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Customers and companies in the subscription economy era

Features and benefits of the subscription-based model.

From customers to subscribers. From the product economy to the confidence economy. This is the great change generated by the subscription economy for customers and companies.

The subscription economy, the subscription-based economic model, is based on the relationship. There are no products to buy, goods to ship or one-off transactions. At the heart of the subscription is the idea that customer happiness is not linked to ownership but to use.

How many subscription economy models are there?

Three models can be identified. They all focus on relationships but in a different way. The first is the subscription: the customer, business or person, buys a recurring service, paying a monthly fee. The best known examples are Netflix and Spotify.

The second is the service to be used, that is, the “pay per use”. Payments are made automatically when you use the service, as happens for Enjoy car sharing.

The third is instant purchases which provides for the payment of a sum of money to access services. The classic example is Amazon Prime: “set up fee” in exchange for free deliveries all year round, without having to pay every time.

What are the customer’s benefits?

Accessibility The subscription allows customers, especially digital and millennial natives, to take advantage of goods and services that would not be accessible with a purchase.

Customisation Suggestions based on preferences, tailored offers, unique services: the subscription allows customers to receive what they want, when they want it and how they want it.

Continuous improvement Buying an item also means dealing with planned obsolescence. A subscription service, on the other hand, offers services that improve over time.

And for businesses?

Predictable and recurring revenue This model allows businesses to have predictable and recurring revenue flows. It is a logic that, in the long term, also reduces costs.

Growth According to Zuora, businesses that have relied on subscriptions have earned up to 5 times more than their competitors.

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