Adopting a subscription economy model starts with understanding and anticipating the operational and cultural changes required to ensure a successful transition to the new model.
Products and services ready for subscription
The first thing that is required is to know the market, detect opportunities and evaluate the company's offer to say which products or services are likely to be offered in subscription mode.
Initially face the greatest opportunities to increase income within your current client portfolio. In parallel, thanks to the response of its own clients, the necessary elements are built to capture new clients and markets. In the initial phase, it is very likely to cannibalize the current offer itself on the same portfolio. If it doesn't happen, it's possible that some other brand will and take the opportunity.
What questions need to be answered:
- What customer problem is being solved?
- What value will customers get from the new offering?
- How does this value translate into revenue?
- What opportunities do they represent for the established business?
- How does the offer differ from the competition?
- Is there a technological and operational model to integrate with customers and third parties? For example, an API model.
Price
It may seem like pricing is the easy part, but considering the impacts of changes to the current customer base and market is key. Bad practice and poor calibration severely damages margins and impedes performance.
There are many issues to consider in pricing:
- By levels or by use?
- Annual or monthly fees?
- What will be the metric or unit for pay per use?
- Which pricing models offer the best long-term results?
- How are competitors evaluating your offerings?
- What type of price best aligns with the value perceived by the customer?
- How much and for what is the customer willing to pay?
- What does the business require to enable value-based or usage-based pricing?
- What price level attracts new users and what provides greater value to customers?
Customer experience
With a correct product and price, you have to consider the customer experience, throughout its life cycle. Wue expects the buyer of the product and the company.
This means that, unlike a single transaction, that the subscription model persists and accompanies the ongoing relationship with the customer.
To offer your customers a unique and efficient search, purchase and management experience, a comprehensive subscription trading platform is required. It is obvious that billing is significantly different for the subscription model, but the same goes for other aspects of the business.
A strong platform brings together all the capabilities—acquisition, marketplace, identity and access management, billing, relationship management, expense management, data and analytics, and all other capabilities—so the business is not in control and forced out. to improvisation.
In the platform selection process, the following questions must be answered:
- Client management and retention tools included in the platform
- Agile support for multiple offers, channels, and devices
- Automation and efficiency in the collection and billing processes
- Data and analytics included for performance analysis
Sales strategy
The change from single transactions to subscription sales means drastically changing the sales and incentives strategy of the sales team.
Selling subscriptions requires different skills and knowledge. Therefore, regarding schemes on unique transactions, it is necessary to change to new models based on the incorporation of clients, activation and average income per account.
- What metrics make the most sense for measuring and rewarding our sales team performance?
- What is the ideal frequency for incentives (eg, monthly or weekly versus annual or quarterly measurements and payments)?
- How should we reward renewals in our incentive plan?
Ecosystem
An ecosystem with complementary third-party products around the company's offering generates greater value for the customer and revenue for the business.
Subscription-based ecosystems make the offer much more attractive to customers because more than one problem is solved from a single window.
The benefits to the business are enormous because new capabilities can be delivered quickly without having to be built in-house. This keeps research and development costs low and provides the agility to bring new products and services to market much faster.
- What are the fundamental capabilities of the product and what must the partners of the sense ecosystem meet?
- What is the value that the customer associate with the brand?
- Does the subscription trading platform scale as the ecosystem grows?
- What is required of partners to be able to participate in the ecosystem?
Customer service and support
A strong customer relationship means that the company is there when customers need help with products or services. Recurring revenue will not be sustained in the long term if the customer is lost due to not receiving adequate support.
That's why customer service and technical assistance are key. This part of the business is a lynchpin of the subscription model strategy and essential to customer relationship efforts.
- Do you need a customer support area or scale the existing one to adapt to the new model?
- Do you have the capacity to respond effectively to the customer or do you need an external provider?
- What service is needed to help extract the optimal return from the service for the customer?
- Is this service likely to be monetized?
basic issues
If you can answer the questions below, you're likely ready to transition to a subscription commerce model or scale your current subscription-based business.
- What customer problem is being solved with the subscription offer?
- What is the size of the directly accessible market?
- Are there one or more APIs to integrate the offer?
- How is the price of the subscription offer set?
- Does the commerce platform have capabilities to manage the customer experience?
- How are customer services and support offered?
- Is there a clear sales incentive model adapted to the subscription model?
- Is there a strategy to develop an ecosystem?
