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