Growth of subscription business model in Malaysia. What are the benefits?
Theja P | July 22
Subscription-based businesses are becoming more popular than ever. Many businesses that formerly employed the pay-once are now transitioning to the subscription business model. This is due to the numerous benefits of invoicing clients on a recurrent basis. This enables the business to provide more engaging experiences to your clients across the whole buying and paying cycle, resulting in increased customer retention and, as a result, recurrent revenue growth.
According to a report from UBS, subscription business models could grow from a $650 billion market to a $1.5 trillion market between 2020 and 2025. Especially in Malaysia, this model has seen wide acceptance and recognition. Many local businesses, ranging from tiny to huge corporations, currently employ the subscription model. This model is being used in varied types of industries like entertainment, education, and e-commerce. Read on to know more about the subscription business model and its benefits.
What is Subscription Business Model?
A subscription business model is a recurring income strategy in which clients pay a weekly, monthly, or annual charge in exchange for products or services. Customers can renew their subscriptions after a specific amount of time. This concept allows the business to use its client relationships to generate a consistent source of cash.
The business can retain its customers for future sales and the customers have the convenience of automatically repurchasing the products or services they know they might need on a timely basis. Subscription business models basically focus on how money is generated such that a single client pays periodic payments for extended access to an item or service rather than a huge upfront one-time charge.
Benefits of Subscription Business Model
One of the key benefits of a subscription business model is increased revenue. The subscription model can have a positive impact on both the customer base and your company’s bottom line. When companies offer customers the option to subscribe, they are more likely to choose similar products or services because it gives them peace of mind knowing what they will get out of their investment.
It allows businesses to easily predict their income based on projected subscriptions rather than relying on one-time purchases as with most traditional models. Also when customers are offered great deals regularly through subscriptions and they accept them and this increases revenue significantly.
Predictable Cash Flow
A subscription business model has a predictable cash flow, which allows the businesses to plan for the future. They also have a predictable revenue, the number of customers, and the number of transactions. This means it can help predict income based on their previous performance and know how much money will be coming in each month.
Customers are also more likely to pay on time if they’ve signed up for a recurring payment plan. This means that the businesses won’t have to chase down debtors or hassle customers about late payments—and that can save your company a lot of money.
Better Relationship With Customers
When businesses have a subscription model, customers are more likely to stay loyal to them. This means they’re more likely to pay on time, which helps reduce the risk of late payments or non-payments. When you have a subscription model, customers are more likely to stay loyal to your business. Plus, if businesses offer additional perks like free shipping or priority service with subscriptions, customers will gladly accept those benefits as well.
When people feel like they’re receiving something valuable through a subscription service, they tend to be more willing to refer others in their network—which means more opportunities for growth for your business. Also, the company can be in regular contact with them, and they will get to know the business on different levels.
Easy to Scale
A subscription business model is the best option for businesses that need to scale their operations quickly. This allows them to grow their business without having to make any major purchases or investments. It makes it easy for a subscription business to grow its customer base over time as long as there is an underlying demand for the product or service being offered.
It enables businesses to start small with just one product or service, then scale up as needed without having to worry about those things again until your business reaches its next stage of growth.
Focus on Retention Rather Than Acquisition
When businesses focus on retention rather than acquisition, they can expect steady growth in their customer base and revenue. The existing customers will likely spend more money over time and even recommend the business to others.
This also helps in not spending huge amounts of money on acquiring new customers, which means that only a percentage of them will ever actually become paying members for the service or product.
Now, How Can Your Business Handle the Subscription Payments?
With the subscription model, there’s no need for upfront capital investment, which makes it ideal for startups. Plus, customers can pay for the products and services they need on a regular basis without worrying about paying off big bills. To make this happen your business needs a payment service provider to manage all the recurring payments. Collect and manage all your subscription payments safely and securely through RinngitPay.
Boost your subscription business model in Malaysia with our expert help! Get started to provide your customers with a seamless payment experience through RinngitPay.