Customer relationship management in service industry: Subscription models

Abstract

Lately businesses are selling monthly subscriptions for all sorts of goods and services like magazines, TV channels, movies, clubs facilities etc. The biggest boom can be seen in broadband and DTH subscription services in India. Companies are enjoying a good customer loyalty and referrals to their services. Through subscriptions the companies try to build, manage and optimize the customer relationships. It can be considered a perfect business model where value is generated both for customers and entrepreneurs. The subscription based model has its own merits. The model generates more revenue than pay more module and the revenue stream is also stable. The acquisition and retention cost for customer are optimized. Currently there is a larger shift from product economy to subscription economy. Businesses now need to handle customer loyalty, pricing and selling very differently. They need to know what factors in the business customer’s value the most and how those factors can be used to the advantage and differentiating from competitors. The consumer behaviour among younger people is changing and people value experience and convenience today. Subscription companies have recurring revenue model that enables them to engage with them and enhance their experience. But this isn’t easy; each company needs to evaluate the needs of its customer base—and how subscriptions could potentially open the door to new users. In this study we will be taking the case of Just Books to study the consumer aspects, critical factors and company strategies in getting a good CRM system in place in subscription models. Secondly we will look at the Just Books subscription model in detail and do conjoint and factor analysis to study the critical factors. Lastly we will try to generalize some of the key success factors in subscription models and give recommendations in the model.