Subscription services on the rise, success often dependent on customer service

Posted by Justin Hesser on June 21, 2012

With technology evolving and improving at an unprecedented rate, businesses must evolve with it, oftentimes changing to meet customers demands or to save off of improved technologies. One such change has been the adoption of the subscription business model by many small businesses. The use of a custom database software can help all companies interested in becoming a subscription service make that change with efficiency.

According to BusinessWeek, more than 40 percent of media and digital-products companies worldwide will use subscription services for their fulfillment, billing and renewals by 2015. However, there are challenges that come with using a subscription model, including controlling customer churn, managing credit-card charge backs and delinquent payments and ensuring the security of customers’ financial data.

While these obstacles may appear daunting at first, the use of a custom database software can allow these media and digital-products companies to maintain accurate records of customer payment information as well as monitor access to guarantee the safety of sensitive financial information.

“In e-commerce, you typically see a 2 percent conversion rate for everyone who visits your site. We can afford to see a much lower conversion rate, as long as the person continues with us each month,” says Millie Tadewaldt, the managing director of Sandbox Industries, a Chicago-based incubator, to the source. “It doesn’t take very many sign-ups off a blog post to cover our cost.”

Despite its rising popularity and healthy numbers, many companies are still hesitant to adopt a subscription service model due to notorious customer complaints. According to BusinessWeek, the key is to make sure that it’s convenient to customers. Allowing customers to cancel orders last minute or rush deliveries may, at first, seem like a headache to companies, but using a custom database software that maintains and displays customer requests in an accurate and easily accessible manner makes providing these advantages much easier for businesses.