[OBO Digest] The subscription economy is growing, and business owners need to take notice

A deep dive into the state of subscriptions and why you should seriously considering building your own

Online Business Owner • January 25, 2023

Welcome to the return of the Online Business Digest. 2023 is humming along, and we’ve already begun to roll out some of our big plans for the new year…

But more on that soon. Right now, it’s time to jump into the subscription economy, and what some are calling “Subscription 2.0”.

Subscription products and services are under threat as consumers and businesses alike hunt for opportunities to cut costs.

And it’s the ones that fail to deliver an incredible benefit that will be the first to go!

To the savvy business owner, this is great news, as the competition is thinning.

This leaves room for you to deliver an incredible subscription that delights and awes; that’s what we’re covering in today’s edition.

Let’s dive in, and don’t forget to share The Digest with your biz besties, clients, and friends so they too can be in the know about what’s happening in online business!

Enjoy,

The OnlineBusinessOwner.com Team

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How To Scale Your Business With Subscriptions

Subscriptions create more touch points by design, and each of those is another opportunity to deepen the connection between business and customer.

Companies can take advantage of this by adding perks and surprises along the way, delighting customers whenever possible—and of course, delivering on the core promises of the subscription.

Doing this repeatedly over time creates more loyalty and decreases churn, leading to greater lifetime value.

However, if your subscription service or product serves as a low ticket or front-end offer, every touch point is an opportunity to prime subscribers for an upsell to one of your higher ticket offers in the future!

If you set things up so that a decent chunk of subscribers join your other offers through your subscription, this saves you a ton of money and time on marketing and sales. 

… money you can then reinvest into your business or pay for more ads!

Plus, these leads will typically be some of the highest quality you’ll find, possibly even on par with referrals.

This way, you have a consistent baseline revenue to cover costs and keep the machine running. Done right, it means your high ticket revenue can be almost pure profit.

To make your life as simple as possible as a business owner, try following this paradigm:

1. Cover expenses and growth with subscriptions; don’t expect to profit here

2. Upsell a percentage of subscribers into more expensive programs to generate a profit

Using subscriptions as a tool for growth rather than profit will open up your business to opportunities you won’t find any other way! 

Here are a few ways to start:

1. Look for opportunities to surprise and delight your existing subscribers—the more they feel like they’re getting way more value than they’re paying for, the likelier they are to stick around.

2. Identify the best opportunities for upsells, both timing-wise (3 months in, etc.) and paired with adjacent features.

3. Add upsells in at these points, making sure not to interrupt the user experience unnecessarily—done right, your subscription will sell your high ticket options nearly on autopilot.

With this, you’ll be well on your way to higher retention and revenue in no time!

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Social Media News + Updates

👥 Meta continues investing heavily in VR — what’s in store for their headsets and the metaverse?
🚫 Congress plans to roll out more social media regulations in 2023
🔭 Social media will see some major updates in 2023; here are 32 Predictions from Social Media Today
👥 The EU fines Meta $414 million for ad personalization violations, forcing the tech giant to alter its approach in Europe
🐦 Twitter will roll out more emoji reactions beyond the like button, increasing response options

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News + Happenings

The Evolution Of The Subscription Model And What’s On The Horizon 

As the economy tightens further, consumers are keeping a keen eye on their expenses.

And when they see a recurring charge every month, they’re prone to ask:

“Do I really need this right now?”

If you offer a subscription product or service, one of your most important jobs right now is to ensure your clients and customers respond with a clear “YES”.

Consumer products like Netflix might seem the most vulnerable, with more than half of consumers wanting to pay less than $50/month for subscriptions...

But B2B businesses can’t afford to rest on their laurels as their subscriptions are often many times that amount.

There’s only one surefire way to ensure subscriptions like this hold their place in the new economy:

Delivering essential service customers don’t want to or ideally cannot live without!

In some cases, this might mean a complete redesign, but the solution can be as simple as doubling down on customer service and providing a personal touch that lets your customers know they’re taken care of.

Why this matters for online business…

Subscriptions are an incredible source of consistent revenue month over month.

If you already have one in place, it may take a hit as people cancel their subscriptions left and right (if yours hasn’t already)...

This is why now is the perfect time to ask: “How can I offer even more value and make this a truly essential part of my customers’ and clients’ lives?”

To discover more about the “Subscription 2.0” shift and help answer this question,

check out this deep dive article from Forbes that offer some amazing insights!

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10 Incredible Facts About the Future Of The Subscription Economy 

Did you know that over the next decade, the subscription economy as a whole will grow to $1.3 trillion?

This amounts to 6x growth in less than a decade!

The current economic climate may slow this down a bit, but while companies already feel the pressure to make some big updates, the future of subscriptions looks strong.

In fact, subscription businesses tend to grow 5-8x faster than those that don’t offer one (a striking fact that I’m sure has caught your attention).

Part of the reason is obvious: Recurring revenue creates consistency, and consistency fuels growth.

But simply leaving it at this would completely miss one of the most powerful aspects:

CONNECTION.

The happier your subscribers are, the more likely they are to stay and even buy your other offers in the future.

Say you have a $50 consumable product that customers need about once a month.

Would they be better off paying for it manually every single time? Or entering their card info once, having it charged automatically, and then showing up at their door with no additional hassle?

Streamlining the process helps everyone after all and even increases connecting — 64% of consumers say they feel more connected with companies that provide a direct subscription business.

Why this matters for online business...

The deeper the connection you build with your customers, the stronger your business becomes.

The data clearly shows that subscriptions are one of the most effective ways to build connection, retention, and future profitability without increasing acquisition costs.

But there’s so much more to subscriptions than we can hope to cover here, so make sure you dive deeper into 10 important statistics about the subscription economy with this great article from eLabs!

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In Other News...

📉 A new hedge fund soars after betting everything is going down, with gains of 163% on “the end of easy money”.

💰 Consumer spend is shifting; here’s where you can expect to see changes and adapt in the new economy.

🧐 Should you be optimistic about the economy? Investors and big-name CEOs are split on economic optimism — here’s what this means for you.

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YOUR WEEKLY KICK IN THE PANTS

@codiesanchez

@altucher

@ramit

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With that, another digest comes to a close. 

We hope you have found this edition both interesting and practically helpful.

As we move into 2023, adding a subscription element to your business—if you haven’t already—is something that could help you increase your revenue while simultaneously building a stronger connection with your audience.

Yet even if you already utilize subscriptions, what used to work no longer does.

It’s important to keep this in mind as you make plans for the months ahead.

Now you’ve read today’s digest, you are better prepared for this.

Until next time ❤️

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