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Subscription technology is growing apace and is becoming more critical to enable business impact and deliver valuable and differentiated customer outcomes.
However, the space is complex – what’s required…when, who should you choose, how do you use it?
A few years ago Substribe created a working group of CTO, CIOs and MDs of subscription businesses to better understand this area.
The answer is never technology on its own.
The AI hype (c.2024 – present) has increased the need for CTOs and their business partners to connect technology to business objectives and customer problems to create value.
This working group, and others like it, contributed to the building of the Substribe value diagnostic and the DaaS assessment, along with other tools and techniques to optimise recurring revenues and customer value.
What follows is the background discussion with the working group, intended as useful discussion points for subscription leaders.
What’s special about subscription businesses?
Subs businesses are quite different to other businesses, with a critical need to ensure renewal. This requires data at the right time, across potentially multiple products and multiple end customers within the same customer account. This means there is opportunity and need for niche and specialist tech in this space. As the wider trend of more businesses moving to the cloud gathers pace, there’s a push for standardisation – or treating businesses the same – and so it’s important to think this through. You should only be different where this makes sense.
In other business environments, the economic buyer is a very different person to your end user, whereas in b2b subs, these roles often overlap. Typically tech has been created for use in direct to consumer, b2c and SaaS environments because the markets are larger. This hasn’t always translated well into the world of higher value b2b subscriptions where interaction and engagement needs to happen across multiple products and services and coordinated across a large number of individual end customers. You need to show the depth of knowledge and data to justify high value subscriptions and it is challenging to get all the information into one place. This means b2b organisations often create a bespoke solution for multiple products and multiple contracts.
“We need to discover the ‘why’ that each persona is trying to solve, then we engineer the system around that. We put it all together into one usage platform so that we can look at how personas are using the service to upsell them or flag potential risk to the business.”
A key part of choosing tech is holding data in a hierarchical way. It is important to consider how these things fit together so that your systems can have a conversation together. Where do you start? You don’t need an all singing & dancing tech stack when you are getting a product out there, a lot of people want it to be future proof and that’s impossible with all the changes out there.
Where can technology create competitive advantage?
Technology that reaches into the heart of your customers’ operation and embeds into their workflow will create competitive advantage.
There’s an emerging approach from new companies who are moving into the subs space where they take the IP built into the technology and this delivers expertise as a service.
For those who are established in the b2b space, the most secure position is to become indispensable to customers by making sure that critical business data being supplied is plumbed into the customers operations, for instance, with pricing data that is used to inform trade. In this way, you can become part of your customer’s business model, so they can’t do without you. Once there, making additional money from existing customers is possible by ensuring that anyone who touches the data has to have a license – and actively hunting people who don’t have a license.
Another approach is to use API, allowing customers to pipe your data into their own systems, effectively providing key data within your customers environment. This helps with the perception of value and becomes more strategic.
However, normal business to business publishers are one step removed from the ultimate value it delivers to the end customer, and therefore rely on the perception of value. This isn’t easy, because perception is hard to quantify for example, as you move from the value of a report that someone reads compared to how someone feels about an experience.
“The barrier of the tech isn’t the cost. The barrier is the replumbing of all the rest of the stack – CRM, data, etc – the cost paid to the supplier is relatively small. The internal cost on developers is where the vast majority of the cost lies. You can’t crack the nut with one swoop – as a business you have to decide what the most important things to focus on are. Incremental innovation is important, starting with what works and what you really need, and then working from there.”
Where do the biggest technology deficiencies currently lie?
“For some businesses they won’t be thinking in a customer centric way. There’s a need to educate the business on how to use that data and to get the business to work differently.”
It is becoming easier to use tech innovation and integrations and user friendly approaches to add tech to your stack. However, quite soon you find you’ll run into a problem you hadn’t recognised about how that data is recognised. One of the challenges of choosing the best tech for your business is to be clear about what you need, what you’re dependent on, and what constraints you will have with your choice.
“Tech shouldn’t be the element that constrains you, it’s about what you’re trying to achieve. Get your process down, and your architecture right. Then find a vendor.”
Does the technology market address the emerging need of subs?
Where the tech world is going is to the Platform of Platforms – offering cloud applications to bridge applications. The promise is that you can evolve and iterate on a platform of platforms. There is a trend towards tech layers rather than replacing the old, so vendors are saying don’t worry about the old systems, put a layer on top to interface.
You can get tech overkill – work out what your customer journey and how you deliver customer and shareholder value and decide what bits of tech to deliver that without going over the top.
The b2b market is slowly catching up, lot of tech over the last 8 years or so started in b2c and has adapted. There’s not that many tech businesses attuned to b2b needs and there are generally gaps. Identity & Access management and licensing has been very useful and is new to our market in a designed b2b way.
Identity & access management is a game changer for b2b, they’ve got the chance to team up with info providers like ourselves to take customers through subscription journeys. The critical thing is to get that tech to speak with other parts of the tech stack.
The problem is that there is a need to be flexible to fit in with new tech and you need to calculate if that is a risk worth taking, rather than a bespoke build in house?
The linkages to the rest of your tech stack is where the real cost comes in, not the cost of the tech itself.
What are the update paths or migration strategies?
“We are moving into the world of continuous innovation, and so maybe we need the talent before the applications. By being clear about the purpose of the tech and the outcomes you want to achieve, you can then approach a vendor to help innovate around the edges.”
Substribe helps b2b companies unlock the value of recurring revenue. To find out more visit substribe.co or contact Andy at andy@substribe.co
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