Strategies for the Successful Transition to a Subscription Model
To make the successful transition from perpetually licensed products to subscription services requires companies to adopt a subscription mindset.
The Subscription Mindset
The subscription mindset is a unique perspective on the measures of business success and the foundations of the company – customer relationship. Many of the tenets of the subscription mindset are not new to technology vendors, but the methods by which resources are allocated and performance are measured must change. The principles of the subscription mindset include:
- Customer retention is everything!
- Full revenue potential is dependent upon the longevity of the relationship (Life Time Value).
- Services emphasize Customer Success to drive use and adoption of products.
- The role of Support shifts from issues resolution to adoption and engagement.
- The measures of Service success are based on retention and expansion of recurring revenue.
Unlike perpetually licensed products revenue from subscription is earned of the term of the customer relationship. No longer does the technology seller enjoy the benefits of an upfront payment for a product. Revenue flows if subscriptions fees are collected. A subscription relationship must be retained to maximize revenue potential. The opportunity for subscription-based relationship is not solely from the fees earned from the relationship but the potential to create new growth opportunities.
The mechanisms to sustain and grow relationships come in the form of programs designed to help customers adopt and successfully apply the products they use. Post sales or subscription services must assume the responsibility for more than installation and issues resolution. Services are now responsible for the ongoing customer success.
Subscription Success = Mindset + Metrics + Programs
The subscription mindset requires that companies embrace a new perspective on customer relationships as well as new measures of success and programs to help customers adopt and succeed with products.
Subscription Mindset – A Catalyst for Transformation
To be successful with subscription licensing programs you must adopt a subscription mindset. The subscription mindset is a framework that will guide companies to new perspectives on the value of sustaining customer relationships; suggest changes to organizational structures to meet post-engagement customer needs; introduce new methods for measuring business success; and influence the design of new post-sales service programs. For more information see the featured report below.
To make the successful transition from perpetually licensed products to subscription services requires companies to adopt a subscription mindset. The Subscription Mindset is a self-guided workshop that highlights the critical factors to achieve subscription success. This workshop is also available as a guided workshop.
Log-in to get your copy.
Login to Access the Full Report
If you don’t have an account, create a free* membership.
*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.
There are many approaches to achieve service success and each company must chart its own unique course. Regardless of the path, there are five principles that all companies must embrace. Every company must have an established CX plan, attainable goals, well-defined service programs, optimized service capabilities and the means to measure and improve performance. These five principles establish the foundation from which to define, execute and achieve tangible, positive service outcomes.
Technical Support Excellence is the achievement of the maximum positive impact on profitability and reputation of the company, product or brand being supported through the efficient and effective delivery of support. Consider the following 10 practices in your pursuit of technical support excellence.
The pursuit of service excellence aligns service activities and outcomes with the attainment of overall corporate KPIs. Have you achieved service excellence? How do your service initiatives contribute to the overall attainment of corporate goals and objectives? Are you on the right path?
Technical Support Excellence is the achievement of the maximum positive impact on profitability and reputation of the company, product or brand being supported through the efficient and effective delivery of support. Technical Support Excellence does not require that every customer is delighted with every service transaction or that Support achieves a perfect Net Promoter or Customer Satisfaction score.
Excellence means that Support has defined and achieved the optimal level of performance and impact from Support delivery given current investment levels in Support and its dependencies on other organizations within the company.
The most effective service organizations are not defined by their state-of-the-art systems, or adoption of the latest organizational designs. The most Highly Effective Service Organizations embrace these five core principles.
Companies that attach services to their core products, professional services firms, and companies that sell their products as-a-service need to be aware of New Revenue Recognition Standard (ASC 606).