Following in the footsteps of companies like Netflix, a lot of companies are moving toward an online subscription model that locks customers into monthly rates.
A lot of companies have caught onto the notion that moving their business online, and revamping their business model based on monthly subscription rates, is a viable idea.
The major benefit: Once customers agree to the monthly rate (usually based on convenience and per-order savings), they rarely think about cancelling. This means the company can count on a certain amount of repeat business every month, provided there’s no major service issue.
A recent New York Times piece spotlighted PetFlow, a start-up pet food service that automatically delivers pet food to customers once every two weeks. In the space of one year, PetFlow went from 60 orders a week to 27,000 – mostly because of guaranteed, repeat orders filled every month. More than 60% of the company’s business is now based solely on monthly subscriptions.
The idea is far from revolutionary. It’s simply an upgrade of the traditional magazine and record-club memberships, incorporating digital tech to increase the options and convenience available to customers.
Another added benefit of a monthly subscription model: Companies can avoid inventory overflow by ordering in advance, based on pre-set subscriptions.
Believe it or not, the online subscription models translate to almost every industry, depending on the product, service, and frequency of use you’re dealing with.
