In my role at CloudBlue, Fortune 500 companies often approach me for help with solving technology challenges while shifting to a subscription business model, only to realize that they have not taken crucial organizational steps necessary to ensure a successful transition.
Subscriptions scale better, enhance customer experience and hold the promise of recurring and more predictable revenue streams — a pretty enticing prospect for any business. This business model is predominant in software as a service (SaaS), but it is hard to find an industry that doesn’t have a successful subscription story. A growing number of companies in sectors ranging from automotive, airlines, gaming and health to wellness, education, professional development and home maintenance have been introducing subscription services in recent years.<div class="article-block block--pullout block--left">
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Legacy companies accustomed to pay-as-you-go models may assume shifting to a subscription model is just a sales issue. They are wrong. </blockquote>
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However, businesses should be aware that the subscription model is much more than simply putting a monthly or annual price tag on their offering. Executives cannot just layer a subscription model on top of an existing business. They need to change the entire operation process, onboard all stakeholders, recalibrate their strategy and create a subscription culture.
While 70% of business leaders believe subscriptions will be key to their future, only 55% of companies believe they’re ready for the transition. Before talking technology, which is an enabler, companies should first address the following core issues to holistically plan and switch to a recurring revenue model.