Ties Luijendijk, Consultancy Director
3 B2B subscription commerce opportunities
working on customer relationships, innovation, and expansion
3 B2B subscription commerce opportunities
We are seeing more and more businesses offering products and services in subscription form, especially in B2C, but also increasingly in B2B businesses. It is a lucrative way to establish a long-term relationship with your customers and generate a continuous source of revenue. If you do it right, of course. From conversations with our customers, we have identified a number of opportunities for other B2B businesses that also want to work with subscription commerce.
In a transaction-driven business model, the focus is on customer contact at the point of sale. If everything has gone as expected, you probably won't hear from customers again until they have new needs. At least you hope so. It is not certain that your offer still matches their wishes, or perhaps your competitor is at the top of the customer's mind at that moment as a result of advertising or conversations with acquaintances. Subscription commerce offers the possibility to strengthen the customer relationship, thereby intrinsically increasing customer loyalty. It also offers businesses the opportunity to innovate in a targeted way and to expand the range of services on offer.
1. Customer data and high contact frequency as a basis for long-term customer relationships
If you lock in customers with a subscription you will have regular contact, and that is very valuable. With subscription commerce, customers become familiar with your offer and organization, and you in turn get to know your customers better and better. This gives you the opportunity to respond to the challenges, needs and wishes of customers, especially when these change over time. And of course, the golden rule is always: a satisfied customer is more loyal and more inclined to recommend you to others.
2. Digitization and data as a basis for innovation and optimization
In practice, we often see B2B businesses adding subscriptions to their product range and, for example, leasing out products that they previously sold or rented out. As with the transactional model, continuous development is also important in subscription commerce, because customers expect new features, updates and improvements. This is one of the aspects that make taking out a subscription more attractive for them. Moreover, innovation is also a way of continuing to surprise and excite customers.
Once processes are digital and more data becomes available, more and more possibilities and information emerge for targeted and empirical optimization. For example, this could pertain to the maintenance cycle, desired communication channels, but also pricing. This offers businesses the opportunity to serve customers in a targeted and successful way and thus ensure their loyalty for a longer period of time.
3. Expansion of the range of services offered
It is becoming increasingly normal for consumers to use products or services on a subscription basis instead of purchasing them outright. This can range from software to brown goods, white goods or even furniture. This trend is going to make more and more inroads in the B2B market. In the B2B market it is not strange to lease hardware, machines or vehicles. We are also now seeing more and more supplementary digital services being offered in subscription form. This can include insights from data, generated in the use of these goods, or certain add-on features.
An example of a sector in which demand is growing rapidly is that of connected hardware (IoT), where businesses offer both the hardware and the associated services in subscription form. According to the most recent Zuora Index (2019), demand for subscription services for connected hardware is growing five times faster than demand at businesses with transaction-driven models. And this goes beyond just ICT equipment. Nowadays, more and more things are becoming 'smart' and 'connected'. For example, we work for an agricultural business that leases smart machines to farmers and agribusinesses. End users can rely on the machines for the execution of the work and can optimize their own work with the insights distilled from the data generated by these machines. They can see how their equipment works best, for example, but also how their farm is performing compared to other farms. This means that not just the leasing business gains valuable insights, but also the end users.
The rise of subscription commerce within the B2B market offers businesses the opportunity to offer their customers extra added value. It is therefore a good time for them to think about how they can make their customers' lives easier, or enrich their lives. Naturally, we would be more than happy to brainstorm with you about the possibilities.