A Different Business Model For A Different World
We live in a world of ‘Big Data’ which leading companies are leveraging in order to gain valuable business insights, from gaps in the market to opportunities to upsell their customers. What organisations do with their data is fast-becoming the key differentiator across a multitude of markets. To stay competitive, it’s essential for companies to get closer to their customers.
Coincidentally, this happens to be one of the key benefits of the subscription economy, as Subscription Factory founder Timo Zuidgeest explains in this blog post which takes a closer look at building a different business model for a different world.
Time For Reinvention
When businesses take the time to truly understand their customers, they create opportunities to grow their offering and provide additional products and services to meet their customers’ needs. For example, by offering a digital edition as a subscription service, it’s possible for a news publication to track the reading habits of their readership and offer them increasingly personalized and relevant content.
Many startups are subscription natives; the model makes sense for their offering, and they’re typically tech-based, or using tech to sell their product or service via a website or app. For established companies, the subscription economy represents a brave new world. As a result, subscription services often become an additional offering alongside their existing single-transaction based products. The subscription-based model also creates new and exciting business opportunities, particularly in areas such as travel, where people pay a recurring fee to gain access to a vehicle, such as a bike.
Whatever the industry, once a product and the pricing is in place, Subscription Factory helps companies handle the complexities of implementing this new business model.
Monetizing A Product Or Service
Subscription Factory’s customer journey normally begins when there is a clear plan in place to launch a subscription service. From that point onwards, we can help customers get set up, with areas like ecommerce, billing, payment collection, and revenue recognition. In fact, just about everything they need to start monetizing a product or service.
Helping customers make money from their idea is where we provide the most value. And over the years, we’ve encountered just about every type of subscription service, from software right through to recipes. We’ve also helped plenty of businesses to overcome the challenges of implementing a recurring revenue model. How do we do it? Our tried and tested approach is defined by Zuora’s Nine Key framework.
When companies approach us, they already know two things: what product or service they’re going to offer, and how they’re going to price it. This means they’ve already decided if it’s usage based, or pay-as-you-go based, and so on. Subscription Factory comes in at the next step: how to set up the acquire channels and the full implementation of the needed subscription management requirements.
We can help businesses to decide whether they’re going to sell their offering via direct sales, ecommerce, self-service or a combination of these channels. After that, we can support with setting up subscription billing, cash collection and getting ready to account for recurring sales, as opposed to transactional sales.
Recurring billing requires invoicing at regular intervals, whether that’s weekly, monthly, quarterly, or annually, and some financial software is not geared towards this type of accounting. Companies also need a robust system for automating payment – and a way of gently chasing those whose payments are not forthcoming.
Once customers are onboard, we work with companies to find opportunities to upsell their product or service, whether that is upgrades to packages or add-ons to complement existing ones. What traditional companies struggle to adapt to is the idea of an ongoing customer relationship, which requires careful handling and nurturing. The subscription model goes much deeper than simply switching the way customers pay for services on a recurring basis.
The recurring revenue model affects the entire structure of an organization, including customer care, product sales, marketing, IT, and finance. Being responsive to customer needs is essential for companies looking to leverage the benefits of a subscription-based model and minimize churn. That’s why it’s so crucial to get all the surrounding business infrastructure right.
You can read more about the business value of Zuora’s Nine Key Framework in Alexander Demes’ blog post: How To Build A Successful Subscription Business.