Subscriptions are ubiquitous in everyday life, with entertainment services, software programs, gym memberships, yard services, and even pet food transitioning to recurring-revenue models.
The reason is customer experience. Customers routinely prefer making small, regular payments instead of large, infrequent ones. This consistency and reliability create peace of mind and a sense of control over relationships with providers and the experience as a whole.
From B2C to B2B
Customer experience excellence drives every industry and B2B leaders often look to B2C processes for inspiration. This is evident with subscription commerce.
Increasingly, B2B companies are leveraging subscription commerce. The model can apply to anything customers use and replace over a predictable period of time. Regular maintenance cycles and unforeseen issues are handled through a field-service agreement, providing simplicity and coverage all in one transaction.
Most importantly, by offering subscription services, B2B businesses evolve from simply selling components, products, or parts to intertwining themselves into their customers’ entire product lifecycle.
Considerations for change
Subscription commerce holds immense opportunity for B2B organizations, but any strategic business shift needs to be successfully planned, managed, and executed to realize optimal value, so take a step back and acknowledge some ways in which subscription commerce will affect your operations.
- Channel conflict: Subscription commerce may disrupt relationships with channel partners and resellers, requiring new incentives and rewards for them.
- Customer support: With a new business model, you will need capacity to handle the new support requests and behaviors to ensure their experience is as positive as possible.
- Fulfillment: Completing orders and managing cashflow will change in this new subscription model. Expect smaller up-front payments and smaller, incremental revenues.
- Pricing and incentives: Subscription commerce is also a large shift for your sales model. Ensuring that pricing is optimized and your internal sales organization is appropriately incentivized are key to achieving rapid buy-in.
- Back office: Billing, shipping, fulfillment, finance, and more will all need to reflect the changes in your business model.
Getting it done: a methodical approach
Now that we’ve established the cross-functional nature of the shift to subscription commerce, it’s important to provide a blueprint for a clear, sustainable way forward.
- Strategize: A holistic approach to designing the model is key to ensuring this shift in business approach is relevant and valuable to your entire organization. Make sure to validate assumptions and talk to customers to ensure you’re addressing top priorities and delivering on internal and external expectations.
- Build: The next step is simple – build the program. This includes aligning affected business units, testing, and executing on a simple, agile scale.
- Oversight and governance: Once the model is constructed, organizations need to also build the support structures that will manage and monitor the new business.
- Go-live: Finally, it’s time to launch. Ensure customers know exactly how the model operates, what it entails, and how it benefits them.