Benefits of Subscription Models for Ecommerce

In the world of ecommerce, subscriptions have become an increasingly popular way for businesses to generate recurring revenue and build customer loyalty. A subscription service is a model in which a customer pays a recurring fee, usually monthly or annually, in exchange for ongoing access to products or services.
February 9, 2023

Let's explore the benefits of subscriptions for a business in ecommerce and how you can up a subscription service for your business.

Predictable Revenue

According to a study by McKinsey & Company, subscription-based businesses grow revenues five to eight times faster than traditional business models. The predictable revenue from subscriptions allows businesses to invest in growth and innovation, which can lead to long-term success.

Customer Retention

The Harvard Business Review reports that customer retention is more profitable than customer acquisition. Retaining customers is essential for building a sustainable business, and subscriptions help customer loyalty by providing a consistent and convenient experience.

Improved Customer Relationships:

A survey by Zuora found that 93% of subscribers feel that businesses should do more to reward their loyalty. Subscription services can help businesses establish a deeper and more personal relationship with their customers, which can improve customer satisfaction and loyalty.

Upsell and Cross-Sell Opportunities

The Accenture Global Consumer Pulse Survey found that 56% of consumers are more likely to shop with a retailer who recognizes them by name. Subscription services provide an opportunity for businesses to personalize their offerings and create a more comprehensive experience for their customers, leading to more upsell and cross-sell opportunities.

Cost Savings

According to a survey by McKinsey & Company, the cost of customer acquisition is five to 25 times more expensive than customer retention. By building a loyal customer base through subscriptions, businesses can save money on marketing and customer acquisition, as well as reduce costs associated with order processing and inventory management.

Here are some simple steps to follow when setting up a subscription service for your business:

1. Determine if your products and services would benefit from a subscription model. If you offer products or services that customers need to continuously access, a subscription model may be a good fit.

2. Set a goal for your subscription service. Do you want to attract high-value clients or increase customer retention? Choose a pricing structure that aligns with your goals.

3. Choose a subscription pricing strategy that aligns with the nature of your product and goals. Create subscription packages and levels that serve different segments of your customer base.

4. Make signing up for a subscription service easy for your customers. Include a call-to-action button on your website and pricing page, and make sure the language and pricing is clear for each subscription level.

Source: Hubspot

5. Create a seamless onboarding experience for new subscribers. This will look different depending on the type of product you offer.

subscription model example: hubspot onboarding
Source: Hubspot

6. Make the billing process simple and easy for your customers. Set up a payment gateway on your website or app to easily accept and process recurring payments.

By following these steps, you can build a successful subscription model that provides a steady stream of revenue and improves customer retention.

Examples of Subscription Business Models for our client Havana Coffee Works

Havana Coffee Works

Subscription boxes have become a very popular type of business model. Every month or every two weeks, customers receive a box filled with various products that are sometimes related to each other and sometimes not. The combined cost of these items typically outweighs the overall cost of the box.

Havana Coffee Works was born in 1989 as a dedicated coffee roasting business. The company now supplies coffee to more than 250 cafés in New Zealand. We redesigned their website using shopify including a subscription model.

Havana has a subscription model where you can get a kilogram of delicious coffee delivered straight to your door once a month. With their "Pay as you go" model, you only pay for what you receive each month, which means you don't have to worry about any upfront costs.

By subscribing to their service, you not only get fresh coffee, but you also get a great deal on both coffee and courier delivery. Plus, you don't have to go to the store every time you need more coffee.

Havana subscriptions come in a pack of four 250g foil bags, which are designed to keep the coffee beans fresh until your next delivery. This way, you can enjoy fresh coffee every time you make a cup.

If you're buying a subscription as a gift, you can enter the recipient's delivery address as the shipping address.

If you need help building a subscription model. Feel free to contact us by clicking the button below.

Let's build something good together

If you have a project in mind, we would be happy to have a chat about how we can make it happen.

Ben van Rooy

Strategy Director

Nick Brown

Marketing Director