May 18, 2017

0% interest subscription models increase refresh rates and revitalize revenue streams

Subscription based models are growing increasingly popular in global markets, seen by consumers as an attractive alternative to the outright purchase of a product or service thanks to the simplicity and flexibility, not to mention the savings consumers see when they are no longer required to part with a large sum of money in one single transaction to obtain the product that they desire.

This growing trend is driven by changing consumer expectations, prevalent among younger consumers who are becoming more familiar with the concept of on-demand services and growing less attracted to the idea of traditional ownership. No longer are they are prepared to part with a one-off lump sum for a product that will quickly become outdated, requiring another outright purchase in order to upgrade to the latest version.

The pace at which manufacturers unveil the latest models of mobile, PC or other consumer electronics has increased rapidly during the consumer’s lifetime, causing a steep decline in the willingness to purchase, knowing that the product will quickly be rendered obsolete. Therefore, ownership is itself becoming an outdated concept and consumer expectations have towards affordable ways to experience products and obtain easy upgrades without the hassle of discarding old models and investing heavily in new ones, only to repeat the same process after a short period.

Whether consumers have the capital to afford the all-in price tag of a product or not, they have developed an expectation for the latest models and subscription based payments enable them to obtain these inexpensively, paying in instalments, with the option to upgrade as soon as an updated model is available.

However, there is no simple blanket solution for every retailer, manufacturer or reseller to pander to these consumer expectations. PC manufacturers and retailers are troubled by long refresh cycles and sellers in other categories face their own obstacles unique to the products and services that they offer.

Opia’s ‘This year’s model – how zero-interest promotions are maximising revenues in an era of changing consumer expectations‘ white paper reveals how new zero-interest financing propositions both for leasing and outright purchase are the one solution that will deliver when combined with Opia’s expertise in risk-managed promotions.