Many people think of eCommerce as a business model that directly replaces the need for having a physical store, or just complements and expands your business reach.
However, since its inception, eCommerce has demonstrated to be an incredibly flexible term. In fact, the online environment has spurred the creation of innovative ways to offer services and do business. People and companies have given free rein to their imagination, coming up with new and exciting ways to buy, sell, or trade their products and services through cleverly designed websites and revenue models as the industry has virtually no way of restricting the way people generate their revenue.
One of the most innovative revenue models today is the subscription model, and platforms like Magento today offer incredible features that make it easy for businesses to create a store around this concept.
If you haven’t been living under a rock for the last decade or so, you must have heard of Netflix or YouTube Premium. The way they make money is by charging their visitors a flat monthly fee and then letting them use their services and products.
You would agree that, given the nature of their products and services, a subscription model makes a lot of sense. Other industries that obviously benefit from this model are fitness, education, entertainment, and news.
But the incredible thing about the subscription or recurring revenue model has been applied to an incredibly wide variety of products and services with amazing success.
Today, there are businesses dedicated to industries that always depended on retail sales and new customers for survival, like personal care, pet care, food, and even car washes.
But How Do Recurring Revenue Models Work?
I remember that back in the 90s it was common knowledge that big companies would spend more money acquiring new customers than retaining old ones, and that represented the bulk of their marketing investment.
Recurring revenue models put this idea on its head giving preponderance to customer retention, turning visits into recurring sales.
When a product or service is offered to a customer with a defined frequency, the revenue stream will be continuous for as long as the subscription lasts.
Establishing proper retention systems is critical to the success of subscription models, since the more you retain your current customers, the more likely they are to stay subscribed and buy from you again.
In general, there are three types of recurring revenue models today:
Here, providers offer a variety of products that may or may not be found elsewhere. The twist is that customers can get a curated collection especially put together following a theme or set of preferences.
One of the best ways to keep customers happy is to offer surprise products to try every month. That way you keep them curious and engaged, and they feel they don´t have to actively research for new products. This system offers a few risks as some customers might not like the chosen products, so you have to implement an airtight feedback system. The risk can be lowered by letting customers select the products they want to receive in advance.
Here, the real product is convenience. Many of the products we buy are regular purchases. These might be cleaning products, batteries, pet food, or even our favorite coffee blend. People usually need a monthly supply of these products so this model works wonders for those who carry products of this nature.
Access To Exclusive Perks
This is a model that works great in tandem with more traditional revenue systems. Customers can continue to buy their favorite products or can get a membership and have access to exclusive perks. These work like your regular loyalty program but leverages the power of recurring revenue.
I find that Magento allows stores to seamlessly switch to the recurring revenue system. However, if you want to boost your subscriptions and make sure your online store is set for maximum customer retention and revenue, you will need the help of an experienced Magento SEO company like Genius eCommerce. They offer incredible eCommerce SEO services and will guide you through the process of creating a successful marketing campaign in no time.