Magazine article CRM Magazine

Subscriptions Boost Customer Engagement ... and Business: Think about Business as a Collection of Consumers

Magazine article CRM Magazine

Subscriptions Boost Customer Engagement ... and Business: Think about Business as a Collection of Consumers

Article excerpt

AS CONSUMERS adopt new technologies and adapt their lifestyles to take advantage of them, they gravitate to companies that shift how they do business to make their lives better. One of the major shifts is the growing adoption of subscriptions for goods and services. In a 2013 Economist study of business executives commissioned by billing/subscription management platform provider Zuora, 80 percent of respondents said customers are changing how they obtain access to goods and services.

NEW LIFESTYLES CALL FOR NEW BEHAVIORS

Previously, organizations focused on selling units and counting transactions. Once products were manufactured, they had to be sold and the transaction would clear. Customers most likely didn't hear from vendors until they needed to sell more units to them. Consumer behaviors and expectations are forcing organizations to focus more on building relationships and less on individual transactions. Which is why companies such as Adobe, Dell, and others from the PC era have added subscription-based offerings for customers. New companies like VideoBlocks.com--a service for downloading audio/ video clips to create better content--put subscriptions at the center of their business models. Zuora CMO Brian Bell says it's time to think about business as a collection of customers and find ways to drive loyalty, repeat purchases, and greater revenue.

CREATING VALUE CREATES A COLLECTION OF CUSTOMERS

One company using subscriptions to create a collection of customers is the Tie Society, which describes itself as the Netflix of ties, because you can go on the site, pick a tie, and have it delivered to your doorstep. When you're tired of wearing it, you can put it back in the mail and wait for the next tie you want to show up.

According to CMO Jake Kuczeruk, anybody who enjoys a good value can see the benefit of the Tie Society. You can either pay $20 per month to buy one single decent-quality tie, or you can spend that same $20 on one of their plans and end up with three different ties per month.

"The best way to look at it is the Blockbuster example," Kuczeruk says. "People aren't going out there buying DVDs anymore, because it just didn't make any financial sense. Ties enjoy one of the most healthy mark-ups of any menswear item, hands down. …

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