💡A quick tip: If you are in a hurry to make your business AWESOME and don't have the time to read each and every word in this article, skip to the > Introduction and then the > headings/sub-headings followed by the > keywords and keyphrases under the main heading/subheading.
On the other hand, if you want to make your business SUPER AWESOME and have a fun reading time, I recommend reading everything.
How cool do you think you sound when someone asks you about your company and you tell them that you work in a company (or perhaps own/manage one) that has a subscription-based business model?
Let me give you the answer - it sounds VERY COOL!
Things like monthly recurring revenue, multiple customer touchpoints, longer customer lifecycle, low customer acquisition cost, offering products as services, doing something for the planet and being a sustainable purpose-driven company are the REAL DEAL!
There are so many different ways now to run a subscription business.
You can differentiate the different types of subscription businesses based on the type of product being offered as a service.
There are of course intangible products as a service, such as movies by Netflix, Amazon, music by Spotify, Apple Music, SaaS software by Hubspot, circuly (that’s us BTW) and so on.
And then there are short-lived tangible products like subscription boxes, apparel, toilet paper, razor, drinks etc.
Wait a sec, did I forget something?
Oh yeah, I did. There are of course long-lived consumer durable products like cars, baby strollers, furniture, home appliances, bikes, scooters, electronics and so on.
Some of the top searches DO NOT EVEN TALK ABOUT a business model for tangible consumer durable products like cars, bikes, furniture and so on. As a result, a dedicated business solution such as subscription management software for such business models DO NOT EXIST!
And that makes scaling and earning more revenue for such a business type harder because running a subscription business for a tangible product, that goes on for a longer duration of time (several months or perhaps even years), is not the same as running a subscription business for intangible or tangible but short term products.
❓Do you think Netflix or Spotify need to bother about getting their movies or music back from their customers?
❓Do you think Hubspot needs to repair a few things in the software and adjust that in the cost calculation when a subscription is cancelled?
❓Do you think subscription box companies need to track their product by serial number and be informed about the whereabouts of their box service at all times?
NOPE! They don’t.
On the other hand, a subscription for let's says a car 🚗 needs to give a damn about all these aspects.
The only thing that makes the process harder or has made the process harder till now is the absence of a proper solution that can deal with all things like product tracking, digital return handling, digital repair, product history and so on.
When it comes to picking a subscription management software (which you definitely should BTW if scaling and earning more revenue is a priority) for YOUR business model and use case watch out for the following:
If your question is whether or not you need a subscription management software for your rental business; the answer is YES! YOU NEED ONE TO SCALE! But the needs of your business are slightly special! Your business needs a software that can deal with long-lived tangible products and can manage its operations.
The subscription management software that you pick to manage your <insert product name> as a service (for example car-as-a-service, bike-as-a-service, furniture-as-a-service, laptop-as-a-service, camera-as-a-service, you get the drill) should have the capacity to automate the return handling process and make it digital.
You don't need an excel sheet running in the background to track your product return, provided the subscription management software is capable of doing that. Unfortunately, most software out there dont have a provision for it because well, as you might have noticed (in case you actually did the google search mentioned above) your particular use case does not even make the cut of being considered as a subscription business model.
What happens when let’s say your bike-as-a-service comes back at the end of the subscription period? Depending on the condition of the bike, you either push it to repairs or restock it in inventory. Sounds like a simple process (in theory) but in reality, most businesses maintain an excel sheet to keep an overview, which most of the time doesn't work because it is manually done by a human being in a crazy looking excel sheet.
What you need is a dedicated space in your management system that tells you that so and so bike needs to be repaired, X Y and Z are the parts that require repairing, that’s how much it costs to repair it and this is the date when it will be pushed back to stock.
Pick a software solution that is capable of doing that.
