Anyone with a good idea for an ecommerce business quickly realizes that the competitive marketplace is brutal. This is true even if you only consider one competitor: Amazon. How do you Amazon-proof your operation so you don’t get crushed under its hypercompetitive approach and unmatched brand and visibility?
One approach a growing number of e-ommerce
companies take to differentiate themselves is a subscription-based model, which generates monthly recurring revenue as a direct function of customer retention.
There are varying types of subscription e-commerce businesses, but those that sell curated goods on a monthly basis — think of subscription boxes that offer a monthly subscription of everything from clothing to beauty goods to snack items — have a leg up on differentiating themselves from the likes of Amazon. They have two distinct advantages:
The Ability to Optimize
Subscription businesses drive greater customer loyalty compared to companies with one-off transaction models. They have the ability to understand customer preferences and personalize services like no other business can.
And, as a recurring revenue business, it’s easy to measure loyalty based on the amount of revenue generated each month. This loyalty is critical for businesses to sustain and build out operations while remaining competitive.
There are three basic tactics businesses can take to optimize customer loyalty:
Loyalty and Recurring Revenue Cultivate Productivity
Loyalty and recurring revenue not only provide regular income, they help boost company productivity. Every member of the organization plays a direct role in optimizing the customer’s experience, and employees are more likely to work hard when they feel they help impact the company’s success.
Businesses that offer unique products on a subscription basis have a distinct ecommerce advantage. There is an opportunity to personalize the products you offer, the payment options you provide, the available fulfilment capabilities, and the post-purchase subscription experience. This personalization fills a niche for customers and allows you to differentiate from the mass approach followed by behemoths such as Amazon.