27. Subscribe to a new way of business thinking

As consumer demands continually evolve, so too does the SME landscape within which these consumers procure goods and services.

There has been a noticeable shift in consumer attitude to what is expected from a business; winning the price war alone is no longer enough, so businesses have to think differently.

It’s not just consumers whose demands have changed however. Businesses need to be much more flexible than ever in this globally competitive marketplace, and the products and services they require need to be flexible too.

Time is a finite commodity, which those in the 21st century seem to have an ever reducing amount of. This ‘time poor’ generation now value flexibility and convenience in their goods and services, both in their business and private life, instead of the traditional model of purchasing goods outright at a time that suited the vendor.

A convenience generation

Consumers demand convenience; over recent years this has led to 24 hour supermarkets, cloud based communication services such as Skype, and subscription based business models for a plethora of goods and services.

Gone are the days of extensive CD and DVD collections; in the physical sense at least. Companies such as Netflix or Spotify, with their cloud based subscription models, have changed the consumption of entertainment dramatically in recent years.

A subscription model is not exclusive to the entertainment industry however. Consumers are using subscription based businesses to obtain commodities that they may otherwise not have the time to shop for; The Flavour Club and Glossybox are but two examples of such businesses.

B2B providers who are capitalising on this type of business model are seeing rapid growth; Salesforce.com for example reported 37% revenue growth as it published its latest figures², and shows no signs of slowing down.

Xero, the leading online accounting software provider in the UK³ delivered an absolutely staggering 83% subscription revenue growth figure in their 2014 accounts; boasting a UK subscription base of 47,000 users.

This type of cloud based, disruptive technology, paves the way for a B2B environment where suppliers will be expected to be as agile as their clients when it comes to meeting both their, and the end customer’s needs.

Subscribe to secure revenue growth

A study conducted by the Economist Intelligence Unit¹ found that 51% of businesses surveyed are introducing new pricing or delivery models, such as subscription, to their offering. 12% of these businesses generate more than 50% of their revenue of delivery models such as subscription, and this is only expected to increase over the coming years.

The subscription model offers businesses using it a distinct advantage over those that don’t; captive audiences to engage, build loyalty with, and generate a forward looking revenue stream from.

‘Sell and forget’ could soon be a thing of the past as the measure of success shifts from what revenue has been generated to what revenue will be generated this year, next year and so on. A subscription model can secure this revenue months in advance.

Introducing a subscription model allows you as a business to focus on the customer, deliver value on a sustainable basis and set yourself apart from the competition. It can also allow you to better plan your cashflow requirements, and most importantly, deliver exactly what the consumer is looking for; flexibility and convenience.

To find out how your business could benefit from adopting a subscription model, or to talk about any of the topics covered above, please contact us through the Tectona website or call Mark Nicholls on 07818 407061.

Posted in Digital/Systems, Tectona Ten - Improving Profitability, Tectona Ten - Strategic Leadership.

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