Insights on “The Subscription Economy” – A Clive Angel Blogpost
It is highly ironic that in this materialistic and asset rich society that we live, that the subscription economy is taking off. People are choosing to subscribe for services and the use of assets as opposed to owning the asset outright. Ditching richly and often personal possessions in favour of having real time access, instant updates and the ability to pay based on a specific needs and measured usage. Welcome to the world of the subscription economy.
The Subscription Economy.
Markedly, prioritising usage and flexibility over ownership.
Furthermore, creating annuity based income streams as opposed to once-off payments.
Subscription services explained
The Subscription Economy explained. A subscription is a service where a consumer pays a recurring fee. Specifically, for the ongoing use of an asset. Alternatively, to gain access to a service offering.
The benefits of a subscription business are through the resulting transformational changes. As a result, of management teams successfully implementing a subscription model.
Firstly, the executive decision-makers of a subscription business need to shift strategic focus. Namely, from product production and development initiatives to becoming customer-centric and service orientated.
The growth strategy for a subscription business is centred around the customer. As opposed to, driven by the product. Subscription models are about providing instant, relevant and seamless services. Notably, to a loyal and engaged customer base.
It is the customers’ current and ongoing needs that are central to the management’s execution strategy.
Marketing will always be core to growing any successful business. However, subscription businesses are principally premised on securing and maintaining customer relationships. Including, the promotion and sale of physical assets and providing service driven customer experiences. Consequently, strategic thinking will be needed to plan new marketing initiatives.
The impact of artificial intelligence.
Artificial intelligence and machine learning will be used to analyse and interpret data. In effect, the increased use of data analysis will directly impact marketing strategies. Henceforth, moving from a sales-based approach to a data-driven methodology.
Customer interactions will need to become central to overall product development. As opposed, to being dependent on the outcome of marketing campaigns. Instead, executives will place reliance on user-generated curatorship. For this reason, marketing will evolve from reactively pushing product through traditional media channels. Henceforth, to proactively engaging instant customer feedback, based on user experience. Therefore, positively impacting customer services.
The Financial Impact.
Financially, businesses will become more cash neutral. Especially, as income is earned over the products lifecycle or the extent of the service. Financial models will be transformed. Uniquely, from the receipt of unpredictable and lumpy, one-off upfront purchases to reliable and predictable annuity income streams.
Impact on Customer Behaviour.
Customer behaviour will shift from the need to own physical assets outright. Above all, to the desire to pay based on access and usage. In particular, the levels of customer service and engagement will have to increase substantially.
In order to, ensure continuity of subscriptions. Indeed, management will have to develop deep customer relationships premised on analysing data, behaviour and feedback.
Subscription as opposed to Ownership.
Customers will benefit in numerous ways. As a result of subscriptions instead of ownership. In summary, some of the fundamental benefits for customers will include;
- All-inclusive services contract as opposed to naked exposure to unplanned for costs. Namely, for insurance & maintenance.
- Instant updates as opposed to waiting to take delivery of an upgraded asset.
- A flexible and tailored service instead of purchasing an asset off the shelf fit for a specific purpose.
- Cash payments aligned with benefits received as opposed to upfront payments. With, benefits only follow from usage over time.
- Tailored services, based on personal feedback as opposed to purchasing an item designed for the general market.
The marketplace is transforming. Consequently, customer values will shift from ownership to relevant and personalised services. These will be delivered instantly, and at the price, they choose to pay for them.
As a result, both businesses and their customers stand to benefit from the emergence and growth of the subscription economy.
Understanding the Subscription Economy