Marketing

The Power of Membership – Why So Many Businesses Are Creating Subscription-Based Shopping For Their Customers

Red Maple

The expression “there’s power in numbers*” has never been truer. Customers are willingly subscribing to pay for services and products weekly, monthly or annually instead of paying for something once. The number of monthly visitors to subscription business sites has grown 800% since 2017. 

The average consumer has at least four subscriptions today and spends an average of $273 dollars a month, which is $36 more than in 2018, according to a new poll. Many Americans are signed up for more than 10 services, according to the Washington Post.

Signing up is easy, rewarding, and so convenient, most people lose track of what they’re spending on subscriptions. That’s also true for me. I added up my family’s subscriptions from the gym to movies to Word software and we pay more than $800 a month or some $10,000 a year in subscription services. 

Businesses love the services even more than consumers. The UBS financial services firm predicts this “subscription economy” will grow to $1.5 trillion by 2025, more than double than the $650 billion it’s worth now.

The Subscription Trade Association expects 75% of direct-to-consumer brands will offer subscriptions in just two years, while global e-commerce will account for 18% of the total market share. 

Studies show subscription services allow businesses to cut down on marketing costs, draw recurring revenue and get more business.  Companies with auto-pay plans report a 23% increase in the number of customers. That’s just one reason why they’re on the rise.

Another is the recurring revenue stream that allows businesses to maintain a steady flow of income and better manage product and service inventory. There is also the value of having loyal customers. 

A recent report says in financial services, just a 5% increase in customer retention produces more than a 25% increase in profit. Return customers buy more from businesses over time, refer other people and are more likely to stay even when prices go up. That also drives down marketing costs for businesses who don’t need to work so hard to find new customers.

At Red Maple, we’ve seen an increase in requests for accounts receivable automation where subscriptions can be billed automatically to the customer’s preferred credit card. Business owners want to know how they can include or increase auto-pay services for their customers and suppliers. We have the software to make that happen.  

We offer Advanced Trade and Pricing with subscription billing that provides companies a means of invoicing customers on a regularly scheduled basis. Each billing line in a contract may have a different schedule and billing type to meet your requirements.  It includes contract-specific pricing, volume discounts, usage-based agreements and a lot more. 

When you pair Advanced Trade and Pricing with our Advanced Credit Cards, invoices can be paid automatically, which means you can instantly charge customers or clients every week, month or year depending on your needs. It’s simple and easy recurring billing.

Adding the feature to your business can really be worth it.  In just one quarter in 2017, Amazon made more than $1.4 billion in subscription-services revenue. In the first three months of 2021, Peloton’s subscription revenue grew 144% compared to last year.

Subscribers to Apple’s services for fitness, games, music and podcasts increased by 145 million in the past year. The CBD company Equilibria told Forbes its subscriptions shot up 100% in March of 2020. Nearly every industry you can think of has – or is trying to create – memberships: wine sellers, gyms, hotels, movies, food, car washes, home repair and restaurants.  

Subscriptions soared in popularity during the pandemic when people were afraid to run out of basic goods like food, toilet paper and other staples. The most popular subscriptions at the time were HelloFresh (21%), BarkBox (20%), Blue Apron (19%) and Dollar Shave Club (18%), according to Forbes.

Subscriptions were already on the rise before COVID-19, rising 17% annually for the past five years. Consumers say they’ll spend more on memberships in the future. According to NCR.com, 50% of online consumers already use subscription services. Also:

  • Among consumers 18 to 24 years old, the group with the most active subscriptions at around 2.5 each, 38% plan to increase their active subscriptions this year.
  • Also, 27% of consumers globally plan on spending more on subscriptions in 2021.

Experts forecast the subscriber model will stay strong even after the pandemic. Consumers say they like the special treatment and deals. It hits their reward centers by receiving products and services they want on-demand, and saves them time from not having to repeatedly go shopping. The author of “The Subscription Boom” told the Washington Post that people also like to have a relationship with a brand. 

 “A subscription is a recurring touch point with the customer. It’s that constant reminder that people have a relationship with the brand,” said Adam Levinter.

But are subscription services right for your business? If you’re an e-commerce retailer who wants to explore the idea, Red Maple can let you know which software will help you set up a program quickly, connect you with the right technology and help you create a seamless experience for shoppers.

Here are the best questions to answer before you get started:

  • What do your customers need?
  • How will you price the weekly, monthly or annual plans?
  • How will your plan be better than others out there?
  • How will you keep your customers?

Also, consider which type of membership you want to offer:

  • One with curated products in a monthly box like Blue Apron that sends meals for customers to cook themselves.
  • Mystery boxes like LootCrate, which pioneered the surprise craze.
  • Replenish consumable products at regular intervals like BarkBox does for pet treats and dog food or similar to The Bouqs, a flower service for people who want frequent floral deliveries. 
  • A program that offers consumers exclusive access to products and experiences like BRB. It has travelers pay monthly for three surprise vacations a year. One month before the departure date, BRB reveals the destination, hotel and flight details. 

While subscription services have increased, clothing retail fell 25% last year. But you can’t just jump into offering memberships without a business plan and a great product or service along with an exceptional customer experience. People are saying they’re willing to be loyal to businesses, but only if they get something worthwhile in return.

The expression “there’s power in numbers” comes from Dr. Martin Luther King, Jr., who in a 1964 speech said, “There is power in unity and there is power in numbers. As long as we keep moving like we are moving, the power structure of Birmingham will have to give in.” 

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