Q
Evaluate Weigh the pros and cons of technologies, products and projects you are considering.

Does a subscription model deepen customer relationships?

Subscription models can enable companies to sell more to a customer over time, developing a relationship that can lead to consistent, dependable revenue.

There are some benefits [for companies with a subscription model]. Let's face it: It takes a lot of time, effort...

and resources to bring on a new customer. You've got to go through the marketing phase, the lead acquisition phase, then you need to qualify that lead, going through the full-blown sales cycle and then, hopefully, at the end of all that, you're able to bring that customer on board.

To go through that process and only have those folks buy once or twice and then fall off, that makes it really difficult [to justify the money spent] and it keeps you in a constant [loop] of looking for customers. Maybe you've spent more time and effort in that phase than you really wanted to.

With the subscription model, there's a lot of effort that has to be made before you can bring on a customer and keep them, but you're set up to be interacting with the customer on a much more consistent, regular basis. I think that interaction helps you to stay connected over a longer amount of time and that typically means you're selling more to the customer. If you're building the right kind of relationship, over time you'll not only have them as a loyal customer who sticks around longer but even as an advocate who will tell other people to buy from you as well. [With subscription models], you have more of an opportunity to stay connected and to hold their attention.

Building a relationship

With subscription models, there's a better likelihood of having consistent revenue. The subscription model is really focused on consistent delivery of value [to the customer] and you have more of an opportunity to stay connected with customers, which is in the best interest of a company going forward.

It's a transition away from transaction-based relationships where [a company] would produce a product, sell the product and then not talk to the customer again until it's time to meet your sales quota. The subscription model is more relationship-driven and it's value-driven too, because you always have to be showing value to the customer. In return, you have a chance to build a more solid relationship than if you just talked to [the customer] once a quarter.

Next Steps

Why do subscription models appeal to modern customers?

This was last published in December 2014

Dig Deeper on Customer loyalty and retention

PRO+

Content

Find more PRO+ content and other member only offers, here.

Have a question for an expert?

Please add a title for your question

Get answers from a TechTarget expert on whatever's puzzling you.

You will be able to add details on the next page.

Join the conversation

2 comments

Send me notifications when other members comment.

By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Please create a username to comment.

How many subscription services do you use? How has your relationship with the company changed over time?
Cancel
I use several subscription services, some for personal use (music, TV) and some for business (research and data analysis tools). As a customer, inertia keeps me in the relationship when I might otherwise have moved on to another service. But having that ongoing relationship has helped when handling issues or getting new features (companies will listen to their loyal customers). 
Cancel

-ADS BY GOOGLE

SearchBusinessAnalytics

SearchDataManagement

SearchSAP

SearchOracle

SearchAWS

SearchContentManagement

SearchSalesforce

Close