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Structuring subscription plans

Last updated on 
September 20, 2022
Introduction

Introduction

Sourcing Vehicles

Sourcing Vehicles

Procurement

Procurement

Financing

Financing

Acquiring Customers

Acquiring Customers

Above The Line

Above The Line

Point of Sale

Point of Sale

Key Value Propositions

Key Value Propositions

Discounts & Promotions

Discounts & Promotions

Lead Management

Lead Management

Inbound Lead Generation

Inbound Lead Generation

Outbound Lead Generation

Outbound Lead Generation

Managing Customers

Managing Customers

Customer Onboarding

Customer Onboarding

Customer Service

Customer Service

Customer Experience

Customer Experience

Legal Agreements

Legal Agreements

Receivables & Arrears

Receivables & Arrears

Collection & Handover

Collection & Handover

Delivery

Delivery

Fines & Tolls

Fines & Tolls

Breaches & Reposession

Breaches & Reposession

Insurance & Claims

Insurance & Claims

Eligibility

Eligibility

Claims Management

Claims Management

Incident Management

Incident Management

Fair Wear & Tear

Fair Wear & Tear

Fraud Risk & Prevention

Fraud Risk & Prevention

Managing Vehicles

Managing Vehicles

Subscription Structure

Subscription Structure

Profitability & Performance

Profitability & Performance

Much like a mobile phone contract that combines a handset with a phone plan, a car subscription combines a vehicle with a subscription plan.

The intention of subscription plans is to provide multiple tiers of choice and value to the end subscriber to suit their needs. When implemented correctly, subscription plans should also incentivise customers to opt for higher plans that offer both additional value and revenue.

What's in a subscription plan?

It's important to know the variables that are available for each plan (with Loopit at least) in order to understand how these variables can come together to achieve the goal of incentivising higher revenue through enhanced value.

Plan Price

Each plan will carry a base plan price which is the minimum weekly cost of a subscription before the vehicle or any add ons are considered. The intention is that the plan price equates to the costs and revenue associated with the plan variables - a plan with a shorter minimum term or a higher weekly distance allowance would attract a higher plan fee, for example.

Minimum Term

Flexibility is at the core of car subscription, and one way of measuring flexibility is with a minimum subscription term. This is the minimum duration in which a customer must stay subscribed to a vehicle - typically from 30 days. With greater flexibility comes a higher cost, so the shorter the minimum term the more costly the plan.

Beyond the minimum term the customer is free to return the vehicle at any time provided they have served the appropriate notice period which is typically recommended as 21 days.

Distance Allowance

Much like data usage with a mobile phone plan, car subscriptions typically come with a weekly distance usage allowance. This is the distance a customer can travel in a week with respect to their billing cycle before additional usage fees are incurred.

With Loopit, the weekly distance allowance is apportioned to the billing term - either weekly, fortnightly or monthly. This means customers are incentivised to move onto longer billing cycles as they have 1,000km to use each month rather than 250km to use each week (for example) as unused distance allowances do not otherwise roll over between billing cycles.

Distance Usage Fee

This is the excess usage cost a customer will incur per kilometre / mile should they exceed their applicable distance allowance. This is important as the distance allowance associated with a plan will consider the vehicle depreciation relative to the plan cost and weekly usage, and customers that regularly exceed this allowance will cause higher than anticipated vehicle depreciation.

Swap Entitlements

Along with shorter minimum terms compared to alternatives like leasing or financing, the freedom to swap to a new vehicle is perhaps the other unique flexibility offering exclusive to car subscription.

Plans may carry different swap entitlements which outlines the number of consecutive days a customer must be actively subscribed before they are entitled to swap to a new vehicle at no cost.

When used in conjunction with the minimum term, swap entitlements can increase customer loyalty and average subscription durations by providing additional value and incentive to remain subscribed.

Establishment Fee

The establishment fee is a non-refundable upfront cost paid by the customer when first creating a new subscription.

It can be used to cover any onboarding and customer acquisition costs, as a commission paid to the salesperson onboarding the customer, or as a negotiation tool that can be waived to offer additional value.

Security Deposit

Return Notice Period

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