Retail markets have been engulfed by a world of subscription services. Anything you can think of, from clothing to groceries, can be had on a subscription basis.
Why? Among other reasons, customers are busier than ever, and prioritize convenient, “set it and forget it” access to goods and services. As business brokers with clients in Philadelphia County, PA, Baltimore, MD, and throughout the States, we’ve been keeping an eye on the national subscription trend and what it means for our clients, especially in terms of annual revenue, value, and company longevity.
A Steady Revenue Stream
First and foremost, offering a subscription service to customers creates a consistent revenue stream. Keep in mind that the benefits may not be immediate: In the case of month-to-month subscriptions, it may take months or years for you to recover the cost of gaining a subscriber. However, as we’ll explain in a moment, the long-term benefits can be huge.
In the meantime, one way to avoid the waiting game presented by month-to-month subscriptions is to charge customers a subscription fee for the entire year. By doing so, you are making an up-front profit from your new customer and won’t find yourself starved for cash.
The addition of a subscription service truly pays off when it’s time to seek broker services for the purpose of selling your business. Business owners from New Jersey to California find that when it comes time for a business valuation, the presence of a subscription service increases the value of their business significantly. The dependable revenue stream created by the subscription service translates into long-term value, in turn making it more attractive to potential buyers.
Strengthening Brand Loyalty
When customers find themselves committing to an annual subscription, they are more likely to stay loyal to your company, out of a desire to get the most out of their investment in you. This core “fanbase” of dedicated subscribers will be incredibly attractive to potential buyers of your business – and will bolster the long-term success of your legacy after you pass your business on.
Subscription services are an excellent way to give customers what they want and keep them loyal to your brand, all while creating a satisfying stream of revenue that can maximize the value of your business.
Are you thinking of selling your business? Not ready yet, but looking for strategies to maximize value? Our Value Builder Score questionnaire and free e-book can provide invaluable insight. Contact Calder Associates today to learn more about how we can help,