3 prescriptions for subscription success
Relationships have always been the center of good business. One customer experience agency found loyal customers are 5x as likely to repurchase, 5x as likely to forgive, 4x as likely to refer, and 7x as likely to try a new offering. So, it’s not surprising that subscription revenue models capitalize on the value of customer relationships, turning a one-time buyer into a life-time customer. And, with customers purchasing a service on a consistent basis, the recurring revenue provides companies the ability to project future revenue more accurately.
Recognizing the need to shift from a traditional, singlet-transaction reseller model as customers seek consistent value and everything-as-a-service, 89% of companies are adopting SaaS in their portfolio of offerings (fourquadrant).
So how are companies finding success with subscription models?
1. Build subscription services around your best products
A good place to start is to examine the highest-value opportunities. What does your best customer look like? Take a look at your business capabilities, products, and processes. What offerings are the most valuable and successful? The most successful subscription services are wrapped around a core technology that is already offered. It’s not about reinventing the wheel, it’s about putting an engine on top of that wheel. Subscription services built around data hosting, software, and infrastructure help partners increase the value offered to (and the revenue received from) their best customers.
2. Leverage consumption analytics to add more value
Subscription business models succeed when companies deliver continuous value to customers. One way to add value over the lifetime of a customers is to drive consumption of your product or service. After all, if a client doesn’t use your technology to its full advantage, they are less likely to renew their subscription. Driving usage through effective onboarding programs will remind customers of the value you offer, while reducing your reliance on bringing in new clients. And considering that acquiring a new customer can cost five times more than retaining an existing customer, it makes business sense to focus more on your best customers than prospects you know nothing about.
Leverage consumption analytics to create sophisticated, personalized onboarding programs that drive usage and customer loyalty. It is a great way to add value and remain relevant with your customers.
3. Deliver consistent experiences
When transitioning to a subscription business model, companies interact with customers through many more touch points. Use those opportunities to increase customer loyalty and boost their perception of the value you offer. Creating consistent experiences will help you achieve that goal. Take Disney for example. The value of customer relationships is evident across all aspects of the company. No matter if you are visiting one of the trademark parks, shopping online or in-store, or using their mobile app, the goal remains the same: make customers happy. Careful planning, discussion, and training of everyone who interacts with your customers enables you to deliver the necessary value.
Prescription for success
With breakthroughs in technology, we now have an opportunity to explore new ways to reach customers and gain better insights into customer satisfaction. The benefits are clear: reliable revenue, accurate forecasting, and increased profits. To get there, you’ll need to build subscription services around your highest-value products, drive usage and adoption with your clients, and deliver exceptional experience across every touch point with customers.