Why a subscription mindset is the future
by Bridget Perry
Posted on 09-10-2018
We’ve seen a major divide form in the past decade between brands that know how to deliver amazing digital experiences and brands that don’t. The gap is getting wider each day, driven by challenger brands like Spotify and N26 that continue to disrupt industries and upend customer expectations, but also by established players that were quick to see change coming and adapted their business models to reach a digital audience.
It’s worth exploring what sets these brands apart. Price aside, what makes Virgin Holidays such a popular travel merchant? Or SKY UK one of the world’s most popular broadcasters?
The answer is simple: they’ve stopped thinking of themselves as mere providers of products or services. If there is one thing that the past decade’s success stories have taught us, it’s that customers don’t just buy products anymore. They buy experiences. The companies that invest in experiences see 36% faster revenue growth rates.
As John mentioned in his blog from earlier this week, people don’t follow a linear path from awareness to purchase anymore. We live in an on-demand world, one in which consumers sit at the centre of an infinite web of information. They define their own path to purchase, which means it’s up to marketers to provide the best possible experience across all these touchpoints if they want their message to cut through and stick.
This on-demand mentality is now evolving further. Everything from music to clothing can be bought on a subscription basis and delivered in a way that’s completely tailored to our preferences, yet again raising the bar for digital experiences. The bar is only set to climb higher too, which means brands can’t afford to stand still. Those that have not already done so need to fundamentally rethink their delivery models and the way they approach digital channels.
People have too much choice at their fingertips for brands to interact with them in the same way they have traditionally. When it comes to targeting, for example, the usual spray and pray approach is both costly and inefficient, yet for most companies marketing personalisation is stuck at this rudimentary level.
That’s why we have challenged brands to transform and start to think of themselves as a subscription model that customers can cancel anytime.
That means moving away from the old days of targeting specific products to specific groups at opportune moments. Even if this approach seems logical on the surface, it’s entirely reactive in practice, which makes it very difficult to build long-term loyalty. Digital customers want convenience. They want brands to think of the little things and proactively offer them relevant experiences that will genuinely improve their lives by taking away the burden of too much choice.
This begs the question of what change looks like, and of what makes an experience-driven business. Transformation on this scale is no small feat. It takes greater integration between teams, data and systems across the business, which requires a major cultural shift in addition to technology systems like the Adobe Experience Cloud, which can support a more aligned approach and create a unified view of a company’s customer.
Taking a deeper dive, there are three pillars at the heart of every experience-driven business.
Pillar 1: Design
All great experiences start with design, but in the words of American Architect, Louis Sullivan, “Form follows function”, even in the digital world. A beautiful aesthetic will always be important, but functional design is the key to creating experiences that resonate. Every message and interaction with customers’ needs to cater to the way they use digital platforms – we deal with too much noise and clutter on digital channels to have patience for content that doesn’t deliver genuine value.
Testing design is crucial. The beauty of digital platforms is that you can learn fast and adjust your approach just as quickly. Perfection is less important than innovation and convenience.
Look at today’s platform-driven start-ups, many of which regularly release updates that are still in progress. Importantly, these companies are transparent about these updates being in beta and continuously collect data on how users are interacting with them to fine-tune their approach over time.
We followed a similar approach at Adobe when we made the transition from traditional software sales to a cloud-based delivery model. Because we no longer had to rely on ad-hoc customer surveys to get feedback on our products and extended release cycles, we were able to get direct feedback based on how customers were using our software in real-time. We now use this insight to inform our product development and upgrades quickly and at scale.
Pillar 2: Intelligence
Most brands agree that customer data is as valuable as gold to their business, but the real magic happens when you can turn that data into actionable insights, and that’s where many companies still struggle. The challenge is that this involves applying intelligence to data on such a large scale that companies can’t just rely on people to manage the process.
Nor can traditional data management systems bring enough context to this information, which continues to be the missing piece in so many mass personalisation strategies.
Intelligence at scale is now possible with advanced Artificial Intelligence (AI) being integrated directly into marketing processes. For instance, AI is improving the way brands handle targeting, helping them to refine the timing and delivery of their content based on a constantly-updated profile of each customer where they previously relied on a rough sketch that couldn’t distinguish rogue signals from relevant data points.
Click here to learn how Sky UK is using AI to personalise its digital delivery and engage with customers more proactively.
Pillar 3: An IT architecture that holds up
Digital transformation may be informed by customers and driven by people in the business, but it ultimately takes the right technology to bring these transformation initiatives to life.
Traditional systems were built as point solutions to solve very specific problems. Even most recent systems have been conceived with the aim of helping brands work faster and cut costs, both important goals but neither of which is a real differentiator.
An experience-driven business needs a unified platform that sits across the entire organisation, bringing together data, people, processes, and content so that it can deliver consistent and engaging experiences on every platform its customers use. It cannot be stressed enough – integration is the bedrock of a complete digital experience, and brands need an IT infrastructure to match.
Developing this architecture doesn’t happen overnight. It takes a great deal of planning and collaboration, combined with the right leadership, to build a system that ticks the right boxes. To this point, our CEO Shantanu Narayen says, “It’s an extremely tough challenge to solve; one that requires platform thinking and much stronger collaboration between the chief revenue officer, the chief digital officer, the chief marketing officer, and the chief information officer”.
Together, the three pillars reflect to what extent the customer experience is evolving. Delivery and immediacy have become more important than ever, even more important than a brand’s heritage or cachet.
That’s why subscription models are proving so attractive to consumers, and why a subscription mindset is the future for companies if they want to build customer relationships that last longer than a single purchase.
There’s no sugar coating the fact this requires a major shift in their way of working, but there is a huge payoff for companies that get this right – stickiness. For the first time in years, brands are in a position to drive genuine loyalty online, something that has until now been incredibly difficult to do.
Click here to learn more about how Adobe Experience Cloud and if you’re attending DMEXCO this week, come and speak to us at our stand (Hall 6 / A011 – B016) to hear how we’re fuelling digital transformation for some of the world’s most respected brands.
Take part in our live 360 customer journey at DMEXCO. You can register for a tour here
Topics: Digital Transformation, artificial intelligence, customer experience, digital experiences, personalisation, subscription model, UK, UK Exclusive, Digital EMEA