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by Bonnie D. Graham
Financial Excellence with Game Changers, presented by SAP

Pivoting from a Product to a Service and Subscription Economy

Description

The Buzz 1: “The subscription economy is not new. In fact, the membership-based business model has been around since the 17th century…Recently, the membership-based business model has been gaining a foothold…Experts believe that the membership-based business model is the revenue model of the future.” (boldbusiness.com)

The Buzz 2: “Building long-term relationships with customers is the route to value in the Subscription Economy®. Yet the Quote-to-Cash (QTC) process at most B2B companies—even those with subscription businesses—is optimized for linear transactions, not relationships. This results in complexity and cost to the provider and a poor experience for the subscriber.” (subscribed.com)

The ‘new normal’ has challenged businesses worldwide during the COVID pandemic. Instead of focusing on revenue growth, most companies were just trying to find new ways to serve their customers and survive, including pivoting their business model to offer product-related services and subscriptions. Some have developed partnerships to facilitate product delivery and installation during pandemic lockdowns – and plan to expand these services.

To facilitate this business expansion, flexibility of how companies bill – and how customers pay – is paramount. Some customers may use multiple payment types for the same transaction, even with the option to pay a residual over time. There may be revenue-sharing with the partners that took on delivery and other services, long-term subscriptions or pay-as-you-go usage-based billing – and a developing trend of outcome-based billing.

We’ll ask Manoj Harbhajanka at Acuitilabs and Richard Chan at SAP for their insights on how different business models are evolving and how billing systems need to keep pace, on “Pivoting from a Product to a Service and Subscription Economy.”

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by Bonnie D. Graham