TL;DR
- Embrace the subscription model for its ability to generate consistent revenue and simplify inventory management for your SaaS business.
- Subscription models prioritize customer retention and long-term business success.
- Subscription SaaS provides flexibility for businesses to adjust IT resources according to growth or decline.
- Discover the nine proven ways to drive sales, from understanding customer needs to creating effective pricing and billing cycles.
- Capitalize on free trials, content marketing, and diverse subscription options to cater to different customer segments.
- Enhance customer acquisition and satisfaction through referral programs and by offering additional product options.
- Invest in a platform like Togai to streamline subscription management and gain valuable insights for your subscription service.
- Investing in Togai aids in nurturing sustainable customer relationships and revenue growth.
Have you noticed that the way we purchase products is changing? It's not just the products that are evolving, but also the business models behind them. As we embrace new technologies and shifting consumer preferences, the way we buy goods and services is transforming before our eyes.
Sellers and customers are focussed on separate needs: Sellers want reliable recurring revenue in an extremely competitive SaaS landscape. Buyers want more convenient ways to make purchases and transactions.
The only solution that satisfies everyone is a subscription business model.
What’s the Deal With Subscription-Based Business Models?
The subscription-based model is indeed very popular. In fact, Salesforce predicts that most new software companies will adopt this business model in the near future. Streaming services like Netflix and Amazon Prime have already popularized the model and proved its worth.
What is the subscription-based model all about?
In a subscription-based model, customers pay the same amount every month to use your products or services. Currently, many software and online purchases are moving to a subscription-based model. This allows customers to put their purchases on autopilot and have continuous access to SaaS products.
How does a subscription-based model benefit SaaS organizations?
Generally, subscription models work well for many businesses. However, for the SaaS business sector, the benefits are manifold:
Customer retention
A subscription business model prioritizes customer retention over one-time sales.
The longer a customer subscribes to a service, the more value they receive, increasing the likelihood of customer retention and ensuring long-term business success.
Recurring revenue
The model generates consistent monthly revenue and a predictable cash flow. When customers buy subscription-based products or services, they commit to making purchases for certain months or years, thus making revenue easily predictable and sustainable.
Quick response to opportunities
The subscription model allows organizations to act quickly take advantage of new opportunities, and respond to unexpected situations. For SaaS businesses, the model enables novel approaches, new service implementation, and multiple vendors to find the optimal solutions for their needs.
Inventory management
Selling ecommerce and retail subscriptions has two benefits: a predictable revenue stream and better inventory management. When customers subscribe for extended periods, it's easier to understand how much product is needed to fulfill orders.
Cost-effectiveness & transparency
In subscription models, the cost is divided into smaller, more manageable parts, thus simplifying the annual budgeting and taxation processes. This recurring revenue and easy itemization enables revenue prediction, cost transparency, and possibilities for business expansion.
Easier scalability
When companies need to adjust their IT resources to match their business growth or decline, Subscription SaaS provides the necessary flexibility. This is because subscription agreements can be easily modified according to organizations' needs.
Now that we’ve dealt with the benefits, we must decode the strategies to sell subscription services and products.
Also Read: Unlocking Success: Subscription-Based Business Model Examples
How to Sell Subscriptions: 9 Proven Ways to Drive Sales & Revenue
1. Understand your customers
Understanding your customer's requirements and purchasing patterns is the fundamental selling strategy of this model because subscriptions are established on recurring customer relationships. Implementing this strategy is easier said than done. If you are new to this model you can use customer data and the industry’s buyer persona to connect with your existing customer base and potential targets.
2. Study the market
Keeping a close watch on the market conditions gives you more insight into how other businesses handle the subscription model. This information will benefit your sales team by driving your product sales with more focus and clarity.
3. Create solid pricing structures
Pricing is the lifeline of subscription models. By demonstrating the value of the subscription to customers, you can encourage them to continue using your product, thereby retaining the existing customer base for a considerable period.
To create a robust pricing strategy, you can:
- Set clear and simple pricing for your customers. This aspect is important because many SaaS subscriptions are self-service purchases.
- Base your pricing tiers on how much your customers are willing to pay.
- Create easy communication modes for B2B companies to contact you about customization.
- Create daily, weekly, monthly, annual, and quarterly billing cycles.
- Consider offering recurring subscription options in addition to one-time purchases to provide customers with more purchasing choices.
4. Be generous with free trials
Customers love free trials, not because they come free of cost but because they are an opportunity to understand the product and its benefits. It is also an incredible way to convert prospective users into long-term customers by bringing them into the paid version.
5. Boost your content marketing
Content marketing creates brand awareness and entices a new fold of customers to your website, leading to more software subscriptions. Your content should also be informative and educate customers about the SaaS product's uses, benefits, and workings. If not, this strategy can fizzle out quickly, and you may lose potential customers.
6. Offer multiple subscription plans
Customers prefer having multiple options rather than being restricted to one single offer. This preference benefits businesses since it expands the possibilities of catering to small, medium, and big-budget customers.
7. Create referral programs
Referral programs allow customers to recommend your products to their friends or family network and expand your customer base. Creating referral programs is an effort that pays off handsomely because referred leads are likely to convert faster than those acquired through other channels.
8. Upsell & cross-sell
It is important to track customers who upgrade or switch their subscription packages. Instead of bringing in new customers, you can target this existing customer base by upselling and cross-selling because it is what they prefer. This approach has multiple benefits. It lets you:
- Build on initial contracts
- Increase your revenue
- Increase customer satisfaction with additional options
9. Evaluate everything
It is important to measure how your pricing strategy impacts your customer churn rate and sign-ups. You can narrow your focus to two key metrics- Churn rate and customer growth. This focused evaluation will give you insights into the number of customers embracing your subscription service and those leaving it.
Let’s Wrap Up
Our strategies mentioned above and guidelines should help you set the stage for a glorious subscription sale in the upcoming months. There’s one more thing you can do to boost your efforts- Invest in Togai, the best Usage-based Metering and Billing Software.
Our monetization platform streamlines the entire subscription management process from acquisition to retention. Togai’s technology aids your subscription-selling strategies with comprehensive analytical insights to nurture sustainable customer relationships and revenue growth.
Schedule a free demo and learn more about how Togai can enhance your subscription-based business models.
