In my conversations with companies across industries, I hear a common theme: Subscriptions are where it’s at! Gartner hears it, too, projecting three-quarters of consumer-direct companies will deploy some type of subscription service by 2023.
Why the love for subscriptions? Unlike one-off product or service purchases, subscriptions are one of the best ways to create personalized, meaningful, and long-lasting relationships with customers. Plus, predictable recurring revenue streams such as subscriptions—“sticky cashflows,” if you will—really appeal to investors, which translates into higher stock valuations and future value.
But leading companies aren’t stopping at simply switching outright purchases to subscriptions. They’re looking to add products and services from other vendors that complement their own, enabling them to dramatically expand their total addressable market (and the revenue they generate). Plus, the lifetime value of customers increases considerably the more products and services a company can wrap around them—which, again, investors appreciate.
This combination of subscriptions and ecosystem-driven “marketplace” plays is the next big thing in e-commerce.
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Leading companies aren’t stopping at simply switching outright purchases to subscriptions. They’re looking to add products and services from other vendors that complement their own.
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Oh, but the Complexity
Here’s the rub, though: All this adds massive complexity that companies really struggle to overcome. To be sure, subscriptions aren’t new. All sorts of companies offer subscriptions, from streaming services and media, to luxury automakers and cars, to a wide range of retailers and consumer goods. And while a different business model is generally required to sell subscriptions, it can be a manageable transition with the right technology solution.
But what happens when you layer on the complexities of selling both your own products or services and those developed by third parties? What if you have distributors or a reseller channel? How do you manage margins and reconciliation across your ecosystem? How do you simplify the end customer experience so customers know what products or bundles to buy to run their business efficiently? How does your company not just enable the ability to respond to demand, but also act as a trusted business advisor that understands how to meet customers’ needs? These are some of the business problems companies face when trying to efficiently manage ecosystems.
Companies also encounter numerous technical challenges. How do you deliver digital products from an ecosystem of enterprises—each with its own consumption models (for example charging by the month, the number of seats, or gigabytes of data); security standards; corporate identity and access that must be managed for potentially thousands of users; and different protocols for deploying to devices?
The fact is, core subscription commerce coupled with complementary offerings from third-party partners magnifies any challenges a company would face during a transition to a recurring services business model. And it's where standard e-commerce and subscription models—and the solutions that power them—reach their limits.
So, what’s the solution?
Purpose-built tools for complex subscriptions
Accenture recognizes the importance of solutions that are purpose-built for subscriptions, but caveat emptor: Many high-quality solutions may be purpose-built for subscriptions, but can't be extended to handle the complexity of full-scale subscription commerce that harnesses the power of ecosystems. And when companies try to build their own solution from scratch to support this business, they usually hit the wall. It’s just really, really hard to do.
That’s why I’m excited by the emergence of platforms that have cracked the code on handling this complexity. The best of these platforms enable companies to sell any product, through any channel, on any device, as a service. They provide the capabilities companies need to activate and manage a subscription-based, multi-partner business—quickly, and at scale, without having to create it themselves. Here are some of the most important of these capabilities:
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Aggregation of services
Leading platforms can aggregate multiple products into a unified product catalog using a standard format for painless integration. This not only attracts more partners to a company’s marketplace, but also gives a company the flexibility to add new products to its marketplace to meet more of its customers’ needs.
Billing is one of the most critical—and complex—components. Leading platforms can handle complex billing relationships among users, service levels, billing intervals, free trials, one-time fees, introductory pricing, upgrades, renewals, and more.
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SSO allows a user a single username and password from providers. SSO is critical because it lowers barriers for end users to create and manage credentials for one company instead of multiple providers. SSO offers service providers control and keeps customers in the branded application or “walled garden,” instead of multiple sites.
Single management portal
With a single management portal, leading platforms eliminate the need for customers to track and manage different purchases from disparate vendors. Users can log in via the portal, view all of the products and services they subscribe to, add or delete other users from their companies, and manage invoices and billing.
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An unlikely example of a company that has embraced one of these powerful platforms—in this case, a solution from AppDirect —is Keller Williams, the world’s largest real estate technology franchise, with more than 1,060 offices and 183,000 associates around the globe. The company worked with AppDirect to build a white-label marketplace that initially provides Keller Williams agents with an open ecosystem of technology apps for agents. Ultimately the company plans to drive all commerce through the marketplace, which will include its own coaching services as well as physical goods, third-party professional services, and event ticketing for a truly multidimensional commerce model.
As the “subscription economy” continues to gain momentum, I’m sure we’ll see more of these types of examples of innovative companies reinventing their businesses with platforms such as AppDirect. These powerful tools are truly revolutionizing what’s possible, and I’ll be talking more about that in future blog posts. In the meantime, feel free to contact me if you want to learn more.
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