subscribed 2015: the subscription maturity model? where do you fit?
TRANSCRIPT
What are we trying to enable?
3
Align price with experience
Product/Service
Defined by access
Experience
Defined by interaction
Outcome
Created through interaction
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Subscription models can get stuck•Attrition•Acquisitions•Culture of “winging it”
Subscription models evolve rapidly•Iterate pricing and packaging•New functionality, new markets
Why a Maturity Model Approach?
5
Rising expectations•Customers•Investors
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And This
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“…messy organic growth, seven customer data stores, three independent payment collection systems, customers passed between different contact centers, no centralized view of the customer.”
“how do we enhance and maintain our customer experience while changing every fundamental aspect of the technology that supports our subscription business without damaging our customer experience?”
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IDC’s Subscription Business Model MaturityScape Stage Overview
Wild West
Focus on customer acquisition without any retention strategy. Inconsistent customer experience.
Business OutcomeChurn is excessively high, outpacing new subscribers.
Differentiated
Customer experience hinges on individual perception of the offering. Systems support low-touch subscriber acquisition, but lack scalability and visibility.
Business OutcomeRecurring revenue is on the rise, but churn is still high and/or unpredictable.
Customer Loyalty
Focus on bringing the “right” customers in, keeping them, and providing them with social avenues to express their loyalty.
Business OutcomeChurn is slowing while recurring revenue is increasing.
Time to Value Acceleration
Structures designed to get customer to realized value quickly, and then demonstrate this back to customers via usage reports.
Business OutcomeFocus on profit as well as revenue growth. Better visibility into key metrics.
Customer Lifecycle Optimization
Focus on building and deepening customer relationships-- before the customer even makes a purchase through renewal.
Business OutcomeCustomer lifetime value is 3x-4x the cost of customer acquisition.
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Haphazard Opportunistic Inconsistent
Experience
High churn Low customer lifetime value Reactive management of the business
Outcome
Monitor customer engagement with the product/service. Develop strategies to make customers more engaged.
Hone your strategy to be more attractive/valuable to key segments.
Guidance
Wild, Wild, West
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Easy to get on board Hinges entirely on the individual's perception of
how unique, cool, convenient, cost-effective, or useful the offering is.
Experience
No focus on customer lifecycle. Customers come in leave in a linear fashion
Pricing focus is on promotion, not retention, and churn is still high and unpredictable
Outcome
Develop a forward- versus backward-looking income statement focused on annual recurring revenue.
Systems must be addressed at this point. Billing frequency, scalability; holistic view of the customer.
Guidance
Structured and Differentiated
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Becoming more social. Outlets are created or supported for customers that want to engage with one another.
Pricing and packaging are designed to help bring the "right" customers into the offering
Experience
Churn is slowing; The cost of customer acquisition may still outpace customer lifetime value.
Recurring revenue measurements and overall retention rates are more instructive in determining business health.
Outcome
Pricing should be transparent and simple to understand.
Focus on getting the customer into the right plan. Structure technology and process around
governance. Institute controls over rogue behaviors.
Guidance
Building Loyalty
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Continuous engagement Unified customer experience across product/service
lines Customer feels like an individual, not a segment.
Experience
Systems and processes support continuous engagement, by providing recommendations and demonstrating value through elements such as usage reporting.
Up-sell and cross-sell identification.
Outcome
Integrate pricing/packaging with customer experience to more effectively design offerings that enable customers to see realized value as quickly as possible.
Guidance
Value Acceleration
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Hierarchy of Pricing Flexibility
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Subscription
Metered Access
Consumption
Outcome
Flexibility
What is a successful outcome?
Size= cost of
equivalent unit
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Clear cadence of contacts and experiences Delightful Personal
Experience
A dashboard view across all key subscription metrics
Customer usage data build prospect and customer profiles
The company realizes that sometimes, putting customers in the "right plan" means putting them in the lower cost plan.
CLV is 3x-4x cost of customer acquisition.
Outcome
Some of the biggest challenges were are managing scale.
Hone your multi-channel relationship capabilities While it may be possible to run pricing experiments,
setting a consistent pricing structure is important to building trust.
Guidance
Lifecycle Optimization
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