Apple Music atau Spotify

Subscription Business Model is a Win

Subscription Business Model, yes, right now, there is a lot of business or startup that’s using a subscription business model. Last month 10 September 2019, Apple just launched its streaming services called Apple TV+ and new Apple Arcade. Both of them using the subscription model, with only $4.99 each month, you can enjoy many movies on Apple TV+ as much as you want, and play every game on Apple Arcade.

This article translated from Indonesian post of my previous article Model bisnis berlangganan itu Menguntungkan

As we know, in 2019, many startups are using the subscription business model, Spotify, Netflix, iFlix, Apple TV+. In this digital era, they supported by the ease of payment. Even in the US, there’s research that research about these things (America Relationship with Subscription Service by Monroe Partners), and they found the majority of American average spent $237.33 each month for paying subscribed services, that makes $1900 each year.

Subscription Business Model is the Future

bisnis berlangganan adalah kunci
Gambar dari Pexel oleh Lukas

Just recently, I’ve finished reading a book from Tien Tzuo about Subscription Business Model with the title Subscribed: Why the Subscription Model Will Be Your Company’s Future – and What to Do About It. Inside that book, he gave a few key topics explaining the movement of the economy of the subscription business model.

Changes into a subscription business model can be used successfully into any product or service when you focused inside the mindset of customer-focused, compared with a product-based mindset. Moreover, when you make changes in your business model into a subscription business model, you’ll get a significant transition in terms of profit, customer base, company culture, and business process in general.

Customer-Focused Mindset

subscription business model
Foto dari Pexel oleh Bruce Mars

When we were discussing a subscription, usually we think about a product that easily scalable like software, music, video, and another kind of digital asset. However, right now, there is substantial business based on a product like T-shirt, razor blade, and others. That using subscription business model on monthly bases. Even Porsche launch their subscription business model where you can ride a Porsche with many models anytime you want.

What About Product Based Mindset?

fokus pada produk
Foto dari Pexel oleh Oleg Magni

So what’s commonly owned by all business models with a subscription model? They changed their focus to the customer. Moreover, when the company still focused on products, its aim is simple. Makes their product well-liked by many people, and send it to the distributor, and the distributor sold it to a regular customer. So when they want to make more money, they’ll make a marketing plan to reduce the price or to make a new version of their product, and it happens continuously. 

Moreover, this business model can’t be applied to the subscription business model because this business model must be changed into a big scale easily and focused on the customer while this old model doesn’t have any direct connection with the customer except their field salesman. You only have a little information gathered by the company from their retailer or distributor inside the sale process, even their telemarketer and internet sales-focused on gathering as much as possible and as fast as possible, a one-time transaction. Also, if you want to scale your product up to reach millions of users, you have to hire a lot of sales representatives that cost you so much.

How About the Mindset of Customer-focused on Subscription Business Model?

fokus pada pelanggan di model bisnis berlangganan
Foto dari Pexel oleh Artem Beliaikin

The importance of focus on the customer is one of the keys to the success of the subscription economy. A business must have consistency in giving value and growing innovation towards the consumers, so they are willing to pay from month to month. 

Moreover, to reach this, all including distribution, experience, innovation, and other services must be run in one center that oriented to the customer. Changes in the business side are, you have a digital representative towards your business and keeps giving positive experience through feedback or statistic through direct interaction with the customer.

With that, you can keep making your business product experience better for your customers and keep learning every way to keep your loyal customer to keep subscribed to your product or service. In the subscription business model, the customer is the center attention of a business, compared with a product-oriented business that only focused their attention on marketing tactics to drag your attention for one purchase.

How About the Point of View of the Consumer

perspektif konsumen
Foto dari Pexel oleh Adil Gokkaya

On this point, now you understand the different perspectives from the subscription business model, where this business model has many benefits for the customer.

  • Efficient purchase: One website, with a friendly interface, just sign-up and you can immediately access their products or service, you can ask directly about their product or service since they’re the one who made it.
  • Improvement and progress continuously: Because businesses with subscription models try to make their customers as a loyal customer, they’re going to add a new feature, fixes, and add-on value towards their product without any charge.
  • Minimalize loss: If you don’t like their product or service, you can just quit! The majority of the subscription business model doesn’t have any contract. For example, if you want to try Spotify, you’ll need to register, if you don’t like it, you can unsubscribe.

There is so much reason why we should like subscription business, and most of it has their area of expertise. For example, Netflix, we all love with its low monthly price, and we can get new content every day. Netflix can make a personal playlist that contains their recommended movie based on our specific taste. Unlike cable tv, we can unsubscribe anytime without paying any penalty or sending the decoder back.

A Win-Win Solution

win-win solution
Foto dari Pexel oleh Tirachard Kuntanom

I believe a business model with a subscription system help customer and producer in the end. Back then, a time where how much sales you need to increase the revenue and profit, now totally changed into a different business model. Now it becomes a business model where businesses competitively finding a way to get customer attention by adding new features or functionality to solve everyday needs, wants, and problems.

In this new business model, there is a strong focus on efficiency, scalability, and customer satisfaction overall. In this model, a company or business must provide high-quality service that helps the company transparency. This transparency helps increase customer satisfaction that also means higher customer retention, where this retention is one of the significant parts of the financial of subscription model business.

Lebih banyak pilihan model bisnis ini = lebih transparan dan efisien = lebih banyak pelanggan yang puas dengan tingkat retensi tinggi = win – win untuk pelanggan dan pelaku usaha

More options of this business model = more transparent and efficient = more customer satisfaction with high retention = win-win between the customer and businesses.

Do you ever use a product or service with a subscription business model?

Do you ever use a product or service with this business model? If so, what are they? How about your overall satisfaction or your response towards product or service with the subscription model business?

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