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10 Tips for Running a Profitable Subscription-based Business

Oct 13, 2015 | By CIO

Experts in customer acquisition and retention and ecommerce share advice on how to create and sustain a successful recurring revenue business

The subscription based business model is far from new. But as ecommerce and mobile commerce have taken off, so has the recurring revenue model, with dozens of new subscription-based businesses – from software services and app providers to subscription box companies like Birchbox and BarkBox – popping up each year. However, while it is often easy to attract new customers to a subscription business, especially if you have good marketing, keeping them (for more than a few months) is another thing. And without recurring revenue, you can’t have a subscription based business model.

Subscription based business model

So what steps can (and should) businesses that plan to or currently use a subscription based business model take to decrease customer churn and ensure a steady revenue stream? Following are 10 tips from experts in customer acquisition and retention and executives from successful subscription-based businesses:

  • Do research to determine if the subscription model is right for your business
  • Test your concept by using Kickstarter or Indiegogo
  • Let people try before they buy
  • Offer discounts for longer-term subscriptions
  • Stay on top of your customers – and make renewing easy or automatic
  • Offer something outside the box
  • Don’t skimp on packaging
  • Use a fulfillment service
  • Provide excellent customer service
  • Use analytics to spot problems and decrease churn
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