The ‘Subscriber Economy’ is an important change that is happening across business right now.
So, what is it?
The Subscriber Economy is the fast-growing trend towards paying monthly for a service instead of an expensive capital purchase upfront.
Consumer purchasing behaviour is changing, and it is changing for good. It is happening in our work and our personal lives. Think about how you used to watch a movie…video rental from Blockbuster? Buy a DVD from HMV?..Ok I am showing my age now!
If you’re like me and many others, your movie is downloaded or streamed on demand; your music is from a subscription service…paid for monthly for all you can consume; no more buying CDs or DVDs (hardware!) up front. The same for cars (lease or PCP vs purchase), shopping (Amazon Subscribe and Save), the list goes on.
As a Business Mentor we see this all the time and it is relevant to every size business and every industry.
Relevance is critical. Any business that doesn’t stay relevant to their customer or relevant in their industry is dead in the water, you are the Blockbuster of tomorrow. How do you stay relevant? You must embrace digital.
In the past, traditional sales and marketing found a channel to market, which led to cash up front, happy sales person and benefit to the P&L. The customer walked away and if they were lucky, got a phone call a year later when they churned or appeared on an outbound campaign. Single product sale, no relationship and no real trust. This is the Old Game with Old Rules.
Today’s customer isn’t specific to one channel, they engage with all channels. They may not pay large sums up front, expecting to pay monthly at a rate they deem reasonable. This also means that as a monthly subscriber, they are free to leave at any time. And they will.
Now this does two things: first it means you must focus on creating a bond between you – TRUST is the bedrock of everything. Second, it means constantly reinforcing that bond by repeatedly engaging with the customer and CONSISTENTLY ADDING VALUE. That’s right, value has a time limit. What had value at the initial purchase does not necessarily retain that value forever or in some cases for long. It is our responsibility to understand what the customer values today, tomorrow and in the future and then meet or exceed that for them.
So What Do We Do?
The key is to think differently. We must work for our customer, not sell to them. We must embrace a cultural shift across the business where everybody is working towards delivering
- great outcome and positive experiences for our customers
- services that are available on demand, not when we’re ready to sell them
- mobility – this is critical – available anywhere
- repeating value through services, support or advice
To do this means thinking about meeting customer needs not selling products. It means building a relationship, not one-off sales. It means pricing the value of the service to the customer, not a cost per unit sold. This is the New Game and New Rules.
I review this area with my clients and two in particular come to mind who have had great success over the past 6 months-one based in Nantwich and another in Stockport where they have reviewed their product and service offering, customer behaviours and key processes and reshaped their business to great success using automisation, diversification and reducing waste. I have other clients in North Wales who are have excelled in increasing recurring revenues via a subscription model.
As part of our role as Business Mentors, we cover with our clients our world class 6 steps for improving profitability which focuses on some of the areas I have mentioned in this blog and many more.
If you would like to discuss more about how you become part of the ‘Subscriber Economy’ please feel free get in touch for a complementary mentoring session.