’s worth – you’ll keep getting service as long as you pay your bills.
Offering a subscription is beneficial to you because it provides more predictable revenue. Rather than needing to resell your current customers every month, subscriptions let you build a base of loyal customers over time. Then you’ll know that a certain amount of revenue will be coming in during each billing period.
The key to making a subscription offer work is doing all you can to retain your customers. As long as you keep adding significant value, only a handful of customers will cancel each period. Thus, you’ll be able to plan your finances with more certainty. Any subscribers that you lose will need to be overcome by signing up new customers.
To learn more about a subscription as a form of value, check out The Personal MBA by Josh Kaufman.
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