The Customer-Funded Business by BusinessNews Publishing

Author:BusinessNews Publishing
Language: fra
Format: epub
Publisher: FichesdeLecture.com
Published: 2015-03-15T00:00:00+00:00

When to apply the subscription model

When you offer something which is perishable (newspapers) or gets consumed predictably (disposable diapers.)

For items like software where people want to have access to the latest and greatest versions without any hassles.

The keys in applying subscription models

If you offer a try-before-you-buy option, you lower the buyer's risk. That also materially lowers your own cost of acquiring customers and provides a good metric of customer satisfaction.

You have to be careful to track the right metrics. The two key metrics are cost of acquiring a newcustomer and the customer's lifetime value. Measure both and then work to improve these progressively over time.

It's also vital to have a feel for the payback period – how quickly your investment in acquiring a new customer is earned back by their subscription revenue. Obviously, the shorter the better so watch if you're tracking in the right direction on this metric.

Getting the balance right between your freemium and premium offerings. Many subscription businesses offer a basic subscription for free in the hopes that users will pay to upgrade to a premium version. You have to make sure there is enough added value so subscribers feel the urge to upgrade.

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