The Psychology Behind Subscription Services


Check the bank account of every American citizen, and you are bound to find one expense that they all have in common: a subscription service.


Subscription services have become the norm for American consumers in a variety of areas. According to an online survey, 75 percent of Americans have at least one online subscription.


With the rising popularity of subscription services, businesses are beginning to look into subscription commerce.


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Defining Subscription Commerce

Subscription commerce is the method of selling products or services to customers consistently. Even though it is a new business practice, subscription commerce is becoming increasingly popular.


An online survey revealed that over half of its participants are members of a subscription box service.



Appealing to Customers


There are several reasons why subscription commerce is so appealing to customers. The first reason is one of the most important reasons for customers: convenience. Subscription commerce helps to reduce the cognitive load for customers.


From a psychological standpoint, two cognitive systems help customers make their decisions.


The first system is intuitive and reflexive, and the second system is regulated and conscious. The second system is what customers count on for organizing a plan and is usually used when shopping.


Although it may seem ridiculous, a simple moment of thought before adding an item to a cart can add up over time. Subscription commerce helps customers reduce cognitive time in shopping and ensure that their items will arrive on their doorstep in a designated amount of time.





Adding Anticipation for Customers


Subscription commerce regularly allows customers to experience a feeling of anticipation.


Customers get excited reading a notification indicating that their package is out for delivery. It is thrilling to expect a delivery, whether a refill of new groceries or new clothes to try.


Some people view subscription commerce as a gift, whether it’s from themselves or not.


Subscription commerce helps to heighten the gift-giving experience for customers by offering several creative unboxing experiences through thoughtful box designs or fun wrapping.



Providing Customers with Control


Subscription commerce allows customers to have complete control over their interactions with products. Customers may be disappointed to discover that their favorite items are out of stock when going to the store.


Subscription commerce allows customers to manage the number of products they order and when those products can be delivered.


It gives customers a sense of security to know that subscription commerce will meet their needs. Customers are also empowered through the flexibility of subscription commerce.


It is also empowering for customers to see that they can make adjustments to their orders at any time.



Creating a Sense of Community


Businesses that employ subscription commerce provide a sense of community around their subscription services for their customers. Companies can build a sense of community through several features such as rewards programs, events and webinars, and other relevant content.


Subscriptions are an excellent way for businesses to introduce customers into their brand community.


Businesses have several ways of engaging with their customers’ brands through regular deliveries and constant messaging. Subscription commerce allows customers to integrate their brand with different products in a human and connected manner.



Appealing to Businesses


Many businesses are beginning to turn to the subscription model — and with good reason.


One of the most appealing characteristics of subscription commerce for businesses is high customer retention. Subscription commerce makes it easier for companies to retain customers for longer periods.


Companies can gain lifetime value from customers who find joy in using the business’s product or service for several months or years.




Increasing Engagement


Subscription commerce provides businesses additional opportunities to engage with their customers. Before subscription commerce, companies were limited in their interactions with customers.


The traditional business model would only allow customers to interact with a business through comparison shopping or making a physical purchase in the store.


Companies can connect with their customers through frequent messaging and regular deliveries and encourage them to merge with their brands.



Leading to More Cash Flow


Subscription commerce puts businesses in a position to handle better cash flow management. Because of recurring billing, where subscriptions are paid monthly, companies can expect a predictable cash revenue coming in every month.


This allows business owners to focus on improving in other areas of the business. Smarter decisions can be reached, and additional financial plans can be devised.



Upselling More Product


Subscription commerce allows businesses to upsell more items to their customers. Companies can offer more premium subscription services to their customers.


Because the firm has established a relationship and trust with the customer, suggesting or cross-selling an additional item is easier. Knowing the customer’s preferences as well helps businesses to offer additional products to upsell.



Engaging in Subscription Commerce


For businesses interested in incorporating the subscription commerce model, there are several practices that they want to keep in mind. The first practice involves offering unique packages to their customers.


The popularity of subscription services can make it easy to become forgettable to customers who are probably subscribed to several products or services with different companies. Businesses want to ensure that the product or service associated with their subscription commerce is unique and beneficial to their customers.


Another practice is to make use of the best internal tools that will help manage the subscription service.


Many subscription services require a digital commerce platform to market and distribute products and a software solution to handle recurring billing. In addition to these tools, businesses must be familiar with using business analytics to help owners and marketers learn more about their customers’ preferences.


Last but certainly not least, businesses must focus on maintaining relationships with their customers.


Subscription commerce is an excellent method that allows companies to establish long-term, meaningful relationships with their customers. Businesses should not take that chance for granted and do everything in their power to focus on providing an excellent experience for their customers.



Daniela McVicker

Jori Hamilton

Twitter: https://twitter.com/HamiltonJori

LinkedIn: https://www.linkedin.com/in/jori-hamilton/


Jori Hamilton is a freelance writer covering topics related to Technology, AI/Machine Learning, Cybersecurity, Politics, Business, and Marketing

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