Subscriptions are a part of everyday life for many people. Television viewing often comes from streaming subscriptions. We buy phones and phone apps on a subscription basis. And, for some of us, even razor blades show up at our doors with regularity. We like what we like, and we especially like that it comes to us without much effort on our part.
The subscription e-commerce market is rapidly growing because consumers like convenience, personalization and lower costs when purchasing what they want and need. According to a study conducted by McKinsey & Company, subscriptions are becoming more popular and are here to stay — for example, “15 percent of online shoppers have signed up for one or more subscriptions to receive products on a recurring basis.”
As defined in the study, there are three main types of subscriptions: curation, replenishment and access. Curation includes items that provide highly personalized experiences in categories such as beauty, apparel and food. Replenishment includes consumer goods that are needed on a regular basis, such as razor blades and cleaning supplies. And access subscriptions are monthly fees for special member pricing on purchases such as food and clothing. Curation subscriptions are the most popular at 55%, followed by replenishment accounts at 32% and access subscriptions coming in at 13%.
Energy Subscriptions: Why Not?
Late last year, Lon Huber and Richard Bachmeier published an interesting article exploring energy subscription plans. Their suggestion is that, in a time of advanced meters, smart thermostats and digital apps, energy companies have a real opportunity to move into a subscription model. As a marketer with experience serving the energy industry and helping consult on direct-to-consumer programs for marketing, I agree; it’s a smart move.
If we can have so many conveniences delivered without a second thought, then why not necessities like energy? An energy subscription would be extremely convenient, and some firms are already offering a fixed price per month, empowering consumers to forecast their monthly payment and eliminate sticker shock when the bill comes.
With technology advancements every day, energy subscriptions could be designed for individual consumer usage based on their unique situations, historical information and area weather patterns.
Part of the appeal of a subscription service is a great experience, not just lower costs, so it’s likely that consumers would appreciate opportunities to affect change in areas that meet their other priorities, like clean energy initiatives.
Subscriptions Mean Relationships And Revenue Streams
This is more than a product evolution — it’s also an opportunity to revamp the customer experience. When it comes to pricing energy subscriptions, companies should be mindful of one critical factor beyond the monthly fee: the relationship. Most subscription-based services rely on the regularity and consistency of the subscription model, not just the actual monthly fee.
Customization is best practice these days. We know this from other industries. Consumers want highly personalized experiences, and if they can get them delivered with no hassle consistently, it’s likely they’ll be more inclined to stay with the service. Long-term relationships mean sustained revenue streams, a fact that should bring energy companies into the subscription fold with their eyes wide open.
Energy providers will need to do some groundwork in technology investment to gain invaluable customer data — the first step toward happy, engaged customers. The data-driven insights gleaned can help providers develop bundled lifestyle products similar to other subscription solutions they purchase every month.
Pricing Drivers Hinge On Innovation
Just having the right product isn’t enough. Offers matter. Tiered offerings with various packages and perks to meet customer needs can be driven by machine learning and predictive analytics combined with digitally transformed infrastructures.
The key is to drive pricing structures that have lower transaction costs and innovations for customer acquisition of new products and solutions.
Subscription models or not, I believe data-driven insights will be key drivers toward energy companies being able to serve up timely, relevant offers to consumers. And in an environment where industry deregulation exists and consumer-level regulation through technology is on the rise, concerted efforts to refine the customer experience are going to provide a significant competitive edge.