In your entrepreneurial journey you’ve probably been told that subscription customers are the best ones to have. How much truth is in that? Let’s take a look.
Every business out there wants repeat customers. A sign of a good customer is one that comes back time and time again. Buying the same product or expanding and buying a variety of products from you and your business. They can also help your business by talking to others and sharing the word that you exist. Services businesses such as IT support work in the same way that other businesses like supermarkets work. They all have several offerings and its part of business to try and convince people to buy multiple offerings.
So where do subscriptions come into it?
A subscription is something a business offers, in exchange for a service the customer pays a daily, weekly, monthly or even yearly fee. Amazon Prime is the perfect example of a subscription service. In exchange for your monthly or yearly fee you get next day delivery on millions of items, music streaming and Prime Video.
A lot of service-based business offer subscriptions. For example, my IT company offers a monthly support contract. This means I can keep a better eye on the business cash flow as I know what is coming in each month and what goes out each month. Boiler and heating engineers are another example of service-based businesses that offer subscriptions. For a fixed monthly fee, they will repair and maintain your boiler and heating service. But these days even nonservice-based business are offering subscriptions. The likes of supermarkets are now offering monthly payments in exchange for free delivery slots and discounts across their products.
Newspaper, magazines and the likes of also offer subscription services. As we all know paid for content is much better than free content. We live in a subscription-based society, our TV shows and film services are all subscription based, as well as our cars and food deliveries. Its possible to have a subscription part to almost any business. With a little bit of thought a subscription could be the end to all your cash flow worries.
As we know any income for your business is good. However not having regular cash coming in can make it hard for you to pay your bills and keep on top of things. If you pick up a large order from somewhere that’s great, it’s a nice cash injection but if these are few and far between it could cause you problems. That’s why subscriptions are a good way forward for many businesses. Sometimes a subscription can be a bad thing. We all know about the 80/20 rule. Sometimes you’ll get 80% of your work from one of your smallest clients, which can turn the tables on if that contract is profitable or not. It is important to look out for this once your business starts to build. The book the 4 hour work week goes into this in more detail.
At the end of the day
Subscriptions are here to stay and for many good reasons. Another being they make customers become sticky. Which means they’ll keep coming back to you again and again. It also makes it more uncomfortable for them to leave your services as they’ll need to find someone new. The best type of subscriptions to offer are those that are scalable. Meaning your costs, profits and turnover can all go up and down at the same rate.
About the author
Christopher has been in the IT support game for many years and wishes to share some of his business experiences, both good and bad, to help you start a successful business. He is available on all social media including Facebook, LinkedIn and Instagram. Feel free to reach out to him if you have any questions on subscriptions or are looking for support with your business.