Subscription centricity: 5 tips for designing diverse, recurring revenue models

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

Continue reading

3 ways the auto industry benefits from simplified supplier collaboration

Managing a diverse and agile supplier network is now a top priority in the auto industry and essential to remain competitive. Whether shifting to produce electric vehicles, dealing with the semiconductor shortage or mitigating everyday disruptions, the automotive OEM and aftermarket supply chains, live and die by their supplier network. The need for innovation and modernization in automotive business networks is crucial to remove friction, enable visibility and build resiliency for whatever comes next.  

How will you ensure your organization is agile, resilient and adaptable enough to meet the challenges it faces? To paraphrase Charles Darwin, “It’s not the strongest of the species that survives, it’s the one most adaptable to change.” We can see this principle at play in the auto industry today: Tesla, in just a few short years, has become a market-leader in the plug-in and battery electric car sector. Contrast that with market-leading automakers that have experienced sales declines of 20 to 30% in North America over the course of the pandemic.  

Without a robust B2B network or simplified supplier relationships you can’t pivot. You can’t adapt quickly to  trends and changes. You can’t readily tap into new suppliers to capitalize on renewed demand. This is especially true in the automotive industry, where hundreds of suppliers and partners are fundamental to a company’s success.  

To ensure business continuity during times of extreme change and help position your organization for long-term growth, here are three ways you can increase the resilience of your supply chain and B2B networks: 

1. Automate supplier onboarding: One major reason companies can’t adapt adequately enough is because they can’t find and integrate the right suppliers in a timely manner. Ensure that suppliers and partners can be well-vetted, integrated, and quickly onboarded to your network. Solutions that automate vetting and onboarding can get suppliers online up to 75% faster. Those weeks and months saved, across hundreds of relationships, can be used for other innovative, value-driven work.

2. Increase flexibility and efficiency of B2B collaboration: Auto manufacturers manage an increasingly complex, multi-enterprise ecosystem, but it’s typically overwhelmed by disparate systems and disconnected processes. To compete in today’s hyper-connected global economy, you need to digitize and automate connectivity as much as technology will permit. In the process, you’ll streamline and simplify complex processes. Having real-time, digitally-connected relationships with the suppliers that matter most to your business is essential to remain competitive. Modern business networks, whether  on cloud, hybrid-cloud or even on premises, can provide those fast, real-time, digital connections and communications required to optimize the value you get out of your supplier base. They can help you break down walls and silos between organizations, streamline processes, and enable the bi-directional flow of data and information. Clear and quick communication and data exchange are the lifeblood of  collaborative supplier relationships. 

3. Modernize technology: Most automakers have a patchwork of supply chain and B2B network technologies that were never designed for today’s dynamic environment. That’s why focusing on modernizing your B2B network offers so much upside, like gaining the scalability and agility to keep pace with changing business and technology needs.

When you modernize your B2B platform by moving to a hybrid cloud or managed service, you can begin to transition from homegrown or acquired processes and applications that cause inefficiencies and errors. Best-in-class B2B networks can automate transactions, provide real-time data visibility and capitalize on AI to provide you with intelligent alerts on exceptions and disruptions, and more. Digital B2B networks are also proven to decrease document management tasks by 85%, prevent 80% or more of current errors, and cut unplanned downtime by 99%. 

Source: ibm.com

Continue reading

Implement a zero trust strategy for your file transfers

The recent Kaseya ransomware attack is yet another reminder of the voracity of the war cybercriminals are waging on the business world. In 2020, scan-and-exploit became the top initial attack vector for surveyed organizations, surpassing phishing, according to the 2021 IBM X-Force Threat Intelligence Index. The report goes on to note that manufacturing was the second-most attacked industry in 2020 for respondents, up from eighth place the year prior, and second only to financial services. 

What’s behind these attacks?

Companies have invested a great deal in building castle-and-moat protections against external threats, focusing on protecting the DMZ or perimeter zone. In a world of known threats and less sophisticated techniques, this protection model worked reasonably well. But times have changed. 

Cybercriminals can be well resourced and tenacious and even backed by nation-states. They can leverage ever more sophisticated tools, such as Ransomware-as-a-Service, and can be incentivized by cryptocurrencies with their strong liquidity and poor traceability. As a result, they are well positioned in the arms race against traditional perimeter defenses. Clearly, it is time to consider a zero trust approach to help protect your most valuable resource—your data.

The rise of zero trust 

The problem with the castle-and-moat model is the primary focus on external defenses. Once inside, cybercriminals can generally move freely around without much impediment and wreak havoc. This has led to a broadening of the security perspective to encompass internal security, with what is termed the zero trust model. 

The Biden administration in the United States, recently issued an Executive Order calling for advancement towards a zero trust model within the federal government and among federal contractors. Subsequently, in response to multiple high-profile ransomware attacks, the White House also issued a memo to business executives urging them to protect against the threat of the ransomware. Such a model is an “evolving set” of concepts that move beyond “defenses from static, network-based perimeters” according to the National Institute of Standard and Technology (NIST).  

When a cybercriminal or organization has breached a perimeter and has access to your secure environment, typically they will start a stealth scan to build a map of your network. They will enumerate the server they are on for all its credentials and then will try those credentials on your other servers to travel laterally. Most breaches move from computer to computer over standard protocols such as SSH, FTP, SFTP, HTTP, and HTTPS. This means you need to have a strategy for restricting the spread or movement within your organization.  

Zero trust to protect your file transfers 

At IBM, our Sterling Secure File Transfer (SFT) solution is designed to align with a zero trust approach and harden servers to help reduce the possibility for ransomware or malware to travel laterally. The aim is to protect the inside of the castle – or inside the DMZ – to help safeguard internal intellectual property and assets. A zero trust approach requires securing and regulating movement between internal computers and servers and we begin by removing untrusted protocols.  

Our SFT solution is designed to include IBM Sterling Connect:Direct which uses a security-hardened protocol. When malware reaches out internally, it will not know how to ‘talk’ to the protocol. It can also check the IP address from the server that has requested access, and if that IP address is not on the internal list of trusted servers, which can be consistently updated, the receiving server automatically drops the session.  

In addition to these two internal security checkpoints, Connect:Direct can have additional checkpoints to further help prevent the spread of malware to another server. The malware also needs the correct credentials, which can be increased for additional protection of high-value servers, and only files with a specified name may be transferred.  

Each server that uses Connect:Direct becomes a checkpoint – and choke point – for malware. This zero trust approach in Connect:Direct hardens infrastructure and includes capabilities for zero trust practices for communications that can help mitigate risks of traditional protocols using FTP, SFTP and SSH. SFT can also encrypt data at rest and in transit, and provides multifactor authentication helping implement a zero trust strategy for your file transfers. 

So, if you have a traditional castle-and-moat security model, I urge you to consider implementing or expanding your zero trust strategy to help protect what is most valuable inside of your organization. You can start small and add more protections over time. The key is to begin now because the war will continue to escalate.

Source: ibm.com

Continue reading