3 ways to overcome failure in your subscription model
Subscription pricing can be an effective way to establish a lasting relationship with customers (read here), but it is often misunderstood. Subscription sales models provide users with access to a product or service for a recurring fee over a defined period of time. For those who are providing teaching or coaching services, a subscription model that includes access perks is the most popular choice. These perks can range from discounted prices on services to the ability to book appointments with priority over non-subscribers.
When successful, this model can generate recurrent revenue and a large subscriber base. However, if it fails to meet customer needs, it can result in high churn rates and inconsistent profits. In this blog, I will discuss three key strategies that can help prevent your subscription model from failing.
1. Subscription tiers
Subscription tiers are an effective way to offer different pricing options for your product or service based on the benefits it provides. This allows customers to select a tier that meets their specific needs without paying for anything they don't require. However, creating these tiers requires careful consideration and planning.
Each tier must have well-defined limitations and perks that cater to different customer needs. This process demands more time and attention than many business owners might think, but it's crucial to get the tiers right to ensure customer satisfaction and loyalty. Consider offering a basic subscription tier that grants (un)limited group sessions at a reduced cost. On the other hand, for clients seeking a premium experience, consider a value-packed tier that includes private sessions, personalized feedback, and booking priority.
As a business owner, using promotional pricing strategies can help you to attract more customers to your business. Once you have acquired new customers, you can focus on converting them to become loyal subscribers, which in turn will generate recurring revenue for your business.
One effective promotional pricing strategy is known as “bundled” pricing. This pricing strategy involves offering multiple products or services together at a discounted price. This approach not only benefits your customers by saving them money, but it also benefits your business by generating additional revenue through new subscriptions and services. By offering bundled pricing, you can make your business more attractive to potential customers and encourage them to purchase more products and services from you.
Small gestures can go a long way in building customer loyalty. For instance, providing a complimentary coffee at the clubs restaurant or a free sleeve of golf balls can lead to a significant increase in business from one-third of customers. Research has shown that these simple yet thoughtful rewards can have a significant impact on customer satisfaction and retention.
Moreover, timing plays a crucial role in the effectiveness of these rewards. Businesses can set up their subscription services to send alerts to members when they reach specific milestones within predetermined time periods. You can think of giving a reward after having booked 10 appointments. This not only helps to keep customers engaged but also encourages them to continue patronizing the business.
In conclusion, subscription models can be a powerful revenue strategy when executed correctly. By implementing subscription tiers tailored to customer needs, leveraging promotional pricing, and offering thoughtful rewards, businesses can not only attract but retain loyal subscribers. These strategies, when carefully planned and executed, can help build a solid foundation for lasting customer relationships and consistent revenue streams. Remember, the key to subscription model success lies in understanding and meeting your customers' needs effectively.
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