Why you need to take action now
The subscription business model is going from strength to strength as more and more companies evolve from selling products to becoming service providers. It is a process that’s transforming not only established businesses that are looking to rapidly launch new services or solutions, but also new start-ups, eager to develop an agile and flexible customer engagement strategy.
Technology giants, whose brands have become synonymous with innovation, like Spotify, Netflix and Amazon, all understand the value of the subscription business model and are making active use of it to launch exciting new service offerings. In recent weeks, we have even seen Amazon start testing a new ebook rental service called Kindle Unlimited, which offers subscribers unlimited access to more than 600,000 titles on any device for less than ten dollars a month.
In tandem with this, we are seeing a new breed of niche e-commerce start-ups come to the fore by introducing subscription billing models for traditional repeat purchases including everything from razor blades to coffee beans and quality wine.
But moving to a subscriptions-based model can also bring challenges. As the move to subscriptions gathers momentum, markets inevitably become more competitive. If you are already offering this approach, rivals may come in, replicate your business model and undercut you on price. Or if you are a start-up just beginning to roll-out new services it may be difficult to stand out from the crowd. Ultimately, whatever your size, status and the maturity of your business, you’ll want to find a way of differentiating yourself; of quickly and easily adding more strings to your bow without breaking the bank in delivering them.
Technology giants, whose brands have become synonymous with innovation, like Spotify, Netflix and Amazon, all understand the value of the subscription business model.
So how can you get one step ahead of the competition before the opportunity passes you by? How can you ensure you get your fair share of the lucrative subscriptions environment before you miss your chance? Here we provide some top tips:
Make it Easy for Customers to Pay. Before you launch a new business or roll-out a new service, decide on a payment model that is quick and easy for customers to use and gives them the choice and flexibility they need. The precise mix will depend on your business focus and customer mix, of course. But typically you’ll need to decide whether you want to enable them to pay by credit card, direct debit, PayPal or other methods such as bank transfer. And you’ll need to put in place the right systems to enable this.
Put Tailored Service Packages in Place. Customers want flexibility, not just attractive prices. Businesses will almost always look for a service to be tailored to their needs in some way. So knowing your customer well and having a flexible way of packaging and pricing your products and services will be key to the long-term success of your subscription model.
Put Recurring Revenue at the Heart of your Business Model. By going down the subscriptions route, you are creating a billing relationship that makes it easy for your customers to buy additional services from you, and less likely that they will buy from someone else. So, make use of the regular contact point you have to create a stronger relationship with your customers, win repeat business and up-sell more.
Remember – Flexible Billing is Key. As we have already highlighted, to make a subscriptions-based model a success you need flexible pricing options. The problem is that traditional on-premise billing systems are typically too expensive to implement or not agile enough to handle this requirement in a timely manner. Cloud billing can be key here, reducing the time taken and cost of setting up new offerings and enabling businesses to rapidly turn creative ideas into monetised services.
Innovation is an Urgent Requirement. As competition hots up in the world of subscriptions, you need to be continuously innovating to keep yourself ahead of the pack. It’s an urgent need. With a cloud billing implementation you get new features and enhancements automatically as part of regular software updates, driving greater agility and the opportunity to continue innovating around new pricing and billing capabilities to stay one step in front of your rivals. In the world of business, long-term success is about finding a winning formula quickly – and that may well mean fast iteration, failing first time and then quickly trying again before you succeed.
Remember the on-going migration to subscriptions is now well under way. If you want to take part in it and be successful you need to take action now. And implementing a cloud billing solution will be a critical step in embracing subscription services and taking full advantage of all the many benefits the approach can deliver.