Think Subscription Models Won’t Work in Your Industry? These Businesses May Prove You Wrong.

Subscription billing models seem like no-brainers for SaaS companies, streaming media services and products buyers use up and repurchase regularly. More and more, however, businesses in a wide range of industries are getting creative and adding recurring revenue models to their offerings. In fact, Salesforce found in 2019 that more than half of finance executives say at least 40 percent of their current revenues are recurring, and even more expect to reach that level within the next 5 years. These companies are growing their customer bases by decreasing the barrier to entry, lowering the long-term costs of sales, and taking advantage of predictable revenue streams (and the higher investor valuations that follow) to forecast and drive growth. (See our recent blog post for more benefits of subscription billing.)

So how are industries that don’t obviously lend themselves to subscriptions work recurring billing into their business models? Let’s look at a few examples:

Planes, Trains, & Automobiles

The Zebra reports that, from 2012 to 2019, the number of registered vehicles in the United States decreased by more than 27.3 million, while new vehicle leases increased from just over 1 million to nearly 4.5 million between 2009 and 2016. The reality is that car ownership is no longer the given it once was, as families share vehicles and/or turn to alternate modes of transportation. With this shift, many commuters are finding it makes more sense to use than to own. This rental model could be short-term, such as with carshare companies like Zipcar, Car2Go, and rideshare apps like Uber and Lyft. But even traditional vehicle manufacturers are getting in on the subscription game, allowing users to pay a monthly fee that includes damage protection, liability coverage, and vehicle maintenance for a certain number of miles driven — and the ability to switch out vehicles on a regular basis. Luxury vehicle manufacturers who’ve taken the leap into subscription models include Audi, BMW, Cadillac, Jaguar Land Rover, Mercedes-Benz, and Volvo. These companies leverage these models to attract new customers who wouldn’t ordinarily buy a luxury vehicle by removing the burden of a car loan or the risks of depreciation. At the same time, they can take advantage of the opportunity to move unsold merchandise off the floor while generating extra revenue.

Airlines are joining this trend, too, with commercial carriers including Delta, United, JetBlue, and Southwest offering subscription services and companies like Surf Air offering members unlimited flights on its fleet of private planes a monthly fee. Additionally, aggregators like FlyLine offer low-cost annual subscriptions that give travelers access to wholesale prices on flights from a variety of airlines.

Health & Wellness

The fitness industry isn’t exactly a stranger to subscription models — monthly gym memberships have been available since the beginning of time (more or less). In-home and app-based fitness brands were starting to embrace these recurring models even before the pandemic, making quality workouts available for people who wanted the convenience of working out from home and/or who didn’t have brick-and-mortar gyms nearby. Once COVID hit, their popularity skyrocketed as even more people moved their fitness regimens into their homes. Peloton is perhaps the best-known at-home fitness brand, offering a variety of workout classes to subscribers, whether they’ve bought the company’s branded equipment or not. Similarly, brands like Daily Burn, Glo, Mirror, and Aaptive provide subscribers with a wide range of on-demand video (or in Aaptive’s case, audio-only) workout classes for a significantly smaller monthly fee than the average gym membership. Even traditional gyms are adding at-home options to their subscriptions, with the YMCA, for example, adding on-demand video classes to their monthly gym membership and offering a lower-cost, on-demand-only subscription.

Elswhere in the health and wellness industry, Fitbit has expanded into recurring revenue with a subscription that adds coaching and doctor-ready reports to the product’s standard insights. Mental health apps like Headspace offer a wide variety of guided meditations for a monthly fee, and Talkspace and others provide subscription-based counseling. Even many physicians’ offices, such as the MDVIP network, are shifting to a subscription model that enables doctors to reduce caseloads without losing revenue and helps patients manage up-front costs of care.

Education & Professional Development

Individuals who want to remain competitive in the job market have to keep their skills up to date. And for businesses, research has proven over and over again that providing consistent learning opportunities has a powerful impact on employee engagement, retention, and productivity. Unfortunately, for many would-be lifelong learners, the tuition requirements for certificate program and universities are prohibitive. Fortunately, “learning-as-a-service” models are making this ongoing learning possible for individuals and businesses on a broad scale.

For professional and academic learning, LinkedIn Learning and Lynda.com are the go-to, offering have teamed up to offer subscribers more than 15,000 expert-led business, tech, and creative courses for just $20 to $30 per month. Bravely (professional coaching), Coursera (open-source university courses), and Codecademy (computer programming) are other brands whose subscription services offer customers powerful learning opportunities. Outside of professional development, MasterClass allows subscribers to learn new hobbies from top practitioners (often celebrities) for $15 per month, and Duolingo makes language-learning accessible through its free and premium subscriptions.

Gaming

Like video streaming, gaming subscriptions offer players much more variety than they can achieve by purchasing individual games. Now, rather than purchasing or renting individual games ad hoc, players can subscribe to Xbox Game Pass or PlayStation Now to stream a wide variety of games on demand. While there was some trepidation in the industry as to whether gamers would embrace these streaming offerings, the results have been overwhelmingly positive.

“The need to own is being supplanted with a need to experience things and a desire to try,” says EA senior vice president of player network Michael Blank in Variety. “All of the data is suggesting that it is positive for players and it’s positive for us as well, because the more they play, that’s more time that they engage in our network and the more they motivate others to play. All this translates into positive, good things for the company.”

Microsoft has seen similarly positive results, according to the same Variety article: “We were pleasantly surprised to see members increase their total number of games played by almost 40 percent, including titles outside the Xbox Game Pass catalog,” says Xbox Game Pass head of planning and business development Matt Percy.

Home Maintenance

Finally, while it’s not uncommon for specific maintenance providers — like HVAC companies, for example — to offer subscriptions that build revenue by taking the friction out of preventative maintenance, other home maintenance providers are entering the recurring revenue space in an even bigger way. New homeowners who miss the convenience of calling on a landlord whenever something needed repair can now take advantage of any of several subscription-based home maintenance companies that function, essentially, as superintendents for homeowners. Some of the leaders in this space are Super, Handy, and Austin’s own PreFix. While the range of services these companies offer varies, the gist is that, for an annual fee, these companies vet and manage service providers and give customers a single touchpoint for whatever they need done around the house — from repairs to preventative maintenance.

These are just a few examples of the ways businesses in a wide range of industries are leveraging subscription offerings to grow recurring revenue and enhance the customer experience. Inspired to find new ways for your industry or business to benefit from subscription revenue? Gotransverse prides itself on helping businesses make the change to more profitable and agile revenue models. We invite you to take a virtual tour of our billing platform today. Then, when you’re ready you can request a demo to learn more.