In today’s subscription economy, businesses must take steps to stay ahead of the curve. Whether you’ve made an initial investment or have yet to get started, modern organizations must accelerate their subscription-based sales to remain competitive. This shift from more traditional pay-per-product models to those that prioritize recurring payments for goods and services has the potential to unlock value for your organization, including steadier, more predictable and more consistent revenue. But achieving these benefits is not as easy as simply tacking on a subscription model; it requires thoughtful planning and execution that focuses on your customers’ experience.
When adopted correctly, subscription-based models help organizations gain new customers and new revenue streams, while creating sticky, loyal customers. Your organization can seamlessly turn one-time shoppers into lifelong customers, which results in more predictable financials. And once your company has a model effectively in place, you’ll then be able to accelerate growth by introducing new features and services to existing customers. Regardless of your industry, shifting to subscription sales will help you remain agile and competitive in today’s economic landscape.
What are subscription-based sales, and how do they work?
The subscription market is best summarized as the shift from a traditional pay-per-product model to one where customers pay on a recurring basis for your products or services. While everyone is familiar with some popular B2C examples of these subscriptions, such as Netflix or Spotify, new ways of using these models are becoming more common in non-tech industries and the B2B space, as well. In fact, the global subscription billing services market is expected to more than double in size from USD 5.1 billion in 2020 to USD 12.5 billion in 2026.
For example, industrial companies might use subscription models that include “power by the hour” and product-as-service, one-time products and connected services bundles. B2B distributors are exploring how to create and sell subscriptions through resellers, including SaaS or customer service.
In the automotive industry, it’s one thing to sell a car through a dealer and then watch a customer drive it off the lot; they’ll unlock more value if they sell subscriptions for features that place the manufacturer in an ongoing, direct relationship with the driver, such as GPS or satellite radio services. These types of subscriptions that are available after leaving the assembly line more than offset the initial cost of having mechanics add those features during creation.For financial services companies, customers can pay for access to advisors on recurring subscriptions. Not only does this expand your service portfolio reach, but it also provides new and existing customers with flexibility at a more budget-friendly cost. These are simple examples from different industries that illustrate how far-reaching subscription models are becoming.
Regardless of what industry you’re in, there are different types of subscriptions that you can offer to customers:
◉ Replenishment subscriptions involve replacing the same products for your customers with automated renewal, such as providing a monthly cadence to restock parts for a manufacturer or groceries for a consumer.
◉ Access subscriptions enable your organization to offer special access to members-only items. You can offer long-term service contracts to products, maintenance and cloud services.
◉ Curation subscriptions provide highly personalized products, services or experiences based on customer preferences. Subscription data on consumer preferences is gathered with every dollar purchased.
No matter what type of subscription-based sales your company decides to implement, the key to growth is customer retention. Creating strong customer experiences across the entire customer lifecycle will ensure you drive adoption and renewals to generate revenue and accelerate the effectiveness of your subscription model.
How to get started with a subscription-based sales model
Your organization is used to transaction-based sales, but you may feel pressure to diversify your revenue streams. Embracing subscription models is one of the best ways to do that while keeping up with industry trends but transitioning your existing products into a subscription-based offering requires a thoughtful commitment.
Subscriptions require different platforms and technology enhancements, data integration and the internal talent to foster interactions that turn one-time buyers into recurring customers. Depending on your current prioritization of subscriptions, your business will fall on different parts of the so-called maturity curve. But whether you’re in the discovery phase or looking to enhance an existing model, it’s important to remember that creating positive customer experiences is what leads to renewals. These models are less about selling products and more about fostering long-term relationships that continuously evolve to address customers’ needs. If you are too hasty with launching a subscription offering, your business will miss the point and waste time, resources and money.
Acknowledging that your organization must prioritize the customer experience is the first step toward successfully implementing a subscription-based sales model. After that, you need to make decisions that are best suited to your organization’s maturity level and goals. Here are some tips to ensure that implementing subscriptions is a success:
1. Give customers flexibility: Allow your users to buy and pay for their subscriptions over any channel and provide multiple pricing tiers. That flexibility will allow you to retain more subscribers.
2. Focus on customer value: Cost, convenience and value are the historical drivers of shopping behavior. The best way to attract customers is to find the right combination of pricing and offerings.
3. Don’t simply add on: Don’t get caught up by just adding subscriptions onto existing products. Make sure your subscription business is based on an unmet customer need.
4. Evolve your experience: We’ve said that the customer experience is the most important part of keeping customers subscribed. Keep customers engaged with originality, consistent quality and a variety of offering options.
5. Establish new metrics: A new sales model means you need to have new ways to track your recurring revenue. Make sure you have the tools in place to accelerate your growth.
Build an agile model from the start
Once you’ve decided to embrace a subscription-based sales model, you’ll need a platform that can support your organizational goals but is also agile enough to iterate, evolve and improve. While experimenting with subscriptions might feel safer, you need to demonstrate to your customers that this model is here to stay with a more committed approach. Succeeding with subscriptions is not as simple as just flipping a switch; it must be a complete change in your company’s mindset regarding how you do business.
Salesforce allows you to consolidate your data, insights and analytics with Genie, giving you access to everything you need to intelligently progress your subscriptions. Customer 360 ensures that you don’t have disparate systems and seamlessly integrates with your existing Salesforce solutions. This also helps you enhance customer service, because issues with billing or subscription management can be remedied with your single customer view on Service Cloud, reducing friction in the customer lifecycle. You’ll be able to automate processes for selling and collecting payments, create catalogs to manage pricing and subscriptions and power your entire subscription lifecycle regardless of the selling channel — all on one platform.
Even with an agile platform like Salesforce, you still need to remain dedicated to continuously improving and iterating on your subscription mindset. With the right people, processes and technology, your company will be able to get started with a subscription-based sales model and accelerate predictable, consistent and upgradable revenue growth moving forward.
Source: ibm.com
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