Subscribing to a New Mindset
Nowadays, consumers often prefer to subscribe to a service rather than buy a product. This business model allows for more flexibility and higher levels of service provided. In other words, “why own when you can subscribe?” is the new mindset amongst consumers, and businesses aren’t far behind.
Power to the consumer
With the subscription mindset, the power of every consumer has dramatically increased. Building a trusted relationship with customers and seeing them as a long-term investment rather than a one-off sale has become key for companies. The product itself moves out of focus. Companies have to really get to know ‘who’ their customer is and what their needs are.
A study in The Economist found that over half (51%) of the companies surveyed, in the US, UK and Australia, have changed or are in the process of changing the way they price and deliver their goods and services.
Some of the best-known examples of brands operating within the subscription economy include Uber, Amazon Prime, Spotify, Netflix, Stitch Fix, Peloton and Salesforce in B2B. We have likely all experienced proof of concept in recent years. More and more of us are subscribing to TV streaming services, scheduling online grocery deliveries or surprise subscription boxes full of our favorite brands.
For brands operating in highly competitive consumer markets, it has become clear that subscriptions are the best way to come to know their customers, build convenience for them, and therefore improve customer loyalty. As always, shifts in consumer behavior impact B2B activities, and companies are starting to reconsider their revenue models. Powered by consumer behavior in the B2C market, buyers now expect to make buying decisions for their businesses in the same way they make buying decisions for themselves as individuals.
Software subscriptions are a no-brainer
The software industry changed dramatically with the rise of Software as a Service (SaaS). Continuous software development and the release of new features on a regular basis to all subscribed customers is one of the biggest advantages of such solutions. The days when software became outdated and lengthy re-installation processes were in order are over. New software packages in the form of CDs is a thing of the past.
Product ownership and the old product economy is becoming outdated as a whole. People don’t want to deal with upfront costs, the hassles of maintenance, and the frustration of obsolescence. Our homes don’t have to be cluttered with things – overflowing shelves of DVDs and books. Many of us don’t even own cars or clothes anymore. Instead, we subscribe to them as services. It’s the same for businesses, where SaaS and cloud solutions have replaced traditional servers and other on-premise hardware.
We want the freedom to access services and use them anytime, anywhere. We want the latest technology or product model available at our fingertips at all times. We demand a choice in how we pay, flexibility to pause and resume services, and the ability to tailor them to meet our specific needs.
The subscription mindset is here to stay. Once companies or consumers make the shift to subscription, they rarely convert back. So, this occurrence is not a blip on the screen – it’s a transformational change that’s happening throughout the economy.
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