What could be better than having ongoing payments to your business in the form of various subscription products? All it takes is the right system, and Shopify can help you.
Shopify helps you calculate lifetime values for each customer, when they are most likely to unsubsribe and many other things.
More and more people love to have their groceries delivered directly to their door every week or have their dog food automatically refilled every single month. For obvious reasons, it would be a waste of time for customers to order the same products every single month. Therefore, of course, you choose a subscription so you do not have to think about this anymore.
According to McKinsey, 15 % of Americans have signed up for one or more subscriptions to receive products on a daily basis. In fact, subscription deals are expected to reach 472 billion dollars in 2025, compared to 15 billion dollars in 2019 - making it an interesting opportunity for existing and aspiring business owners.
Recharge Subscriptions
The overview of the data from your customers is a very essential part of scaling a subscription business. With the Recharge Subscriptions app, you can easily keep track of your monthly turnover, customer journey, subscriptions, tracking, and much more.
This will only help to scale your business more easily and see how much you possibly can pay for each individual customer calculated according to their lifetime value. With Recharge Subscriptions, they do all the work for you based on data from your shop.
Track all your important performance indicators with their dashboard. They show you in-depth sales breakdowns, total refunds, average order values, churn rates, and more. They even help you project future revenue based on history. All the data you need to run and develop your business is in one place.
In relation to the implementation of this business model, Recharge Subscriptions has several different design solutions. You decide for yourself how long the subscription runs and how often the payment should be made.
Sometimes your customer will just ship this month's shipping. And if the customer does not know how to do it, it can lead to the customer canceling their subscription. Recharge Subscriptions can make it easy to skip or reschedule a delivery when your subscribers try to cancel. These simpel tactics can increase your LifeTimeValue by 30 %.
What are the benefits of this business model?
Predict your income
Knowing how much money is coming into your business on regular basis each months helps you streamline your sales forecasts. This means you know exactly how much you can reinvest the growth back into your business all the time.
More money in the coffers
From subscriptions to subscriptions, it is different how much you have to pay from the start. Some as for full payment from the start or at a reduced price. Others have 7-14-31 days for free to get customers started. In addition, of course, you also do it to see if customers can use the subscription for something without having to pay. This is great for one's cash flow, and can thereby provide a buffer with much needed peace of mind.
Spend less on acquiring customers
Companies with a pay-per-product pricing model must constantly invest in marketing and sales to attract new customers and thus increase revenue. Rising customer costs are a leading source of startup errors. With a subscription-based model, customers make regular payments to you, so you do not have to invest so much in new customers to keep your business going.
Loyalty, loyalty, loyalty
If you manage to create loyalty to your subscriptions, where regular purchases are made all the time, it gives a deeper insight into your customers behaviour. Then it is possible to improve the personal experience you offer, where you also discover where the customers jump off. A very important knowledge that you use to scale your business.
If done well, subscription companies create extremely loyal, repeat customers - and repeat customers spend 67 % more than new customers. This is the prerequisite for the customer's lifetime and one of the most important factors in determining a company's success.
Make it easier to sell and do cross-selling
With a subscription model, you are positioned to earn more on existing customers. Because you have continuous contact with your customers, you build a trusting relationship with them. This makes it easier to market additional products or services to them because they already know you are providing a valuable service.
