Brian Masheti

How Services are Defined Subscription services can be categorized based on recurring or non-recurring nature, duration, product or service type, personalization, customer support quality, and flexibility. They offer convenient and cost-effective access to a wide range of products and services, making them an essential part of modern consumer culture. Here are a few ways that subscription services can be classified and defined: 1. Based on the Type of Subscription: Rolling Subscription: A subscription that renews automatically every month or for a period until the customer cancels it. This is great for your customers as they have nothing to lose: Try it for three months and don't like it. Then you can cancel. Sign up but don't use it in the first two months. Then you can cancel. Hit a bump in your business's road, and cash flow is tight. Then you can cancel. Your business's requirements change. Then you can change or cancel. 2. Based on the Delivery Model: Digital Subscription: A digital subscription refers to a type of subscription where the subscriber receives digital content, such as articles, videos, or access to online services, rather than physical goods. Digital subscriptions have become increasingly popular in recent years, particularly in the media and entertainment industries. Consumers have shifted towards consuming content online rather than through traditional print or broadcast channels. Digital subscriptions often provide subscribers with a more flexible and personalized experience, allowing them to access content on-demand and from various devices. Physical Subscription: A physical subscription is a type of subscription that involves the delivery of physical goods to the subscriber's address. Examples of physical subscriptions include magazine, book, food and beverage, and beauty product subscriptions, among others. Depending on the subscription plan, the subscriber typically receives a package containing the physical product at regular intervals, such as monthly, quarterly, or yearly. Physical subscriptions are often popular among consumers who prefer the convenience of receiving curated, high-quality products at their doorstep without having to visit a physical store or spend time shopping online. 3. Based on the Payment Model: Tiered Subscription: A subscription that offers different access levels or features at different price points. Most subscription companies offer two or three pricing tiers their member can subscribe to. Recurring Payment Subscription: A subscription that requires the customer to make regular payments at set intervals, such as monthly or annually. These recurring subscriptions can be classified into regular/fixed or irregular/ variable payments. Freemium Subscription: A subscription model where the basic features of the product or service are free, but additional features or functionality require a paid subscription. This model is common for mobile apps and software products. Hybrid Subscription: A subscription model that combines two or more payment models, such as a one-time payment for access to basic features and a recurring payment for additional features or services. The hybrid pricing strategy combines usage-based and fixed pricing models to help companies better serve customers and diversify their revenue streams. How to Market Marketing a subscription model is an ongoing process that requires ongoing effort to attract and retain customers. Here are some steps that a business can take to market the different member classes of its subscription service effectively: 1. Win new customers with special offers: Offering free trials and freemium options is an effective strategy to entice new customers. Free trials enable customers to experiment with your product or service for a limited time before they are charged. Freemium, a blend of "free" and "premium," provides customers with basic features at no charge while granting them access to more advanced features for a subscription fee. 2. Reach your audience through email marketing: Email marketing plays a critical role in traditional and subscription marketing strategies. As such, it's important to begin building your email list as soon as possible if you haven't already. Email marketing lets you reach out to potential customers, follow up on abandoned carts, offer to upsell or cross-sell promotions, and provide updates on new features and news. Overall, email marketing can be used to cultivate customer relationships and ensure that your brand and products remain top-of-mind. 3. Post. Post. Post.: Producing content consistently and regularly is vital in a subscription model. It is not just about attracting new customers but also creating content that emphasizes the long-term benefits of your products. It is crucial to continuously remind your subscribers why they chose your products and validate their decision to purchase them. In addition to website copy and blog posts, social media and email campaigns should also be included in your content strategy. When developing a plan for content creation, be sure to incorporate content marketing strategies to maximize your content efforts. 4. Partner with influencers: One way to promote your business is to partner with influencers with a good reputation among your target customers. Building a mutually beneficial relationship with them can be advantageous in two ways. Firstly, when an influencer recommends your product, it can boost the trustworthiness of your brand with your audience. Because the endorsement or testimonial comes from a reliable third party, people are more inclined to believe it than if it came directly from your company. Secondly, influencers often have a large social media following, and working with them can help you expand your reach by leveraging their social footprint to reach new customers. 5. Differentiate your products and brand: To make your subscription stand out from competitors, consider what makes it better or different. Is it faster, higher quality, or easier to use? For instance, businesses offering image editing software that may not be as robust as Adobe Photoshop could emphasize their product's ease of use or lower price point. In subscription marketing, you must modify your approach and messaging to retain subscribers. While it shares channels and tactics with traditional marketing, every move must consider the long-term effects on customers. Subscription marketing is a marathon, not a sprint, so be prepared for the long haul. Spotify Spotify is a digital platform that offers music streaming services, allowing users to listen to millions of songs and podcasts from various artists and creators worldwide. Founded in 2008 in Sweden, it has become one of the most popular music streaming services globally. The platform operates on a freemium model, where users can access free music streaming with ads or upgrade to premium subscriptions that offer ad-free listening, unlimited skips, offline playback, and higher-quality audio. Apart from music, Spotify provides a wide range of podcasts, audiobooks, and other audio content and features a user-friendly interface for creating personalized playlists based on user preferences. It is available on multiple platforms, including desktop computers, smartphones, tablets, and smart speakers, and operates in over 80 countries. As of the last quarter of 2022, Spotify had 205 million premium subscribers worldwide, up from 180 million in the corresponding quarter of 2021. Spotify's subscriber base has increased dramatically in the last few years and has more than doubled since early 2017. The following is a visual representation of the number of users and revenue. Figure 1:Spotify Users Figure 2: Spotify Revenue Below is Statistica report on spotify premium users. Figure 3: Number of Spotify premium subscribers worldwide from 1st quarter 2015 to 4th quarter of 2022(in millions) Spotify Business Model Spotify primarily earns money through subscriptions and ads. Premium subscribers pay a fee for ad-free listening, while advertisers pay to place ads on the platform. Spotify's costs include licensing, infrastructure, and marketing, which it seeks to control through investment in original content. It also partners with companies to integrate its service into other platforms and offer discounts to customers. The company aims to provide a personalized music streaming experience while generating revenue from subscriptions, ads, and partnerships. Figure 4: Spotify Business Model