What is a subscription-based economy?
Busy? Of course you are. Aren’t we all? A lot of us don’t even have time to replace our worn-out toothbrushes. But this doesn’t need to be a problem: there are now services that will send you new toothbrushes every month. They work on a subscription basis. It’s also worth noting these services aren’t limited to toothbrushes. They’re everywhere. Think about Spotify, Netflix, services that offer office space on demand, your TV decoder and all the cars you see that are either bought or leased on a subscription basis. There are also traditional subscription-based products such as newspapers and magazines. They’re all part of the subscription-based economy that provides us with everything from up-to-date reading literature and access to the latest tunes, to a self-replenishing supply of toothbrushes.
Apart from the convenience and savings in time, the subscription economy benefits consumers in other ways. As a consumer, you typically pay an all-in price for the services or products you receive. Maintenance and upgrades are included. It doesn’t cost you a cent when your leased vehicle needs to be serviced. And after a few years? You’ll be entitled to an upgrade. The subscription economy inevitably pressures businesses to provide the best quality products and services. You would probably encounter a few problems and a lot of annoyance if your virus scanner didn’t automatically upgrade. And paying for extras? It sounds like those nasty hidden costs that used to appear in the days before transparency became commonplace. Most consumers will soon look elsewhere if you don’t provide the best.
Why go for a subscription-based business model?
The obvious answer is that if you play your cards right, you’ll keep your customers coming back. And this is definitely not the only reason. A subscription-based business model delivers everything a business manager likes. • As subscribers pay up-front, you have positive cash flow. • The more you sell, the more cash you have in the bank. • You’ll know in advance what your revenue will be in the next month. Which makes planning much easier. Possibly even freeing up enough time for you to buy a toothbrush. • You have your customers on the hook. Meaning they are far more likely to be enticed by the expanded packages you offer them.
Making the most of it
Today’s subscription economy is digital in nature. A company called Zuora is the pioneer. The insightful people there realised the potential digitisation offers. And responded by helping you make the most of it. Zuora’s software receives client’s details as they subscribe, instantly feeding them into your logistics and bookkeeping software. It then watches for patterns to emerge. Before you know it, you’ll have the multiple touchpoints you need for meaningful dialogues with your customers. Your targeted communication responds to their usage patterns by offering services that encourage them to be loyal. Would they be better served by the next best offer? Or is a new service suited to their particular needs? Perhaps it’s better for them to downgrade their services based on recent usage. And maybe it’s time for a long-term upgrade. With the right information, you’ll have no problems fine-tuning your existing products to the preferences and expectations of your clients. And defining new products. Or perfecting your marketing strategies. Best of all? You’ll know exactly what steps to take in the future.
But it won’t work for my business!
Will a subscription-based model benefit you as a business? Will it benefit your clients?
Either of these is a sign you can become subscription-based. And don’t say it won’t work for your product or service. Even genome sequencing is currently available in a subscription-based format!
Just remember that being subscription-based is not an obligation. It’s an opportunity.
The easy way to become a subscription-based business
Wanting to become more customer-centric? Actively participating in your customer’s journeys and creating a win-win for you too? As partner of Zuora, we at 4C help you make the transition to being a subscription-based business. Just subscribe and you’ll be able to click your way to a new business model. This is a natural extension for our services and for our Salesforce.com customers: they are already familiar to the SaaS (software as a service) world where a monthly subscription provides all the functionality, including 3 times a year innovations and seamless hassle-free upgrades.
Welcome to the subscription-based economy.