3 ingredients of a successful subscription business

Common mistakes include focusing too much on customer acquisition rather than retention.

by Paul Simpson

There are many benefits to subscription business models – improved cash flow, better margins, less volatile revenue streams – that underpin the growing success of firms from Netflix to Dollar Shave Club. But there’s a lot more to getting it right than just getting customers to sign up to a monthly direct debit, as Management Today explored in its latest pdf intelligence report, Inside The Subscription Economy.

Here’s an edited excerpt exploring some common errors firms make.

1. Listen to your customers

It’s essential to pay close attention to how subscribers behave and what products or services they order, so you can deduce where you need to improve to increase customer satisfaction. By taking the appropriate action – it could be upgrading the service itself, launching new products and services or adjusting pricing – businesses can drive up subscriber satisfaction that, in turn, should grow revenues, margins and profits. And they can keep doing this – indeed, they may well need to keep doing so if they are to avoid what some analysts already refer to as “subscription fatigue”.

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