December 8, 2020 | Authored by: Vindicia Team Blogs
Characteristics of a next-gen subscription service
The subscription landscape is increasingly saturated and highly competitive across all verticals, whether monthly beauty boxes delivered to the consumer's door or subscriptions for auto insurance. At the same time, consumers' preferences are heightening and users are becoming more attuned to subscription fatigue.
What does it all mean for subscription businesses? More than ever, they need to differentiate themselves with a next-gen subscription service that can accelerate growth and forge long-lasting customer relationships.
But what exactly does a next-gen service look like? Previously, offering (and reconciling) subscriptions within the Apple and Google app stores was the must-have. But what else is there? This blog will walk through three defining characteristics of such services, some examples, and what your business can do to develop an innovative service that embodies a next-gen vision.
Characteristic #1: Bundled offerings
The recurring revenue bundle is far and away one of the most powerful trends in the subscription industry today. While it's been a timeless strategy, subscription-based businesses have latched onto the power that bundling has in both driving brand affinity, customer growth, and retention.
At a high level, bundled subscriptions can help solve many challenges for consumers by delivering value, access, and convenience. In general, we see three types of bundles:
- Organic bundles: These are bundled products and services offered by a single company. Organic bundles are typified by the tech giants (like the six-in-one Apple One bundle) that have the scale and product diversity to create their own bundles of core services.
- Aggregator bundles: Aggregators are businesses that offer third-party subscriptions to their incumbent customer bases like telecom or bank would do (consider the entertainment subscription partner offers that Verizon extends to its users).
- Partnership bundle: This refers to two or more subscription businesses that link up to form a strategic partnership, like with Spotify and Hulu. Oftentimes, complimentary services join forces to deliver new benefits, value, or convenience to the existing user base.
One upside to bundling is that, with the subscription industry flourishing, there's more opportunity than ever to find complimentary services across the subscription ecosystem that can enhance your own offering and allow your business to stand out from the crowd.
Bottom line, bundled subscriptions can help you:
- Retain customers by offering additional value
- Build brand awareness through partners' customers
- Expand your audience or reach a targeted one
- Unlock new revenue streams without building new products
Of course, each business will need to assess whether bundling is right for them. Some potential drawbacks include the limited control of the end-to-end experience and pricing that impacts market perception. Weighing all these factors will help your business make the best decision.
Characteristic #2: Superior user experience
Expectations for the user experience are sky-high and growing even still, a trend largely driven by the seamless experience that big tech companies offer. In any case, superior user experience is a hallmark of next-gen services and something you must prioritize.
Engineering an engaging end-to-end experience takes effort, but ultimately is a major advantage to your business. The more you can map out high-quality user journeys, the more able you are to convert, engage and retain customers with a frictionless, satisfying, and rewarding experience. A superior user experience requires resources and attention to points like consistent cross-device functionality, log-ins for multiple profiles, and granular controls. Some examples of subscriptions whose growth can be attributed to creating seamless experiences for users include:
Need a real-world example?
- Tynker — a coding education platform designed for young learners — has profiles for each kid and parent so families can monitor progress together, while also allowing teachers and students to collaborate in the same way.
- Amazon Prime video now allows profiles for everyone in the household under a single account. While the company (and others like it) is following Netflix, such features allow for more granular data collecting to better personalize the experience to the individual.
- Peloton, the exercise equipment company, can support the addition of new riders and friends to a Peloton account, which underscores and reinforces in practice the company's commitment to user engagement. The ability for a rider to create a personal account and connect with other riders has helped Peloton build a vast community of exercise enthusiasts, too.
Characteristic #3: Backend subscription intelligence
A next-gen service ultimately needs to be powered by subscription-specific technology that can deliver your business with tools for data insights and enhanced subscription management. In short, your platform must have robust subscription intelligence reporting capabilities so you can have a 360-view of your operations and offerings.
With the right subscription platform, you can easily mine insights from user data, as well as take advantage of analytical tools that let you look beyond the "what" and toward the "why?"
The right platform will provide features that allow you to manage, at the least:
- Churn reduction
- Pricing optimization
- Revenue source reconciliation (in-app, web, etc)
- Flexible GTM strategies
- Increased payment success
- Recurring transactions
Vindicia's MarketONE is a platform designed by subscription experts, as well as one powerful enough to help you launch a next-gen service that breeds subscription success across growth and retention.
Contact us today for more information about MarketONE and how it can help your business.
Twelve essential steps to building subscription bundling successDownload