Business models to watch – Subscription models and beyond.

ClassPass.

When ClassPass founder, Payal Kadakia, struggled to find a fitness class after a long day of work. She did a deeper sea, and she found thousands of classes that she combined into one app. Users now have access to thousands of lessons and lifestyle services in over 30 countries worldwide. By connecting fitness enthusiasts and health clubs (and now hairdressers and other lifestyle services) in a new and improved way, users can access a vast diversity of fitness classes, gyms, hairdressers and more. ClassPass combines the powerful components of the services shift and the digital shift. The company removes the hassle of finding new fitness activities, offers personalised recommendations, and motivates users to try new activities while billing a monthly payment that fits their needs. A simple and effective way to create new value for customers while also creating the secondary value proposition of offering health clubs an added layer of data from which they can draw insights. The global health crisis tested the tech startup, but ClassPass pivoted to developing their digital workout proposition to help both health clubs and their customers stay fit.

SubPlace.

Another subscription model is changing how consumers interact with products. SubPlace offers its Malaysian customers the option to subscribe to their desired grocery products. The company also offers a premium subscription, where customers can subscribe to more expensive household products such as electronics. It is a bit weird to say, “subscribe to a TV”, but this is what is happening. Subscription models enable companies like SubPlace to offer their customers the opportunity to budget their costs and increase the affordability of more expensive household products. Furthermore, SubPlace can more accurately forecast their customers’ demand, which allows for more favourable deals with wholesalers, which reduces the unit costs even further. Data is collected throughout the whole process, which is also used to understand consumer behaviour and better improve the value proposition of SubPlace.

Subscription models offer many interesting benefits for both the businesses that employ them and the consumers that enjoy them.

For consumers:

The cost of the subscription is more accessible than the upfront cost of own the product or service. Imagine if you had to purchase a membership for each health club listed on ClassPass or if you were a student who had to fully furnish their house instead of leasing an item or two on SubPlace.

It is convenient to set and forget. 
Subscriptions remove the hassle of not having to worry about picking up the household essentials every week/month, we have all run out of toilet paper at the most inopportune time. SubPlace makes sure we are always stocked with the right household supplies.

Customization (choose the level of service that fits your needs). ClassPass allows users to mix and match their perfect fitness routine and it does not have to be the same every month. This adds a must deeper layer of personalization to the customer’s experience.

For businesses:

Costs become more predictable. Businesses are able to better forecast their costs which opens up opportunities for cheaper deals from suppliers.

Recurring Revenue. Every company benefits from having a reliable revenue stream, a subscription model helps make it possible.

Customer Insight. By allowing customers to mix and match, just like ClassPass does, insights can be drawn to shed light on consumer behaviour which allows businesses to improve their value propositions.

ClassPass and SubPlace have employed the power of the service and digital shifts to create new value for their customers.