Optimising your subscription business for customer value

Subscriptions are nothing new. Traditional subscription companies kept customers at arm’s length. Subscriptions were an efficient financial model of recurring contracts. Now, high-performing subscription companies obsess over customers. Examples of this include the movement to memberships and community. But looking further afield to Software-as-a-Service (SaaS), it is about putting the success of the customer first and foremost.

…high-performing subscription companies obsess over customers…

The focus on the success of the customer is the key to unlocking performance for subscription services. In customer-obsessed companies, excited customers are eager to experience what’s coming next. Stakeholders have confidence in the product roadmap. It’s a virtuous circle, unlocking customer lifetime value. The next-level subscription service is a journey that pays off in many ways:

• More money comes from existing customers
• New customers know what to expect
• Existing customers believe in what’s coming next
• Stakeholders are confident about the roadmap

Understanding your customer’s changing world

At Substribe, we interview hundreds of B2B customers. As we come out of the pandemic, two things are clear – the customer’s world is changing fast, and they are facing more complex decisions.

To keep on top of customer challenges, there needs to be a continuous cycle of innovation. The cycle needs to lead to incremental and radical improvements. Getting this right will avoid many years of turmoil in your business. At the same time, a lot of innovation fails because of two things:

1. Companies forget to discover how to help customers do their job better
2. Companies neglect to discover how much time, resource and money customers are willing and able to invest

The customer must be at the heart of decision-making to unlock lifetime value.

Where are you on the journey?

It takes time, effort, and resources to unlock the value of subscriptions, so it’s useful to know when you’re on the right path. At Substribe we sense a healthy organisation when we see clear shifts in behaviour from a traditional, transactional model towards a genuinely high-performing one.

The drivers of success

It is useful to reflect on the maturity journey for a subscription company. There are six drivers that make progress possible. Balancing the drivers gives an organisation momentum.

Companies that over-invest in capabilities in one driver will be pulled back to the lowest common driver over time. This can lead to years of frustration – and always pulls an organisation back down the maturity journey. A typical area of over-investment is systems, in particular investing in technology before the people and processes have been established.

Getting the right balance

To reach a defined level of maturity, an organisation needs a balance across its capabilities – not over-investment in one at the expense of the rest. A company that over-invests in systems while leaving people and processes opportunistic will find the return on that technology investment tough going, because every other capability is still catching up. The problems this causes may not be seen for 12-18 months.

When you have balanced the capabilities across your drivers, you need the kind of service that will attract subscribers for the long term. This requires continually evolving the service.

If you’d like to find out how Substribe can help you implement any of these strategies, please do get in touch.

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