Let’s assume that you offer a bike-as-a-service for 70€ (part of the cost-plus some profit) on a monthly basis. The original price is 2000€. You calculate how long it will take to cover the cost and how many cycles of renting it would take to make a considerable amount of profit out of it. Let’s say that the first subscription cycle of the bike runs for a year and when it comes back into your inventory, it needs some repairs worth 200€. Obviously, these repairs increase the cost of the original product which needs to be accounted for.
A good subscription management software will have the capacity to attribute these costs, showcase the product history and help you in key decision making like changing product supplier in case the same part of the product breaks over and over again or knowing when to discard a product or perhaps even depreciate a product over time.
What is the one thing every customer does after they make a purchase? They track their products and mentally ask their phones the question, "is it there yet". While this is also true for customers of a subscription product, tracking in a subscription-based business happens in two ways. The customers track the delivery status, and the subscription provider tracks the lifetime status of the product.
This essentially means that a subscription service provider needs to know at all times where the product is and which product is associated with which customer. For that, every product needs to have its own serial number beside the Stock Keeping Unit (SKU), and that serial number needs to be stored in a place that can track it.
Let's take the case of StrollMe.
StrollMe offers baby strollers as a subscription service. They have multiple same strollers under one stroller category. They need to track each of the strollers separately for each customer.
In case one of the strollers is broken when returned, they are able to track which customer was responsible for it by simply logging in into the circuly backend and checking the customer information associated with the serial number of the stroller in question.
Lifetime product tracking is a must-have for a subscription-based product.
For the customer, renting and buying are two sides of the same coin in the sense that it is about getting a product online, using it and returning it at the end of the subscription. To the customer, it’s like e-commerce. Well in reality it is e-commerce because the things that lead to a success story of such a business model are the same as that of a regular e-commerce business model and that is creating that ultimate customer experience that results in customer satisfaction.
Things like “out-of-stock”, “delayed delivery”, “fill a form to get a quote” are deal-breakers for the customer. If your product is not available at the moment when they need it, they will simply move away to buying it instead or worse to a competitor who is probably doing a better job at managing their inventory.
A subscription management software with asset tracking enables you to keep an overview of what's happening with your inventory and have a real-time estimate of when it moves from repairs back to stock in your webshop. When it comes to asset tracking and management the goal of any tangible product based subscription business should be to make sure that there are always products available to be rented out in the webshop.
You want your customers to land on your shop and checkout with a subscription.
Automated invoices let you focus on generating more business and not generating invoices. The invoice emails should be 100% customisable according to your own branding. Sending out invoices manually to 10 customers probably sounds doable but it is in no way practical as soon as you cross a certain customer mark. This is probably one of the most basic operational tasks a subscription management software should be capable of doing. The invoice emails should be 100% customisable according to your own branding.
7. Payment Automation
The beauty of a subscription-based business model is the monthly recurring revenue. A considerable amount of companies out there are using plugins to trigger payments or sometimes even ASKING THE CUSTOMER to pay on a monthly basis.
A subscription management software leverages the capability of the API of the payment service provider (like Stripe or Braintree) does some coding magic on top and the payments are automatically deducted from your customers account. Voila!
These are just a few important features to look for in subscription management software in case you feel lost and don't know where to start. In case you skipped over the entire article, I'll be a nice writer and sum it up for you. So when it comes to picking a subscription management software, ask for the following:
All right then! See you in the next article.
FREE RESOURCE: E-book on Core Growth Strategies for Subscription Business! An action plan to grow and scale.
We enable companies to rent out their products instead of just selling them. In this way, we create further sales potential for our customers and at the same time bring sustainability to e-commerce. With our Subscription Management Software for physical products, we support young companies in optimizing and scaling existing rental models and help established companies to build new, circular business models as a second mainstay.
Our software is a white label solution that creates a customer-centric rental experience along the entire value chain of the rental model. Starting with the conclusion of a rental contract, the setup of recurring payments, self-administration by the end consumer, and ending with the management and tracking of all products by the provider. We also enable the integration of third-party providers such as logistics service providers and financing partners in the back-end. We make Circular Business Models simple and effective!
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