1. Reliable, Recurring Revenue
Subscriptions’ biggest benefit is that they create a reliable, recurring revenue stream.
2. Increase Customer Lifetime Value (CLV)
Competition and acquisition cost in the eCommerce space is high. Subscriptions offset rising costs by extending CLV and improving ROI.
3. Improve Inventory Forecasting
With subscriptions, you know how many customers are going to buy which products in a given period. This helps better evaluate your inventory and limits the risk of overstocking.
4. Generate More Customer Insights
Subscriptions enable you to generate data about your customers and quickly act to meet their needs. This creates a virtuous cycle in which you can gather information, incrementally improve your buying experience, and then delight your customers.
5. More Interest From Investors
Investors love subscriptions. A predictable revenue model enables you to aggressively invest in growth. In fact, companies with recurring revenue models are valued 8X greater than companies with transaction-based business models.
Subscription-first businesses can also disrupt established industries by offering lower upfront costs because they expect to keep the customer for longer.