The past few years have seen manufacturers making serious attempts to reorganize their business focus around subscriptions. For most, joining the burgeoning subscription economy is essential to pursuing new revenue streams from spare parts and services. How can manufacturers move forward with this goal?
Subscriptions have risen to stronger prominence in the manufacturing world. The sharp increase in subscription-based offerings has principally come as manufacturers strengthened efforts to reach and support customers throughout the past two pandemic-filled years. At present, manufacturers commit even more to supply products and services through monthly or yearly subscriptions. Plus, some lay out plans to unlock additional revenue streams from customer subscriptions to services and spare parts deliveries.
There are many reasons why manufacturers pursue new income streams—and some of the most important are to boost growth and take on industry rivals as competition heats up and customer expectations hit all-time highs. Yet the road to new revenue opportunities can quickly turn into a mighty maze. Industrial firms stand to profit immensely from opening up new paths to revenue but not without fully understanding which strategies work to their advantage.
Here are some ways manufacturers can run a profitable subscription-based business that paves the way to new and stable streams of income from spare parts and services.
Entering the Subscription e-Commerce Market
Just last year, e-Commerce has blossomed into an essential component of growth for a host of manufacturers. But today, the explosive rise of subscriptions is likely to entice industrial firms everywhere to pour more investments into e-Commerce.
Manufacturers may need to invest in e-Commerce platforms specifically built for subscriptions. When backed by the right platform, they should launch fully responsive, mobile-friendly, and intuitive online stores that allow customers to easily purchase subscriptions to a selection of parts and service packages. Moreover, firms should regularly publish electronic catalogs with relevant parts and service information to enable customers to make effortless and correct subscription decisions. This maximizes the usability of e-Commerce channels and, therefore, the revenue potential of all offerings displayed on such platforms.
Selling through online marketplaces provides a perfect opportunity for manufacturers to reach beyond local markets and target new customers in other geographic areas, thereby adding new revenue streams and driving increased sales.
Launching a Data-Driven Personalization Strategy
Expectations around personalization now extend to spare parts and services. Subscriptions make it much easier for manufacturers to deliver on such expectations because they can be customized to the customer’s liking to allow, for a defined period of time, a guaranteed:
- Delivery of custom-made spare parts for specific equipment
- Provision of services individually tailored to the needs and interests of every client
Many of the firms providing customized subscriptions find success thanks to data.
Over time, manufacturers continuously generate large troves of data through subscriptions and customer interactions. If accessible and usable, that data plays a central role in a firm’s personalization efforts. First of all, data expands the understanding of demand patterns and customer specificities. Secondly, it aids industry players in identifying client intentions and predicting outcomes. Most notably, though, data helps in customizing offerings to individual preferences. Those who make proper use of data can put forward excellent subscription plans to personalized services and spare parts—creating greater value for customers. Once these subscriptions have proven their worth to clients, firms may tremendously improve their potential to drive additional purchases and tap into unexplored income streams.
Exploring Opportunities for Subscription Upsells
Attention to subscription upsells is growing at a fast pace. This strategy aims to target customers for special and more expensive offers designed to upgrade their subscriber experience. Normally, firms try to persuade existing customers to transition from a month-to-month to a longer-term subscription plan. But in addition to getting clients to commit to extended subscription periods, they can also restrict premium services and a lot of add-ons to products to subscribers who sign up for higher-priced packages.
Manufacturers upselling clients to a premium and higher-end subscription plan with richer benefits can, for example, offer exclusive and early access to:
- Advanced maintenance, inspection, and emergency repair services
- Technical support dedicated to the installation of spare parts
- Original and limited-edition spare parts
Regardless of the upgrades and add-ons included, such subscription plans are prepared exclusively for subscribers. Undoubtedly, firms will push up the prices of all upper-class parts and services intended for subscriber-only access. But each subscription upsell must add value to the customer experience. If manufacturers succeed, all kinds of benefits open up. Building and solidifying strong relationships with clients is one of the benefits of launching a subscription upsell program. Another perk is that industrial firms have a chance to introduce existing customers to more of what they offer in terms of spare parts and services. Providing upgrades of superior value will likely bring extra revenue to the manufacturer’s pocket and help maintain loyal customers.
Vying for New Sources of Revenue in the Subscription Era
There has been a lot of talk over the years about subscriptions in manufacturing circles. Industrial firms have become increasingly optimistic they can chase and secure new lines of revenue through subscriptions. And they are not wrong. So many of today’s manufacturers set foot in the subscription e-Commerce market to sell to customers in new and different locations, which brings a significant increase in revenue sources.
Admittedly, a lot of opportunities exist in the subscription market. Personalizing and upselling subscriptions to make offerings more valuable to customers is also likely to result in additional streams of income. But to unlock the true potential of subscriptions, perhaps nothing is more important than meeting customer expectations at every moment of contact. What most clients expect from gaining subscription-based access to spare parts and services is to:
- Rely on access to a ready supply of spare parts
- Benefit from round-the-clock services
- Sign up for exclusive offers available only for subscribers
- Take advantage of simplified and streamlined purchasing experiences
It may not be necessarily easy to set up subscriptions that drive growth and profitability, but it will be well worth the investment.