Subscribing to the Subscription Economy

When we look at our checking accounts each month, many of us are often a little shocked to see just how many monthly subscriptions we participate in — subscriptions for movies, clothes, food, and even razors.

It indicates a fundamental value shift that’s taking place and transforming almost every industry, especially software. To thrive in this new landscape, your high-tech business must evolve from the old transaction mindset to a cloud-based subscription framework.

But it isn’t easy. There are real roadblocks to making this change. Legacy systems, often a patchwork of as-needed fixes, can create major difficulties for system-wide updates. And legacy mindsets, driven by a fear of becoming obsolete, can keep us from trusting new cloud-based systems and processes. What’s more, critical but fragmented data make it hard for organizations to get a complete picture of who customers are and what they need. An experience-driven platform can help.

The struggle to adapt is real — but it’s happening

In a 2017 FutureScape report, IDC predicted that by 2018, 60 percent of manufacturers of connected devices — across industries spanning medical equipment to home automation — will generate recurring revenue via a software-based offering or service.

This evolution has led to great opportunity for some and harsh realities for many. Businesses formed under the older IT model, back in the mainframe days for example, are finding that their survival depends on transforming from boxes to cloud, and from transactions to Software as a Service (SaaS).

In this new model, relationships between customers and companies are less transactional, more personal, and — most importantly — continuous. When someone signs up for a service or product, they expect frequent contact from the service provider. While they use the service, they expect to be notified about their service’s status, when they need to renew, or about other options that may have become available. Ongoing communication is critical in this environment. Companies that successfully nurture this close connection are set to thrive.

Churn down for what?

By managing your entire subscription process from acquisition through renewal, you can consistently grow subscription volumes and get out in front of your churn. The key is to measure the behaviors of subscription and renewal customers happening during your trial period. This helps you get accurate predictions of future behaviors. For example, Adobe can predict the likelihood of churn based on how often customers use and participate in online training. With this knowledge, you can reduce future churn by providing tips, tricks, and links to online training modules while the customer is still a subscriber.

Communication for the caffeinated consumer

An agile commerce platform with depth and versatility is essential for enterprises offering subscriptions. Unlike a product sale, subscriptions are purchased or renewed on a monthly or annual basis. Which means that subscription vendors must be ready to support large volumes of transactions and provide responsive, hyper-focused communication throughout the trial and subscription phase of the lifecycle. With robust content management and marketing automation, as well as integrations into your commerce platform, Adobe Experience Cloud makes it easier to manage the complexity that just comes with the territory of subscription models.

Well-timed, relevant communication based on customer behavior is one result of a unified marketing platform, but there are other benefits as well. Segment management through our data management platform (DMP) is built into Adobe Experience Cloud to help you aim for consistent personalized messaging — both offsite and onsite. Let’s say you want to offer an extended trial period to customers who’ve been active during the trial, but now the trial period has ended. That’s a specific segment that Adobe Experience Cloud lets you identify and target, boosting your ability to make contact with the right people at exactly the right moment.

Calm your data mayhem

If your company is like most high-tech companies, it’s likely that your subscription customers will have diverse profiles and needs — and that data about them will be scattered across your company. You need to start with a clear picture of your customer in order to deliver relevant experiences. The first order of business is to reign in your data mayhem. To effectively manage your subscription business, you’ll want to utilize accurate behavioral data that spans the key customer touchpoints. That means you’ll want to bring in web, usage, and email data as a priority. Social data is also critical. It’s actually the top referral source for trials and subscriptions.

Adobe Experience Cloud is in the forecast

Certainly, moving to SaaS has big implications for your entire organization. It will change the way you recognize revenue. The way you market. The way you sell. The good news is you’re not on your own to make the transition. Adobe Experience Cloud is seeded with our deep institutional knowledge and experience. Recognizing the limitations of a perpetual-license model as early as 2008, we implemented a pilot program that eventually led to a successful adoption of the now-prevalent subscription model. We have guided many types of companies into the new climate. These business haven’t just succeeded in bringing new cloud-based offerings to market, they’re now the ones making the weather.

Read more about our path to transformation here.

See how we’re helping the high-tech industry transform.