Businesses are facing the question of whether to offer a membership or a subscription model. There are many advantages to both, and companies need to consider their business model and industry when deciding which would work best for them. We will explore some of the differences between memberships and subscriptions and how these two services factor into marketing and positioning strategies to help your company make more money from its customers!
Product Subscriptions: focus on repeat orders on a product needed frequently
Product Subscriptions is a business model that focuses on repeat orders of products or services. As seen in many types and industries, but it's best to focus on the most popular ones: food delivery companies like Blue Apron; beauty box subscriptions such as Birchbox.
The primary strategy for positioning this subscription-model is to focus on the need for repeat orders. For example, suppose you're a food delivery company like Blue Apron or Hello Fresh, and your customer has been ordering from them every week to two weeks to get their weekly fix of home-cooked meals without having time themselves. In that case, this is an ideal opportunity for a clear product subscription.
The primary strategy for marketing this subscription-model is by highlighting its benefits: the convenience of not having to go out or buy products regularly; or to place regular orders manually. Often subscription-based propositions are offering discounts to their customers to pick subscription orders over one-time purchases.
Memberships: a customized shopping experience: exclusive and premium
A membership often offers more than just a recurring shipment of a product; at a premium, people get access to unique products, discounts, and other benefits.
Memberships exist for a specific type of product or service; for example, if you're selling clothing, then the membership might offer access to new arrivals before they go on sale in stores, while another company may include exclusive events for their members.
Product-as-a-Service: your offering includes the product(s) combined with service(s)
Product-as a Service is an offering that includes both the service and physical product. It's best to use this type of commerce for products or services with high value, such as expensive luxury goods like e-bikes, designer clothes, and consumer electronics. It's also frequently used for products that need replenishables with it. Good examples are products with additional filters like air purifiers, cleaning kits for coffee makers, and more.
Often, people compare Product-as-a-Service to a rental offering. It's essential to position a PaaS proposition on the service benefits and not the product features. This increases the overall value of the offer to your customers, preventing price comparison to renting the product.
The customer will not own the product, which gives the benefit of not having to worry about the cost of ownership and will be able as well not have any risk in case something happens with it.
A PaaS product is also a good option for companies that want to control their purchase experience through use. You'll have more control over your product's outcome over the total time a customer uses your product.
In the end, you'll likely end up combining positioning strategies across the different models. You can especially use the membership component to position subscription-based and Product-as-a-Service businesses in a differentiating way.