On average, businesses that transform their customers into subscribers experience better retention and more predictable revenue
San Francisco, CA (PRWEB) June 11, 2013
Aria Systems, delivering the full power of subscription commerce to transform business, today applauds the innovative implementations of a subscription business model by two air carriers, United Airlines and Surf Air. These examples show how subscription commerce can be used to improve business results and delight customers. Global leader United Airlines will now offer a subscription option for premium services while startup regional airline Surf Air has plans to base their entire revenue stream on flat monthly fees for any number of flights between the communities they serve. United and Surf Air join a rapidly growing number of companies with recent subscription announcements, including Apple, Adobe, Google, and YouTube.
Tagged as Economy Plus, United Airlines’ new subscription program offers air travelers a variety of additional services for a flat monthly fee, including pre-paid checked baggage and seating with extra legroom. An interesting option for frequent flyers is to pay for their subscriptions with accumulated miles. Surf Air, a regional California airline offering an executive travel experience out of small terminals in California, offers its services only through a monthly subscription.
Conceptually, recurring revenue businesses have three options for packaging their products and services:
1) Subscription — Fixed payment for service for a specific period of time: a day, a month, a year.
Example: Magazine subscriptions in which the subscriber pays to receive every issue for a year.
Terms: Flat rate, membership.
2) Usage — Charges per use or per unit of service.
Example: Home water service is commonly usage‐based billing. The more water used, the larger the bill.
Terms: Metered usage, pay per use, pay-per-view, bandwidth billing.
3) Subscription plus Usage — Combines fixed subscription for a defined amount of usage, with “overage” billed as extra charges.
Example: Canadian internet provider Shaw Communications offers five tiers of subscriptions based on data transfers from $25 a month for 15 gigabytes to $150 for 350 gigabytes. Users who exceed limits are charged per gigabyte for overages.
Terms: Combination Billing.
These three fundamental approaches to recurring revenue can be applied to sales of products and services in myriad and often unexpected ways. The simple subscription model United Airlines is now using to offer optional services could easily expand to include additional offerings or be combined with usage billing for their core travel business. Other businesses are recombining their product lines to include consulting or maintenance as recurring charges, with all manner of variation and combination. Most importantly, goods and services can be rapidly structured into offerings that match changing customer needs.
“On average, businesses that transform their customers into subscribers experience better retention and more predictable revenue,” said Andy Eliopoulos, Sr. Director of Product Marketing, Aria Systems. “Businesses that excel in this area use the subscription relationship to gain deeper insight into their subscribers so they can ultimately delight them with new products and services.”
The bottom line is there are endless ways in which companies can offer their product or services - it’s only a matter of a company’s imagination; not the limitations of their billing system. The recent profusion of subscription offerings seems to indicate a growing understanding across many sectors of the advantages in subscription and consumption based offerings.
Curious about subscription billing? Consider downloading this Subscription Billing for Dummies book. Concerned about buying the right subscription commerce solution for your company? Consider downloading the Six Key Buying Considerations e-Paper. Visit http://www.ariasystems.com or call 1.877.755.2370.
About Aria Systems
Aria Systems delivers the full power of subscription commerce to transform business by creating new opportunities, improving customer relationships and providing more revenue predictability. The Aria Subscription Billing and Management Platform is used by brand name companies such as Pitney Bowes, AAA NCNU, Experian, Red Hat, Ingersoll Rand, EMC, VMware, and HootSuite to evolve their company’s subscription businesses while delivering outstanding customer experiences.