This blog post was written by Robbie Kellman Baxter, founder of Peninsula Strategies, LLC, and a bestselling author. She is an expert on membership and subscription-based business models. Her clients have included start-ups and mid-sized venture-backed companies as well as industry leaders such as Netflix, Oracle, Electronic Arts, and eBay.
“Back-end is the new front-end.” Georg Richter, CEO of OceanX
If you’re thinking of expanding your offering to include ongoing services, such as data analytics, support, or scanned data billed on a subscription basis, or even if you’re thinking of moving to an “as-a-service” model for your entire business, forgoing selling equipment altogether, make sure that you have the right technology to support it. Consumers have become more sophisticated about how subscription services should be delivered and base their expectations on their experiences with subscription leaders like Amazon Prime, Netflix and Spotify.Consider starting with a mostly human supported experience, making it as easy as possible for customers to get the experience. Only once you know what services you’re going deliver and to whom, should you begin scaling through technology. It’s important that before you scale your subscription services, you think through the end-to-end customer experience. Don’t make it an afterthought.
In the scaling process, one of the biggest challenges for most subscription companies is implementing the technology and business processes needed. From initial acquisition to fulfillment of value, this challenge is complicated by three things: the plethora of vendor solutions, inexperienced technology buyers, and unfamiliar requirements.
The challenge is further exacerbated by the massive change in how companies evaluate and purchase technology solutions. Ten or fifteen years ago, when a business unit needed a new technology solution, they’d work with a business analyst to identify requirements. Businesspeople now conduct buying cycles themselves. Is your team up to the task?
Kathy Greenler Sexton, CEO and Publisher of Subscription Insider, told me that that first vendor to respond to a potential customer is 50% more likely to close the sale than those that follow. SaaS salespeople are generally highly experienced and compensated and very good at going for the close. So, you want to be sure you have a good process in place, which will prevent your team from buying from the first vendor they meet.
Selecting technology is not a fundamental skill of every businessperson, but it’s time to hone your expertise and play an active role in this area. You don’t need to be an engineer or know how to code. You do need to identify opportunities to employ emerging tech solutions to strengthen your business, and to assess when/how much to invest
Before you reach out, look inward. Scott Brinker’s Martech Landscape[i] suggests there are hundreds of technology solutions that support deeper customer relationships. Some are functionally oriented, billing, customer success and so on. Others are focused on particularly verticals. Rather than getting familiar with all of the vendors, first identify your objectives. Understand what you’re trying to accomplish in your business. Answer questions like the following before you scope your requirements.
- Who’s your ideal buyer and what’s the Forever Promise?
- What will your customer need to be able to do? Today? Tomorrow?
- What will you track to understand how you’re doing and where the emerging problems are?
- Can you break it out by benefits? By features?
- Is it worthwhile talking to other subscription business owners who have recently gone through this process?
- What might trigger sign up? What hooks them for life?
- What is the role of freemium and free trials, and are they justified by the CLV?
Consider every step of the customer experience, and every step of your internal business process.
If you are just getting started or planning a major tech investment, make sure to start with your strategic requirements. Keep it as simple as possible and protect the project from getting “hijacked” into a much bigger project.
If you are midway through a tech project and want to optimize it from wherever you are, take a step back, and look at your strategic requirements. You might be able to trim your project and get it refocused on what’s needed to scale. You don’t need to do it all at once—it’s going to be an iterative, evolving project.
Remember, if you have no budget and need to make do with existing infrastructure for now, you can probably find manual ways to manage these processes. A “chewing gum and safety pin” approach can be an easier and less costly way to experiment—and by the time you are ready to invest in technology, you’ll be very clear about your requirements.
Learn more about the technology you need for building a subscription business
Mize is hosting a Webinar with Robbie Kellman Baxter, bestselling author and founder of Peninsula Strategic, LLC, on April 23rd, 2020, at 1 PM EST/12 PM CST. All qualified participants will receive a complimentary Kindle version of her new book, The Forever Transaction: How to Build a Subscription Model So Compelling Your Customers Will Never Want to Leave