What is the subscription economy?

The digital age has completely transformed the way in which we live our lives and consume products and services. 

It wasn’t long ago that to watch a movie you had to go to Blockbuster, now we stream films anywhere, anytime. To drive a car you had to actually buy one, now you can hire almost any car you want on an hourly basis. 

This is thanks in part to the rise of the subscription economy. Music, food, games – the list of products and services that have been revolutionised through subscription services touch every industry.

Consumers don’t want to spend large amounts of money for services upfront. Instead preferring to pay by the hour or day, rather than committing to the complete cost. This subscription business model has brought about amazing opportunities for businesses and also consumers.

From a small business perspective, the subscription economy gives them the opportunity to have more consistent ongoing interactions with customers. Instead of a once-off sale, they have multiple touchpoints in which to upsell, build brand loyalty and establish strong relationships with the customer. 

Customers often choose brands based on the customer experience and service they receive, so by having multiple customer touch-points, businesses have ample opportunity to optimise this experience across different devices.

This shift in consumer purchasing habits isn’t just for big companies such as Netflix and Amazon. Small businesses similarly need to adapt and change the way they offer products and services to customers. 

Across all industries, small businesses will need to be better at how they manage a multi-channel relationship with their customers. They need to focus on the customer as opposed to the product they’re selling. It’s also beneficial to small businesses from a payments perspective, seeing as most subscription-based services are direct debit, it minimises the number of late payments.

Brands need to start thinking about customer experience as “subscription experience”. A more fluid relationship that is long-lasting, two-way, and always has the customer at the center of everything.

Businesses who haven’t embraced the subscription economy yet need to get their act together. Customers are doing the talking with their wallets and more actively seeking out subscription-based services. It’s going to impact businesses of all sizes across different industries and isn’t going away anytime soon.