Understanding the Subscription Based Economy
If you are not creating long-term relationships with your customers, you are missing out on the benefits of a phenomenon known as a subscription based economy. In such an economy, the customers and the services they receive are more profitable than the shipping of an actual product. Several corporations in different sectors are seeing great results after shifting their focus in this direction.
Volvo’s Ownership Alternative
Recently, the automaker Volvo announced that they would be offering a subscription service in which customers can get a new vehicle whenever they please for a low monthly fee. The fee includes maintenance, insurance, and service. The monthly price is such that it is no more expensive than buying a new, similar car.
Porsche’s Passport Program
Similar to Volvo’s subscription service, Porsche is allowing customers to regularly exchange sports cars and SUVs using their mobile app. Subscribers get access to 22 different models of Porsches with unrestricted mileage.
Customer Reception and Retention
But why are customers loving this model? And what does it have to offer the businesses? Well, it turns out, inclusive subscription models allow customers peace of mind and ease of access. Instead of worrying about car maintenance costs and depreciating values, customers can count on one monthly fee that never changes and is about equal to what they would pay for a singular new car, without service fees and insurance. When the model is executed correctly, meaning that the business is providing high levels of customer service and satisfaction, customer retention is much higher, and referrals skyrocket.
Implementing Subscription Based Purchases
If you want to get in on the subscription based economy, you need to consider what type of service your business is offering, and figure out how to offer it on a monthly basis with a fee. This means setting up extensive programs on your website.
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