Digital Transformation and the Importance of Switching to a Subscription Model
What does digital transformation have to do with subscription business models? More than you might think. Subscription models, in which customers pay a recurring fee or buy credits to use a service on an ongoing basis, aren’t just convenient for users; they also support the move to digital transformation by making it easier to shift technology to the cloud and maintain software that has continuous updates and patches. Here’s how businesses are using this model to become more agile and meet customer needs faster than ever before.
Learn more about how the shift toward digital transformation can benefit your business with these six benefits of switching to a subscription model.
What is digital transformation?
First and foremost, it’s what every company talks about these days. Whether you call it digital transformation, digital business, or wholesale digitalisation, most savvy business leaders know that technology is fundamentally changing their industry—and that they need to change with it. But for many businesses (especially those in B2B), just being digital isn’t enough: they need help building modern tech solutions that are tailored specifically for their business processes.
What is a subscription model?
A subscription model, also known as an ongoing revenue model, is one where a customer pays for access to content or services over time. Rather than having customers pay for each individual purchase or in large blocks, companies use a subscription-based model that allows customers to be billed on either an annual or semi-annual basis.
How switching to a subscription model impacts your business
There are many reasons why companies choose to switch from a traditional, transactional business model to a subscription-based model. First, switching to recurring revenue enables businesses that provide digital services or products, such as apps or software programs, additional flexibility. Additionally, when your customer base is constantly receiving new updates in your product offerings, they’re more likely to renew their service with you because they’re continually seeing value in what you offer.
How it impacts your customer's experience
Today’s digital consumers expect businesses to offer subscription services that fit their unique needs. By providing subscription services tailored to your audience, you increase brand loyalty, engage your customers on an ongoing basis, and create an endless revenue stream for your business. As companies look toward digital transformation as a means of growth, it’s important that businesses know how switching from one-time purchase models to subscriptions will enhance their customer experience in ways both large and small.
How switching can improve your marketing efforts
When you switch from an on-demand model to a subscription model, your users can receive continuous value from your product. It’s much easier for them to get started with, try out, and stick with your product because they don’t have to put in any additional effort.
In addition to providing excellent service, switching your subscription model gives you access to data about your customer base that can help improve your marketing efforts.
As customers regularly purchase from you, you’ll be able to compile information about what they like best and least about your product. This knowledge is crucial for tailoring future campaigns so that they speak directly to what customers need. By switching to a subscription business model, you can get even more direct in how you address concerns or introduce new features. After all, who better than an existing customer to be aware of issues with your product? They are obviously enthusiastic enough about it not only to pay every month but also tell their friends!
