subscribed 2015: the subscription maturity model? where do you fit?

The Subscription Maturity Model:

Where Do You Fit?

Subscription Maturity Model:Where Do You Fit?

Amy KonaryResearch VP

IDC@mizkonary

What are we trying to enable?

3

Align price with experience

Product/Service

Defined by access

Experience

Defined by interaction

Outcome

Created through interaction

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“Experience” Businesses Face Challenges


Subscription models can get stuck•Attrition•Acquisitions•Culture of “winging it”

Subscription models evolve rapidly•Iterate pricing and packaging•New functionality, new markets

Why a Maturity Model Approach?

5

Rising expectations•Customers•Investors


Because This

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And This

7

“…messy organic growth, seven customer data stores, three independent payment collection systems, customers passed between different contact centers, no centralized view of the customer.”

“how do we enhance and maintain our customer experience while changing every fundamental aspect of the technology that supports our subscription business without damaging our customer experience?”



IDC’s Subscription Business Model MaturityScape Stage Overview

Wild West

Focus on customer acquisition without any retention strategy. Inconsistent customer experience.

Business OutcomeChurn is excessively high, outpacing new subscribers.

Differentiated

Customer experience hinges on individual perception of the offering. Systems support low-touch subscriber acquisition, but lack scalability and visibility.

Business OutcomeRecurring revenue is on the rise, but churn is still high and/or unpredictable.

Customer Loyalty

Focus on bringing the “right” customers in, keeping them, and providing them with social avenues to express their loyalty.

Business OutcomeChurn is slowing while recurring revenue is increasing.

Time to Value Acceleration

Structures designed to get customer to realized value quickly, and then demonstrate this back to customers via usage reports.

Business OutcomeFocus on profit as well as revenue growth. Better visibility into key metrics.

Customer Lifecycle Optimization

Focus on building and deepening customer relationships-- before the customer even makes a purchase through renewal.

Business OutcomeCustomer lifetime value is 3x-4x the cost of customer acquisition.


Haphazard Opportunistic Inconsistent

Experience

High churn Low customer lifetime value Reactive management of the business

Outcome

Monitor customer engagement with the product/service. Develop strategies to make customers more engaged.

Hone your strategy to be more attractive/valuable to key segments.

Guidance

Wild, Wild, West


Easy to get on board Hinges entirely on the individual's perception of

how unique, cool, convenient, cost-effective, or useful the offering is.

Experience

No focus on customer lifecycle. Customers come in leave in a linear fashion

Pricing focus is on promotion, not retention, and churn is still high and unpredictable

Outcome

Develop a forward- versus backward-looking income statement focused on annual recurring revenue.

Systems must be addressed at this point. Billing frequency, scalability; holistic view of the customer.

Guidance

Structured and Differentiated


Becoming more social. Outlets are created or supported for customers that want to engage with one another.

Pricing and packaging are designed to help bring the "right" customers into the offering

Experience

Churn is slowing; The cost of customer acquisition may still outpace customer lifetime value.

Recurring revenue measurements and overall retention rates are more instructive in determining business health.

Outcome

Pricing should be transparent and simple to understand.

Focus on getting the customer into the right plan. Structure technology and process around

governance. Institute controls over rogue behaviors.

Guidance

Building Loyalty


Continuous engagement Unified customer experience across product/service

lines Customer feels like an individual, not a segment.

Experience

Systems and processes support continuous engagement, by providing recommendations and demonstrating value through elements such as usage reporting.

Up-sell and cross-sell identification.

Outcome

Integrate pricing/packaging with customer experience to more effectively design offerings that enable customers to see realized value as quickly as possible.

Guidance

Value Acceleration


Pricing and Packaging = CX


Hierarchy of Pricing Flexibility

14

Subscription

Metered Access

Consumption

Outcome

Flexibility

What is a successful outcome?

Size= cost of

equivalent unit


Clear cadence of contacts and experiences Delightful Personal

Experience

A dashboard view across all key subscription metrics

Customer usage data build prospect and customer profiles

The company realizes that sometimes, putting customers in the "right plan" means putting them in the lower cost plan.

CLV is 3x-4x cost of customer acquisition.

Outcome

Some of the biggest challenges were are managing scale.

Hone your multi-channel relationship capabilities While it may be possible to run pricing experiments,

setting a consistent pricing structure is important to building trust.

Guidance

Lifecycle Optimization


Additional Guidance


Amy KonaryResearch VP

IDC@mizkonary

Thank you