Embracing subscription models is challenging. Offering software on a subscription basis is the way forward to future proof your business.
Customers are demanding software via subscription. Your competitors may already be delivering subscription-based software. In fact, more than 80 percent of software companies by 2020 will have moved to subscription-based selling.
So you’ll want to do that too. It will make you more competitive, help reduce customer churn, potentially drive new business, and provide you with recurring revenue and greater financial predictability.
That’s the word from Manoj Tharakan, principal solutions architect at Gemalto (News - Alert), who spoke at the recent LicensingLive! event. He then welcomed Joshua Bloom, partner at San Francisco consultancy Simon-Kucher & Partners, to discuss how to optimize subscription licensing models.
If you’re considering or are in the midst of shifting to a subscription licensing model, you’ll want to have some flexible offerings, ensure company alignment around this new strategy, and make sure your business systems can support subscription-based selling and delivery, Tharakan said.
You may want to offer some prepaid and some post-paid options. Prepaid offerings include perpetual licenses with maintenance in term, subscription license models, and enterprise license agreements. Post-paid offers include the ability to pay based on actual usage, committed usage, or on a fixed subscription model.
Of course, before introducing new offerings to the marketplace, or even moving forward with a strategy around subscriptions, business leaders championing the shift to subscriptions need to convince C-level executives this is the way to go.
Subscription champions should be ready to address business policy questions like when the company will begin to charge subscription customers. For example, is it when they sign up for service or when they begin using the software?
Business leaders will also need to get the other departments onboard with the new strategy, tell them how it will affect them, and realign the sales team for the new kind of selling subscriptions entail.
Moving to recurring revenue models also requires organizations to have flexible business systems and processes in place. Those systems should enable the business and its customers to add and delete users at will, fulfill new and updated orders immediately, and allow for personalized services. Gemalto solutions address the analytics, delivery, and licensing pieces of this scenario.
Bloom added that organizations employing business models based on metered usage should think about how companies and customers experience the product over time. In doing so, they should think about how they can seed additional features that will drive retention and future buying.
Businesses also should think about whether their segmentation aligns with specific roles. And they should figure out how to expand from those people to others in customer organizations.
Click here to watch the LicensingLive! presentation.
Edited by Maurice Nagle