The biggest take-away of the post-pandemic economy is the uptick in the adoption of the Subscription model across larger and small businesses in every vertical. A recent survey has indicated 70% of Business Leaders believe subscription business models will be key to their prospects in the years ahead.
The driving force behind this push especially during the pandemic can be attributed to two key factors for both consumers and the seller.
- Cut down on Wasteful Spending: Customers are looking to consolidate what they own and remove what they won’t. The Subscription model allows them the flexibility to embrace a more Pay-as-you-Go model to stay in control of the Services they subscribe to
- Reduced Customer Acquisition & Improved Loyalty: The fact that subscriptions push organizations to deliver experiences that have engaging and constantly improving is well documented. Survery’s indicate a repeat customer spends 67% more than a new customer which drives more revenue.
As a solutions architect I have had to work with multiple customers is guiding the conversation down the path of Build vs Buy. This is key decision that primarily influenced by 3 factors and where you fit on this scale will drive the decision of Build vs Buy as well.
- Is Price or UX experimentation a key requirement for your business
- Does your billing ecosystem run on a very simple cadence
- Are customer self-service and contract management a key requirement
- Do you have the right data to drive decisions
- Do you have a cohesive connected billing ecosystem
There are some of the key questions most CTOs / CXOs need to ask themselves to perform a real-evaluation.
Is Price or UX experimentation a key requirement for your business
If your business operates in a competitive landscape and frequent pricing strategy changes are implemented across the ecosystem e.g. once a month, once a year etc. Making the change is always half the battle the downstream implications and subscription objects will need to be dealt with as well.
This would in effect imply that organisations who are limited by the inability to experiment with different pricing models today should look to purchase a subscription platform
Does your billing ecosystem run on a very simple cadence
Some businesses have a very simple subscription component which would essentially run a 5$ monthly deduction against a customer’s credit card. For such organizations, most payment processors provide customers with a simple JavaScript component that can be leveraged to build their own subscription workflow with a few payment processors offering checkout services as well.
Is customer self-service and contract management a key requirement
With most organisations customer self-service is a de-facto expectation rather than an after thought. This would need to include the ability to sign-up and maintain subscriptions by upgrading or downgrading or cancelling.
The functions behind the scenes for most organisations required to facilitate these workflows would be broadly similar with the ability to prorate and schedule changes.
Most subscription management software’s provide these workflows which can be embedded into your user workflows via an API.
Do you have the right data to drive decisions
For organisations to driven the right pricing and service strategy it is important to understand key facets of your business including Customer Lifetime Value, Acquisition Cost, Churn and Cohort analysis.
All these data sets form the foundation to perform segmentation and driven more adoption across segments. Additionally, for any A/B testing or experiments that are setup will need to provide the right insights and KPIs to understand the impact of these changes on your business.
Do you have a cohesive connected billing ecosystem
Most businesses tend to hack together a billing platform that runs as a standalone application and functions as an orchestrator in the larger ecosystem. Often times the complexity lies in integrating these systems with your CRM, Accounting, Communications and other applications. Additionally ensuring that the integrations which have been built to support your growth at scale and the ability to upgrade these integrations as your billing requirements evolve become increasingly difficult to maintain.
In summary if your business is looking at solving any of these questions it is pretty much a given that buying a subscription platform makes a lot more sense than actually hacking together a system internally.
Some great Subscription Management Products to checkout:
- Chargebee – Great for both Startups and Enterprise
- Zuora – Great for Enterprise with complex workflows
- Stripe Billing – Good for Startups