What is a Subscription Economy?
- This economy started when traditional companies started shifting from a pay-per-product model to a subscription business model.
- Here companies give access to products and services for a recurring fee.
Image Source: Salesforce
Today it’s not about your products or services. It’s about what value people get by subscribing to your product/services.
A shift from Product-Focused to People-Focused. There is a shift in how companies view their product experience.
- Ownership has changed to Access
- Generalization has become customization
- Automating improvement
- Building relationships
- Responsiveness
Previously customers were happy with a generalized product but now people expect a software:
- that Fulfills their needs
- where Products are delivered instantly
- that solves a problem they are facing
It’s now all about creating an experience for the customer.
Subscription models are on the rise as companies are shifting to cloud service or Software as a Service (SaaS).
Source: UBS
The above graph shows how digital subscriptions are expected to more than double by 2025.
- By creating personalized service for customers, businesses increase their value. This also builds long-lasting relationships.
- Companies should bring constant improvement to their products and services by focusing on how people react and respond to their products and services.
- Companies should automate relationship-building by collecting user information based on how they use the products and services.
- Companies should shift strategies from transaction centric to relationship focused. This is sure to provide growth over time.
Understanding the customers and monetizing that understanding is how subscription businesses become a success.
- Thus, embracing the changing subscription economy grows business and relationship with customers.
- Focusing on user experience and responding to them through your releases, updates, value-based pricing, and support, can create predictable recurring revenue, value, and better customer relationship.
Image Source: UBS
U.S has the most subscriptions, i.e., 53% of the total digital subscriptions.
“Focus on the customer rather than focus on the product or transaction.” This will help you retain customers and grow your business.
