Business January 4, 2019 Last updated January 2nd, 2019 2,338 Reads share

Offering Subscription Services Brings in More Mobile Commerce Money

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Courting customer loyalty is an ever-shifting goal to hit and no longer relies solely on a business offering a solid product. Digital marketing, word of mouth advertising and the natural lack of stagnation brought around by the age of interconnectivity might be leaving you wondering what the next big break in customer retention could be.

If you’ve been regarding the era of the Columbia Record Club as a bygone age of old-school marketing, you might be surprised to hear about one of the strongest services you can offer that very few have capitalized on. M-commerce is changing fast, and those who capitalize on the rising trends will leave their competitors in the dust.

The Untapped Market Share of Subscription Packages

If you run a business, you’ve probably already looked at services like Netflix or Blue Apron fondly for their simple approach to delivering a service: Customers sign up, money changes hands and a service or a box of goods goes out the door without having to worry about enticing customers to come back month after month with special promotions or unusual advertising. A large portion of that belongs to brand recognition, but the idea of subscription services has more traction than most business owners are willing to admit.

Paypal Australia released its 2018 mobile commerce report complete with statistics and interesting insights into where money is really changing hands. Many of the usual avenues for capital gain are well-accounted for, but their insights into subscriptions and marketplaces are particularly eye-opening.

As many as 50% of Australian consumers have a subscription service, yet the number of businesses that offer a subscription of some kind barely scrapes past one in every ten. Of these businesses, 86 percent saw a revenue increase after implementing a recurring service model.

The report holds quite a few interesting insights into the spending habits of the average mobile user, including a new high of 72 percent of their customers using mobile payments, but their frank look at subscription adoptions is both worrying from a business standpoint and incredibly promising in a financial sense. With companies like Dollar Shave Club boasting 3.9 million subscribers for something as simple as razor blades and hygiene supplies, you have to wonder how many entrepreneurs have missed the mark on drawing in repeat business.

Mobile Marketer recently released a collection of Salesforce statistics that point towards just how powerful a switch to mobile marketing could be in the coming months. Many retailers still see the Christmas holiday as an occasion where brick and mortar shopping shines, given the occasional difficulty of finding gift ideas through blind internet searching, but as much as 68 percent of e-commerce traffic will be performed through mobile devices through the holiday season. Even those who visit physical retail stores tend to use their mobile devices. In the 18-44 age bracket, 83 percent of shoppers refer to their phones for assistance during physical shopping trips.

Tapping into these markets can take more than simply delivering a digital product, with the focus instead shifting on the carry-through of pointing consumers to products through one service that then links into a second complimentary service. Instagram is rumored to be developing a new shopping app that links the products shown in its users’ Instagram feeds to digital storefronts to better serve those who use Instagram for window shopping while simultaneously cutting out other retail middlemen.

Bridging the Marketing Gap of Old and New

Finding the guerilla market success of a business like Dollar Shave Club might seem like a case of lightning never striking twice in the same place, but a lot of the business practices around recurring customers does rely on fairly classic marketing techniques. After all, very few people will buy into receiving a product repeatedly if they have no interest in it, to begin with.

Subscriptions offer a modern take on customer loyalty and their appropriate discounts and perks; Not only is a customer guaranteed to have at least one product purchase a month, combining the subscription with incentives to purchase additional goods with coupons and exclusive deals. Since we’re focusing on mobile experiences it does bear mentioning that the ease of this experience matters more than in many traditional markets.

An extensive Marketingland report on mobile vs. non-mobile purchase habits dug into what makes phone and tablet users more likely to complete transactions. Over 40 percent of respondents reported they would complete more transactions if the process was faster or easier, which is often a field of neglect. The earlier PayPal assessment showed only 55 percent of Australian businesses are optimized for mobile users, a fact that no doubt chews into potential completion rates.

To get an idea of what these optimizations might look like, the Humble Store offers a digital coupon system that is often tied in with its monthly subscription service and coupon use is automatic. Users are granted deals through their subscriptions or special offers, which are then applied to their user account and automatically go into effect when appropriate items are added to their digital cart. No customer action is required to ensure they can take advantage of a boon granted by their monthly loyalty while the business side doesn’t have to worry about customer complaints of attempts to use vouchers incorrectly.

Finding the Sweet Spot of Conversion: Short vs. Long Term

For those with a short-term business strategy in mind, you won’t have as much luck with subscriptions as you will if you turn your attention to a long-term strategy, but that’s more of an issue with shareholders that need placating and startups that haven’t found their financial footing yet. Offering bite-sized services that lure in curious consumers, however, is a delicate balancing act to maintain.

Programs like Adobe Photoshop have long been a hurdle for those looking to break into the field of digital art and content creation, often causing issues with a stiff price tag that requires a large up-front purchase. Recently, Adobe shifted to a subscription plan that offers a suite of their programs for a much lower initial cost that can add up over time, yet they also ensure their products receive constant support and updates to make that sub fee easier to swallow.

For a startup, chances are you won’t have a product that has such a large install base that can then be converted into recurring payments that reach a more impressive monthly total than single purchase costs might be. On the other hand, there’s always the possibility of offering a product, such as Dollar Shave Club’s razor handles, that can then be supplemented with a monthly product like their razors. Making this process streamlined and appealing to mobile users is just the next step in ensuring your product reaches the widest base possible.

One of the major difficulties faced by those who intend to offer subscription services rests outside of attracting new customers. In fact, customer retention issues can be far more pervasive than enticing a customer into trying your product for the first time. After all, many storefronts have turned to offer special one-time deals for new subscribers or even a nearly free trial period that can be initially attractive, yet fail to entice once the honeymoon phase is over. Keeping customers involved in a subscription service tends to show the best results when there are no penalties for backing out of an agreement and the contract is handled at a month to month basis without the looming fear of commitment.

Don’t be afraid to try stepping into subscription services when creating your business plan even if your business model feels more traditional. You might be surprised just how swiftly your incoming revenue may change by tapping into a market that has an abundance of users, especially as more markets shift to digitally-friendly delivery methods. It’s just another step to take in the long road towards merging classic business with modern methods.

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Philip Piletic

Philip Piletic

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