Business Models

Online marketing is dynamic, and it keeps on transforming day by day. Concerning, business models have also shown alteration in recent years. Currently, membership or subscription models are ruling the market. They have dominated all other models, including the traditional sales model. It is the benefit of the membership model that has pushed companies to use it. Irrespective of the business size, business models feature the business process of a company. It shows how an organization manufactures its product or services and its working strategy.

Here we are with the reasons why the membership model is perfect compared to the traditional sales model. Let us first have a look at different types of business models adopted by companies.

1. Direct Sale

Direct selling is said to be the oldest form of business model. Here the companies earn revenues directly by selling their products/services through a salesperson. Direct selling has no fixed place. Usually, the sellers are associated with a few large enterprises (parent companies) to sell the products.

The selling process takes place through illustration or demonstration of the product/services. Typically, direct selling is made at hosted events or the home of the prospects. The sellers directly share profit based on their sales.

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2. Franchise Model

The concept is as clear as the name. Following a franchise model, companies and organizations criticize take the franchise of developed and established businesses. Having a franchise model, you need not create or manufacture any new product. All you need is to acquire an ownership stake of a successful business. A franchisor offers its goods and services to expand its business operation. In return, the franchise owners demand and earn a fixed amount of revenue. KFC, Subway, and Mcdonald’s are some examples.

3. Freemium Model

Companies use freemium models to market their services across the web. Such a model offers free services to the people. The idea and objective are to persuade customers for future sales. The free basic-level services help companies to establish a healthy relationship with their users. After a time interval, companies offer customers premium and advanced services like zero ads and other add-ons at a fixed price. Skype and Spotify work on a freemium model.

4. Membership/Subscription Model

Membership Model

As mentioned above, companies are now shifting on membership models. Subscription models are best for companies with leading customer acquisition costs (CAC). It helps businesses retain customers for a long time and make them a fixed source of income. The customers need to signup and pay companies according to the membership level they chose. You, as a customer, get a limited time frame to assess a specific product or service.

With an idea of different types of business models, here is why the membership model is the best:

A. Regular Income

Compared to other models, a subscription model guarantees you a fixed income. In this way, companies feel secure and can easily predict their revenue and profit. It also helps them in developing and growing their business.

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B. Attracts Customers

A fixed amount for a fixed period attracts more customers than a significant amount for a single time. With high prices, you may get few customers for your product or services. The membership model helps you in getting a significant amount for the long term, even a lifetime. As customers get access to your products, they also love to have additional benefits. Offering them services will help you grow and expand your business. With each kind of payment gateway, anyone across the globe can easily reach you.

C. Upselling

In a subscription model, you need to provide people with reasons for paying for your items. They may subscribe to you for a specific product but may continue after encountering different products. It is because additional products have created interest and urged them to continue further. Eventually, the customer came for the X product but continued shopping after exposing the Y product.

D. Customer retention

Customer retention

The chances of customer retention are higher compared to other models. For instance, specific people subscribe to Netflix for Money Heist. Then after they watch Narcos, Stranger Things, and so on, on the other hand, they may also have subscribed to Amazon Prime. Yet getting a free trial, they still adhere to staying on Netflix. It is so because they get value for the money they paid you. Your competitors also have the same stuff, but you must beat them to have customer retention.

Note – It’s just an example, and we do not criticize or humiliate any platform.

E. Customer Relationship

It was a time when buyers and sellers only met once during the purchase-sale process. With low customer retention, the sellers rarely see the same buyer. Whereas in the membership model, there exists an open-ended relationship between the proprietors and members. The owners can track their member’s activities, and both can anytime communicate with each other. Regular communications lead to a healthy relationship between them. Moreover, customers’ feedback helps owners to work on their products/services.

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F. Product Consistency

In the membership model, you regularly need to come up with fresh and new content. You must have a motive to engage and satisfy your members. Try launching and producing them in installments to maintain customer engagement. Your customers will give you time to make some new content. However, in traditional selling, customers will demand and expect immediate results. 

Conclusion of Business Models

Learnmate

The following reasons and benefits show the advantages of the membership model over traditional or other selling models. Remember, always look at your business type before selecting any of the business models. Your success and failure both depend on the kind that you will choose. Stay connected for our upcoming blogs.

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