If your online proposition wants to effectively compete in the 21st century, then you need to accept that subscriptions are a fact of life. Four out of every five firms, have admitted that their customers are changing the way the access services. Regardless of the type of industry, if you are smart, you are going to meet this challenge by transforming pricing and packaging strategies to meet this new shift in consumption. According to the intelligence unit of the Economist, “businesses believe that these new models will enable new revenue opportunities, and offer better differentiation from competitors and access to virgin customer segments”.
The Economist Intelligence Unit (EIU) and Zuora, a subscription and e-commerce and billing provider, recently collaborated on research that found “a societal shift in global consumption preferences is changing the way businesses are pricing and delivering their goods and services”. Businesses and consumers are constantly on the lookout to access services that are flexible and convenient. The cable industry is learning this fact to their detriment. As new models of ownership are created through the emergence of subscription and sharing businesses, this has caused a major transformation in various sectors which include financial services and technology.
Key Takeaways of the survey results are (or see the infographic below for a visual display):
- Four out of every five businesses see changes in how their customers access goods and services.
- The consumer benefits are reduced transaction costs, more convenient use of goods and services and the ease at which you can upgrade or downgrade services.
- For businesses shifting to these new models of delivery, the expected benefits are new revenue opportunities, competitive differentiation, and increased customer loyalty.
- Over half of businesses are integrating new pricing and delivery models such as subscriptions, sharing and rental goods and services, rather than selling products on a one-time basis.
- Of those, subscription-based models have emerged as the primary means to do so, with 40% of these companies implementing subscription services as part of their core business.
- There are high expectations for revenue growth, with 84% anticipating that revenue from these new delivery models will increase over the next two years.
Zuora co-founder and CEO, Tien Tzuo, made this point: “Driven first and foremost by changing consumer behavior, the development of the Subscription Economy is fundamentally changing the way successful businesses operate and opening up a worldwide market opportunity conservatively estimated at US$500 billion. It is clear that businesses in many industries have recognized this transformation in customer expectations, as well as the benefits it is bringing which include longer, stronger customer relationships and increased opportunities for recurring revenues.
However, the shift in the Subscription Economy is not easy. How you price, sell, bill, collect payment and account becomes much more complex, and every line of the business must be prepared and aligned to meet the demands of this disruptive transformation in global commerce.
The World Subscribed is a brave new world. New rules are being written every day on how to grow successful businesses and transform billion dollar industries. Zoé Tabary, Deputy Editor at the Economist Intelligence Unit commented: “The shift to new consumption and delivery models is taking place against the backdrop of more empowered consumers, who increasingly seek convenience and better value for money on goods and services. This is creating technical and organizational challenges in implementing new models, but businesses are starting to take advantage of the opportunities that they represent.”
Hayden Richards is Contributor of IntelligentHQ. He specialises in finance, trading, investment, and technology, with expertise in both buy-side, sell-side. Contributing and advising various global corporations, Hayden is a thought leader, researching on global regulatory subjects, digital, social media strategies and new trends for Businesses, Capital Markets and Financial Services.
Aside from the articles, interviews and content he writes for IntelligentHQ, Hayden is also a content curator for capital markets, analytic platforms and business industry emerging trends. An avid new media explorer Hayden is driven by a passion for business development, innovation, social business, Tech Trading, payments and eCommerce. A native Trinidadian, Hayden is also a veteran, having served with the Royal Air Force Reserves for the past 10 years.
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