In the Subscription Economy, Only the Truly “Customer Centric” Will Survive!
The subscription economy has changed the dynamics of the B2B industry. In this write-up, we look at why being customer-centric is the only option left for businesses to survive in the subscription economy.
Nov 24, 2021
Subscription model, membership economy, consumption-based model. Name it what you wish, but it ultimately boils down to the forever transaction. It is the moment where customers join once and stay forever. As per Deloitte, 8 out of 10 subscription companies are maintaining their customer base or growing their customer base in the pandemic.
Today, businesses in the subscription economy have moved from selling one-off products to customers. It is more about creating members for your subscription.
The subscription economy has come a long way in recent years. From Fortune 500 to startups, all are becoming firm believers in reaping the rewards of the subscription business models.
The biggest challenge in getting the subscription model is the culture.
So, what is the best way to create an organization that supports and gives the much-needed impetus to your subscription model?
Customer-centricity is the key to comprehending where your customers are heading and how you can meet your customers at different journey points whenever required?
In the forthcoming sections of this write-up, we will discuss how customer-centric thinking is imperative in the subscription economy.
The concept of customer-centric thinking
Customer-centric thinking is putting the customer first. It is basically keeping the customer at the core of customer strategies. Customer-centricity provides a positive customer experience and aims to increase customer loyalty, drive repeat business, and improve growth. Customer-centric thinking is crucial to building long-term relationships. You can build customer relationships with three important concepts-
Developing use cases and new cases for the product or service
Boosting brand loyalty
Increasing customer reliance on products or services
The era of the customer
Companies are now realizing that customers are the most important ones in a relationship. Excellent customer experience is essential for long-lasting company success. The era of the customer means that customers are now the priority and the ones helming company growth. This means there is increased importance on how customer relationships are maintained in this era.
The subscription economy drives the era of the customer. In this, customer retention is linked to customer lifetime value. A subscriber generates good revenue for the business. An increase in CLV is possible with each subscription payment which increases profitability. When you retain your customers or subscribers, you don’t automatically spend on acquiring new customers.
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The need to grow your relationships, not your transactions
In a subscription economy, you need to shift your focus on relationships over transactions. This offers more growth value in the long run. When you build a relationship with a customer, it goes on to mean more than just numbers. This is what creates a positive relationship with customers. You can also improve revenue through upsells, cross-sells, and other means. Customer relationship management is when you can lay the groundwork for improved revenue from existing accounts.
Embracing the changing customer-centricity in the subscription economy grows businesses and relationships
Companies need to adapt to changing customer relationships to improve businesses. The end goal is to retain existing customers, deliver multi-channel experiences, offer lasting value, and create memorable experiences. Recurring revenue requires better relationships with customers. For that, companies need to proactively communicate about product innovations, new services, and the latest upgrades. This will only increase the customer bonding with the company.
The challenge of adapting to customer-centricity in the subscription economy
1. Getting adequate leadership support
The subscription economy requires adapting to customers as per trends. IT would help if you had adequate leadership support to alter strategies as per the need. Customer centricity is possible when all levels of management are aware and on the same page with respect to plans. Leadership support is necessary to create customer-centricity.
2. Educating and engaging colleagues
Another challenge often faced is educating and engaging colleagues. In some cases, co-workers may not be aware of the customer-focused strategies. This is where you must build processes, playbooks, knowledge sharing sessions to educate and onboard every team member on this journey and other factors must be considered while creating customer-centric strategies.
3. The change of roles
Adapting to customer-centricity requires changing roles to suit customer retention. A sales executive will have to be upfront about what the company offers. Bridging gaps between company and customer is important. This is a challenge, since many times, companies cannot prioritize accordingly. Managing this resistance is important to create a truly customer-centric environment.
4. Shift in workforce
Customer-centric behavior requires a mindset change even for the employees. This shift in the workforce is required for a subscription economy to thrive. Some employees may leave unable to take the change. However, companies need to strengthen their strategy and move ahead.
Culture change is huge for an organization. This can be tackled with the right strategy. Balancing the team on various fronts is tough but necessary. The core idea for any company to thrive in a subscription economy is to focus on the customer.
You need to prove to the customer that the products are of high value and offer great services.
To do that, you need to know the customer and have a customer profile drawn up. You need to know what the customer does, where they live, what they like, and who they like to draw a sustainable, unique customer success plan.
The subscription business model thrives on exploring the customers’ needs instead of selling the products and services based on their ownership. It is known that they are thriving. Top SaaS companies are into subscriptions which only improves the opportunities around. There is a need for effective management to optimize incentives and make a business customer-centric truly.
With the help of a customer-centric approach, businesses in the subscription economy can thrive on customer loyalty and build strong customer relationships.
The only way businesses can grow in the subscription economy is by adopting customer-centricity in their operations. It is a must to function at full throttle and grow further.
Anshi has over 12 years of experience in demand generation, digital marketing, and managing global teams. In her prior role as head of marketing operations for a high growth US healthcare tech organization she transformed marketing from cost to revenue center.