Customers and customer expectations have changed in recent years. Browsers and buyers have become more fickle and less loyal. They are more impatient. And they have come to expect more from business in terms of innovation, personalization, and product offerings.
So businesses need to change. They need to rethink how they do business and how they interact with customers. And they need to alter their billing and other processes so they can more effectively compete in the digital economy.
A key part of that change should involve billing, said Mitch Ivey, PwC’s Revenue Innovation & Billing Transformation practice leader. In the past, he added, billing and pricing functions were utilities a company would apply to a product just before it was ready to be introduced. Now, however, billing has become core to the value of products, he said. It can serve as a competitive differentiator, a way to grow new revenues, and a tool through which to strengthen customer relationships.
Jean Lawrence, director of product marketing for Oracle Monetization Cloud, added that in the new digital world, subscription-based commerce is a quickly growing model. For example, she noted, Intuit (News - Alert) used to sell software as a one-time transaction. Now its software is available via subscription and through cloud.
So is media like movies and music, she noted. Just take a look at Apple (News - Alert), which started out with a model based on one-time downloads. Now, she said, the company is encouraging customers to buy monthly Apple Music subscriptions, and it had activated 20 million subscribers as of last December.
Businesses are introducing subscription-based solutions to address customer demand and build loyalty, enable recurring revenue streams, and provide them the flexibility to pivot quickly when customer behavior signals a new trend, she said.
The value of subscriptions is not just conjecture. Just look at the Amazon Prime effort. Amazon Prime customers spend twice as much as non Prime customers, she said. A recent Oracle (News - Alert) survey of 293 U.S. executives points to a strong link between companies with subscription-based services and those exceeding their plans for revenue growth.
And an Economist Intelligence Unit study that Oracle commissioned notes the belief by business leaders that customer retention is key to company success. Yet, only 42 percent of those surveyed rank themselves as strong on customer retention.
Why is retention so challenging? Because of competition. Lawrence noted that 44 percent of the executives surveyed say competitors are undercutting prices and 34 percent say new entrants are stealing customers’ attention. That means businesses need to work harder at building meaningful relationships with customers, who have increasingly short attention spans, she said.
They can do that by bundling offers, doing more cross selling, offering discounts and reward points, and providing subscription-based services that keep them in constant contact with customers and enable them to see firsthand how those customers are using their services.
To learn more about all of this, check out Oracle’s on-demand webinar “Monetization as a Competitive Advantage.”
Edited by Erik Linask