subscription economy: how to shift mindset in 2017 and adapt to changing consumer expectations
TRANSCRIPT
Subscription EconomyHow The Subscription Economy Is Disrupting The Traditional Business Model
#TDI #innovation #trends
Give Me Some Stats!
The in-app purchases (one-time payment or a subscription) grow, while the paid apps are slowly fading out.
How do users pay for apps?
Example box
Julian Padurariu
The Membership Economy
Why This Happens?
Innovation drivers (#TrendDrivenInnovation)
1. Evolving
customer expectations
2.New technology
Evolving Consumer Expectations
Ownership AccessFrom To
Evolving Consumer Expectations
Ownership Access
The Access Generation: ● A growing cohort of mobile, technically
savvy young people who value access over assets.
● They prefer to stay nimble and rent a home rather than own one; listen to a song on Spotify rather than buy it from iTunes; or subscribe to Oysterbooks or Scribd rather than buy from a Barnes & Noble store.
Market Evolution
Product (1970s)
Product + Services (1990s)
Customer Centric (2000s)
Relationship Centric (today)Zuora
● Razor blades○ Dollar Shave Club
● Wine○ Winc.com○ Getvinebox.com
● Beauty○ Birchbox.com○ Mishibox.com○ Boxycharm.com
● Flowers○ Thebouqs.com
● Cars○ Zipcar $7/mo
● Snacks○ Japancrate.com
● Chocolate○ Cocoa.com
● Diapers○ Diapers.com
● Cooking○ Blueapron.com
● Athletics○ Adidasavenuea.com
● Fashion stuff○ Bespokepost.com
● Socks○ Sockclub.com
Customers Already Get Access Via Subscription To:
● Music○ Spotify $10/mo○ Apple Music $10/mo○ Focus@Will $10/mo
● Movies○ Netflix $10/mo○ iFlix (in APAC)○ Hulu
● Books○ Kindle Unlimited $10/mo○ Quarterlanebooks.com
● Education○ Lynda $25/mo○ CodeSchool $29/mo
● Confluence● JIRA
@ HotelQuickly: Very few licenses, dozens of subscriptions
● Analytics (Optimizely, Amplitude, …)● Emails (Mailchimp, Kahuna, ...)● Telephone numbers (DIDWW)● Cloud servers (AWS / GCP)● CRM (Zoho, Salesforce)● Messaging (Slack)● Faxes (InterFax)● SMSes (Twilio)● Edu (CodeSchool)● Security (Bitium)● Legal (HelloSign)● HR (Jazz, TribeHR)● UX (InvisionApp)
● … and a dozen of other subscriptions
Licenses Subscriptions
At HotelQuickly, we have many more subscriptions than licenses purchased.
Did You Know?
Did You Know?
Did You Know?
Did You Know?
Did You Know?
Did You Know?
Did You Know?
Did You Know?
Why This Subscription Hype?
In addition to providers of software, books, and
music, companies in media & entertainment
(News Corp, HBO); consumer services
(TripAdvisor, Touring Club Suisse); telecom &
utilities (Telstra, YP); financial services (AXA);
healthcare (ThermoFisher Scientific); education
(lynda.com, Kaplan); farming (FarmIQ); and,
through the innovations around the Internet of
things (IoT), even manufacturing (General
Motors, Swann Communications, NCR, Schneider
Electric) are pivoting to or starting up as
recurring revenue subscription businesses.
Evolving Market
Why This Subscription Hype?
Book: The Automatic Customer
Why This Subscription Hype?
If done right, the subscription model offers regular, predictable cash flows to businesses that can keep their customers happy. The lifetime value of customers is also much higher. If companies deliver value, customers buy again and again, instead of just once. Startups don’t have to spend money on marketing or advertising to convince that customer to buy again, so the return on the initial investment is far better. Businesses keep the customer through quality of service and experience, rather than spend. In order to do so, however, businesses have to shift their focus from individual transactions to creating and nurturing long-term relationships with their customers.
If done right, the subscription model offers regular, predictable cash flows to businesses that can keep their customers happy. The lifetime value of customers is also much higher. If companies deliver value, customers buy again and again, instead of just once. Startups don’t have to spend money on marketing or advertising to convince that customer to buy again, so the return on the initial investment is far better. Businesses keep the customer through quality of service and experience, rather than spend. In order to do so, however, businesses have to shift their focus from individual transactions to creating and nurturing long-term relationships with their customers.
Why This Subscription Hype?
If done right, the subscription model offers regular, predictable cash flows to businesses that can keep their customers happy. The lifetime value of customers is also much higher. If companies deliver value, customers buy again and again, instead of just once. Startups don’t have to spend money on marketing or advertising to convince that customer to buy again, so the return on the initial investment is far better. Businesses keep the customer through quality of service and experience, rather than spend. In order to do so, however, businesses have to shift their focus from individual transactions to creating and nurturing long-term relationships with their customers.
Why This Subscription Hype?
If done right, the subscription model offers regular, predictable cash flows to businesses that can keep their customers happy. The lifetime value of customers is also much higher. If companies deliver value, customers buy again and again, instead of just once. Startups don’t have to spend money on marketing or advertising to convince that customer to buy again, so the return on the initial investment is far better. Businesses keep the customer through quality of service and experience, rather than spend. In order to do so, however, businesses have to shift their focus from individual transactions to creating and nurturing long-term relationships with their customers.
Why This Subscription Hype?
Why This Subscription Hype?
If done right, the subscription model offers regular, predictable cash flows to businesses that can keep their customers happy. The lifetime value of customers is also much higher. If companies deliver value, customers buy again and again, instead of just once. Startups don’t have to spend money on marketing or advertising to convince that customer to buy again, so the return on the initial investment is far better. Businesses keep the customer through quality of service and experience, rather than spend. In order to do so, however, businesses have to shift their focus from individual transactions to creating and nurturing long-term relationships with their customers.
Zuora
Subscriptions bring steady revenue...
...but it's also dangerous...
...and challenging...
Book: The Automatic Customer
Different Approach To Business
Brent Leary
Models Of The Subscription Business
1. Membership site model (i.e. online academy, e-learning)2. All-you-can-eat content model (i.e. Spotify)3. Private club model (i.e. investment clubs)4. Front-of-the-line model (i.e. Disneyland VIP)5. Consumables model (i.e. Dollar Shave Club)6. Surprise box model (i.e. Birchbox)7. Simplifier model (i.e. household maintenance)8. Network model (i.e. Whatsapp)9. Peace-of-mind model (i.e. home security)
Subscription vs. Membership?
Subscription vs. Membership?
Subscription = A financial agreement to consume a service or product
Membership = An attitude, connection, emotion, a "neighborhood" for
its ideal customer.
Subscription or membership? Apple Music
Subscription or membership? Member Site Academy
Customers at the center
What about the Travel industry?
In Travel (1/2)
"The concept of buying music at 99 cents a song is becoming irrelevant." Bloomberg
Further reading...
The Automatic Customer (Amazon)
The Membership Economy(Amazon)
Subscription Marketing(Amazon)
...and online academy
www.membersiteacademy.com