Why digital subscription is future of online business in Nigeria
Getting paid as a business or brand on any digital platform takes more grit than when it is done offline. It is easier for people to trust a seller who they see and can touch than one whom they cannot. Experts at the ongoing Social Media Week Lagos 2019 say businesses that do not have an a subscription business strategy will not be around for long.
One of the benefits of monetizing content or service online is the potential for recurrent revenue, that is multiple payment sources. In fact, subscription business model is based on the idea of receiving recurring revenue (weekly, monthly or annually) for providing prolonged access to a product or service.
In Nigeria were small businesses find it difficult to access funding, having a single revenue model – offline – could be the fastest route to going down. And in a future dominated by digital technology, revenue has to be diversified for any business to attain sustainability.
Globally, companies like Netflix, Apple Music, New York Times and Trunk Club are notable successes of using online revenue strategies. The New York Times reported on Wednesday that it made $24 million in profits in 2018 alone from its digital subscription.
The Times said it made $709 million in digital revenue in 2018, bolstered primarily by 17.7 per cent growth in digital subscription revenue for the year. The company added 265,000 digital subscribers during the quarter, for a total of 3.4 million total digital subscribers, up 27 per cent from the end of 2017. It is on its way to reaching its goal of $800 million in digital revenue by 2020 and 10 million digital subscribers by 2025.
Nigeria also has a few subscription success stories, although it is early days; this include BusinessDay, PiggyBank, Fitness Centre Gym and Paystack among others that are proving that digital subscription model does work and is the future of sustainable online business.
During a panel organized by payment infrastructure provider, Paystack, Linda Ochugbua, BusinessDay’s head of digital marketing recalls that Nigeria’s online population is inherently distrustful and often prefers to pay for entertainment than pay for content that could potentially help them make better business decisions.
Today, 45 per cent of BusinessDay’s revenue comes from subscriptions, but it was not always the case.
“It was difficult to explain to people why they should pay for content they read on our platform. We had to use offline tactic in 2016 to attract subscribers in 2016,” says Ochugbua.
One of the major issues that businesses must deal with for online customers is trust.
“PiggyBank’s biggest challenge is trust,” says Joshua Chibueze, co-founder of the online savings and personal finance platform. PiggyBank has acquired over 180,000 registered users.
Online customers will only part with money when they can be assured to a large extent that their money will come back with the value they had in mind. Ugly experiences from dealing with some online businesses put most potential customers on edge when they are asked to pay.
Ochugbua says addressing the quality is critical to building trust.
“If you are not selling something of value, you will find it difficult to get people to pay for subscriptions,” she says.
In essence, a company’s service must be of the quality that people will be willing to pay for.
Ebun Okubanjo, CEO of Fitness Centre gym adds that a lot also rides on how transparent a company is with the customers that willing to pay.
“If you are going to be doing recurrent billing, let people know when you would do it and how you would do it,” he says.