ONEtoONE, 26 May 2020: The subscription economy is a game changer and has become a strategic success factor for companies. The shift from spontaneous and purely use-oriented buyers to recurring and long-term consumers is enabling all companies to build up a long-term relationship with their customers. In all sectors, and from start-ups to listed companies, we are creating the ideal basis for this shift.
Why buy a car when you can drive a convertible today, a limousine tomorrow, and an SUV next week? The younger generation of consumers in particular appreciates the advantages of subscription models. They prefer the usefulness of services to possession, something which has made streaming portals such as Netflix or Spotify so successful. The constantly changing range of services and the convenient access that comes with it are eclipsing ownership. The basic principle is not new, however. Subscriptions and leasing models have been around for a long time, but have now improved significantly, both in the B2C and B2B areas. The models have become much more flexible and more customer oriented. For companies, the key question is no longer: “How do I sell my product better?“ but “How can I further develop my product so that the customers are interested in long term consumption and want to conclude a contract for long-term access?”
Long-term Customer Retention
To stay with the “car” example: While in the case of one-off purchases customers become the owners of a car, and become possessors of cars via leasing models, with subscription models they become car users. As users, they get all of the services surrounding a car – such as maintenance – free of charge. With leasing models, these services have to be paid additionally, and owners have to pay for them anyway. The advantage for customers is obvious: they have maximum cost control, with the flexibility to add to or reduce their products/services as required, setting the scope and the duration exactly as the need them. For the companies, offering products and services “as a service” has the appeal that the consumers enter into a long-term relationship with the product or service. Companies can thus communicate directly with the customers and address their needs.
You Look after our Customers, We Do the Rest!
Subscription models allow you to develop your products in a customer-oriented, rather than a product-oriented way. This creates trust in your services and strengthens customer retention, thus generating customers of greater value. At the same time however, subscription models increase the requirements and complexity with regard to the administration and billing of your customers. The number of invoices and accounting documents multiplies, and the subscription management and regular invoicing that are needed lead to further complexity in CRM, billing and accounting.
In order to achieve flexible billing models – for products and services of any kind – companies need the right solutions. The creativity of the product managers shouldn’t be slowed down by restrictions in billing or accounting. They should always be able to keep an eye on the added value for customers and thus for their company. In our whitepaper “Subscription Management Report 2020”, we show you the subscription models that are best suited to your product, that best addresses your target groups, and that will perfectly suit your company goals: replenishment, curation, club membership, consumption, or renting. The Subscription Management Report 2020 explains the various models, as well as their advantages and disadvantages. With nexnet’s solutions, complex subscription management becomes a simple routine. Our solutions include all of the building blocks relevant to achieving successful subscription management: from contract- and customer management, to the payment process, to monitoring receipts of payment, all the way to credit management, we carry out all transactions securely and efficiently.