Subscriptions are the success story of the 21st century, with research from Zuora showing that subscription businesses have grown five times faster than the S&P 500, and are adding customers at a rate of 15% per year, writes Liam Lucas, Professional Services Lead, Global Business Group, Facebook ANZ
The popularity of these businesses are getting attention with budding entrepreneurs in Australia, with 70 per cent of business owners now considering a move to subscriptions, and a growing number of these businesses are starting to appear and shake-up industries with great success.
It should be noted that subscription models aren’t new with services like mobile, internet and electricity being mainstays of consumer spending for decades. So why are we seeing a rise? Convenience, cost-saving and variety are the top three benefits for adopting a subscription service, and businesses like Netflix and Spotify do these exceptionally well, while also convincing consumers to pay for content in the internet age. We’ve seen that widespread access to the internet and mobile devices has challenged some industries, but it’s also presented opportunities for industries to re-invent themselves and provide better experiences for their customers.
Take for example healthcare. The pandemic has shown the benefits of tele-health services, which is still a growing industry in Australia. Startup Mosh Health identified the lack of service in the current healthcare system for men and saw an opportunity for digital healthcare services with an ongoing payment from patients. The digital health clinic for men, enables patients to book online telehealth consults for issues such as sexual health, skin and hair issues. Last year the business took off, and saw 2000 per cent growth across their sexual health, mental health and skincare programs. The success comes down to a business providing a convenient and personalised service to help patients consistently get the medical treatment they need, when they need it, which is something Australian men are willing to pay for, consistently.
Increase retention with excellent service and added value
While there are plenty of opportunities for subscription models, there are also plenty of challenges working against them, most importantly retention. In the US, 33 per cent of subscribers cancelled their service within three months, and 50 per cent cancelled within six months, which is indicative of how trends take shape in Australia. Retention is one of the key drivers for a thriving business, and we’ve noticed that the brands who succeed in this field are the ones that provide excellent customer experiences at every point of the journey and maintain a sense of connection with them.
Another great start-up that does this well is Good Pair Days, which has made wine subscriptions fresh and personal. They offer bespoke wine boxes on various instalments, based on customers’ flavour profile and have given more Australians the confidence to explore wines outside their comfort zone. They invested in cultivating their community, and used their Wine Lovers Facebook Group as an integral part of this strategy.
In the last year the Facebook Group grew more than 500 per cent and serves as a positive community group for their customers, and was a crucial component to grow their new wine categories by more than 800 per cent.
Helping your business diversify
While subscription models won’t benefit all businesses, it does present a different way to diversify revenue streams and operate. Internet access and digital tools have been key to help make these subscription models a viable operating model, but also a way to sustain ongoing retention. We’ve already seen start-ups shake up some of the most established industries like healthcare, but I know that the same thinking can be applied to even more sectors, and Australian businesses are only just getting started.
Wanna hear more about subscription models and other ways you can diversify your business? Check out Facebook’s free Fast Forward Discovery Commerce Summit on June 24.
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