Research from subscription consulting company Zuora indicates that companies that offer subscription-based pricing plans experienced faster sales growth than those that do not. Zuora also found that companies that offer more payment options, specifically those preferred by their customers, were among the most successful companies in terms of revenue growth.
Stronger Revenue Growth
Zuora created the Subscription Economy Index (SEI) to measure the performance of companies that offer subscription-based products and services. As of the end of 2020, sales for companies in the SEI grew at a seven-year compound annual growth rate (CAGR) of 18.2% versus 3.6% for the overall S&P 500 and 3.7% for retail companies within the S&P 500.
What part do payments have in the growth of companies offering subscription-based products and services?
More Payment Options, Faster Growth
Zuora found that companies that offered more payment options, experienced the fastest revenue growth. For example:
Customization Is Key
While companies offering subscription-based payment options grew their revenue and customer base faster than those who didn’t, businesses that offered more flexible payment options performed the best on those metrics. The key takeaway is that having the flexibility to customize products and services to a customer’s preferences is a factor that may allow companies to differentiate themselves from their competitors and grow their businesses faster.
The subscription-based pricing model may allow companies to offer this flexibility as there are often more points of contact between the customer and companies that offer subscriptions.
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