Artificial Intelligence (AI) is about to transform eCommerce, particularly in the world of subscriptions. Many merchants are steadily getting familiar with this new technology and are integrating it effectively into their subscription programs.
But how is AI driving the subscription economy forward? And why AI-powered subscription models are considered to be the future? To know the answer, let’s move ahead in this article.
Why are People Turning to Subscription Services?
AI, AR, VR, and other emerging technologies are part of every aspect of life and business. Below we listed reasons why users are keen on turning to subscription services:
Users are Immersed in the Digital World
Consumers are swapping physical products for their digital counterparts. Many subscription services are solely digital. This makes shifting from a single purchase to a subscription model a breeze for businesses.
Users are Becoming more Penny-wise
With money matters at the forefront, subscription services answer the call by providing versatile, budget-friendly pricing options.
Users are on a Quest for Convenience
Amid our fast-paced, hectic lives, subscription models bring convenience by automating our routine purchases.
Users are Swamped by an Abundance of Choices
With an array of options to pick from, subscription services help streamline the buying process.
Users Cherish Personalization
Subscription-based businesses can offer a level of customization that traditional brick-and-mortar stores can’t match, serving up a personalized experience more inclined to foster long-term fidelity.
AI-Powered Subscriptions: The Next Big Thing
According to industry reports:
- AI is expected to add $15 trillion to the global economy by 2030. This will even surpass China and India’s combined output.
- The subscription economy is also on the rise, set to reach $1.5 trillion by 2025.
- The days of owning physical products slowly fade as we shift towards subscriptions.
- The rise of AI is leading to smarter and more flexible subscription models. It is benefiting both businesses and consumers.
But how exactly will AI-powered subscriptions become the future of this industry? To know, read further.
Suggested Reading: 20 Generative AI Applications for B2B Businesses
The Role of AI in Boosting the Subscription Economy
Artificial intelligence (AI) enhances how businesses operate, from recommending products tailored to customers’ preferences to automating customer lifecycle management. Let’s dive into the several ways AI is fuelling the growth of the subscription economy.
Personalizing Recommendations with AI
The biggest contribution of AI in subscription services is its ability to offer Customized recommendations to each user. This is achieved through collecting and analyzing customer data.
This data then serves up relevant suggestions that directly speak to a user’s needs. This is a huge deal considering that 80% of customers are likelier to purchase businesses that offer personalized experiences.
Simplifying Customer Lifecycle Management with Automation
Managing the customer lifecycle in a subscription model can be a demanding task. It’s all about understanding how your customer relationship grows and changes over time. Crucial to your success is customer acquisition and retention.
It’s important to look after every stage of the customer journey to ensure customer satisfaction. AI is transforming the way subscription businesses handle customer lifecycle management. You can automate these tasks, making the process simpler, more efficient, and effective.
Tackling Customer Churn
Customer churn is when your subscriber stops using your product or service. For eCommerce businesses, keeping low churn rates is important to retain customers. AI plays a significant role in achieving this.
Forecasting Churn: AI tools utilize data engineering and machine learning to predict customer churn. They analyze customer behavior, giving you a heads-up about potential cancellations.
Analyzing Churn Causes: Cancellations can happen for various reasons. AI helps you understand the most common ones, equipping you to tackle voluntary Churn more effectively in the future.
Preventing Involuntary Churn: Sometimes, customers leave unintentionally due to payment issues. AI can help you reduce these situations by sending automated reminders about payment updates and retrying payments when the success rate is high.
Wrapping it Up
AI is reshaping how businesses operate, especially in the subscription service industry. AI drives the growth of most businesses. And this trend is here to stay and rise. It will be even more prominent as AI becomes available to businesses of all sizes. Have you embraced it yet?