A subscription business model is a recurring revenue model in which customers pay a fee periodically, such as monthly or yearly, in exchange for products and services. This model allows you to leverage your customer relationships to create a steady income stream.
In addition to the discounted nature of the product, replenishment subscriptions are also appealing to customers for their convenience, delivering commodity items on a recurring basis.
Setting up Subscriptions on Shopify
Enabling subscriptions on Shopify is very simple through their supported subscription apps, which merchants can enable, customize, and configure from the Shopify admin.
A subscription policy must be created once a subscription app is configured from the App Store. After this, choose the required products that need a subscription and any corresponding discounts. Also, it is possible to edit the information shown in Checkout, like the subscription frequency. In the Payment step, we can have a message to confirm the customer’s understanding of the payment frequency.
Some of the key features that can be used are:
1. Access and Membership Subscription
Subscribers pay to receive exclusive products, content, or discounts like Netflix or Amazon Prime.
2. Curated Subscriptions
Involves personalized products for different customer segments based on their purchase history/ profile.
3. Replenishment Subscription
Customers subscribe to receiving the same product regularly without the risk of running out of stock.
4. Subscription-based Pricing
Custom, dynamic, tiered, per-user, or gift-based pricing based on product bundle or customer segment.
5. Loyalty and Reward Points Subscription
Offer Loyalty points based on every purchase or customer segment, which can be redeemed by the user at a later point in time.
The subscription business model helps engage more with customers on a recurring basis due to the nature of the purchase. It also helps have a predictable revenue model since we know the subscription and payment frequency. It also provides an easy entry point to enable the customer to buy in small quantities, but over a long period of time, it turns out to be a large purchase.
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