From pet toys and meal kits to music and movies – it seems that there is a subscription-based service for just about everything. And it’s easy to see why so many companies have chosen this path.
The subscription model aligns with the ever-growing demand for convenience. Customers aren’t hassled with the purchase decision – whatever it is they need (or want) just shows up. And because the price is set at a fixed rate, the customer always knows what she is getting and how that fits in to her budget.
Subscription businesses also mean recurring sales, so businesses are better able to predict their revenue. This helps businesses manage resources and inventory as well as accommodate their expected growth more efficiently. And as an added bonus, guaranteed revenue is a particularly attractive trait when it comes to potential investors.
Aside from the financial and logistical benefits of a subscription-based business model, there is the intangible value it offers both the customer and the business. After all, it’s not just about getting a product or service to the customer, it’s about developing a relationship with the customer. And if the business is not holding up its part of the bargain, the customer will cut ties. So the business must constantly be pushing to create a better customer experience and to bring more value to the table than anyone else. And this, in turn, creates a sense of trust and security for the customer – turning what could have otherwise been a one-and-done exchange into a real partnership.
Yet, with so many subscription based services vying for a customer’s attention, how does a business stand out? And once a business has that relationship with the customer, how do they maintain it? And is a subscription based model really the right move for every business?
To help answer these questions, we recently sat down with Andy Levitt, CEO and Founder of Purple Carrot – the plant-based meal kit business that was recently in the news for its “Peak Performance” partnership with Tom Brady. We talked about why the subscription model works well for them, how they create an exceptional customer experience, and what’s in store for the future of the company.
Why a subscription model instead of a a pay-as-you-go model? Is it better for business, better for the customer?
