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Forrester: Subscription Models to Love

3 minute read
Matthew Brodsky avatar

Subscription business models aren't only for getting rid of the evil of online advertising, or to save news and investigative journalism. 

(Would you be willing to pay $1 day for ad-free newspaper content? $10 a month?) 

They can work for marketers in any industry to create stickier customer relationships, deliver more customer insights and tap into the power of the cloud and experiment with connected products.

Transformative Option

Such are the insights shared by a recent Forrester Wave report on the topic. It delved in those four key subscription model benefits, as well as looked at eight leading vendors: tech firms Apttus, Aria Systems, Digital River, goTransverse, SAP hybris, Recurly, Vindicia and Zuora. 

For end users, the claim is that subscription business models have allowed them to transform their businesses. 

See Adobe’s moves and its share price’s response, notes the report co-author and Forrester analyst Lily Varon. Or check out Taser — "yes, that Taser," says Varon — which sells storage and archiving services as subscription service add-ons for its body cameras and other security audio/visual equipment that it sells to law enforcement.

The Forrester authors were surprised by just how far, how fast subscription models have come. For some industries, like retail and auto, the model is relatively new, but the platforms themselves are “robust.”

“That's what's surprising: the mismatch between the relative immaturity of the market and maturity of the technology,” says Varon.

Strong Track Record

For Guillaume Vives, SVP of product at Zuora, the maturity in the market isn't a surprise.

Zuora's worked with everyone from media firms like Financial Times and HBO to startups like Box and, to established tech players like Dell and HP, to manufacturing firms like Honeywell and consumer services firms like tripadvisor.

"Several technical evolutions have caused that acceleration, such as Internet infrastructure, mobile, personalization, the application market, etc, all of which are able to come together in subscription-based business models," he said.

Learning Opportunities

From his vantage, the brands doing the best with subscription models have made their plans personal and flexible and plan to continue to do so, while they reduce complexity for consumers. He cites FT, which went from two subscription models to more than 42.

The Data Connection

In part, firms are able to do so because of an aforementioned key benefit: customer data. Vives notes how marketers can share that customer data — on behavior and consumption over time — with the consumers themselves, informing them to further tailor their subscription services.

“This allows their readers to have lots of granularity of choices, which enhances the subscriber relationship,” he says. "It’s the feedback loop that these technology trends and new insights have created that has amassed fast followers who are driving a global subscription economy," he says.

Varon agrees that collecting and sharing customer data — and the flexibility they allow — is the “key to the value proposition of these subscription billing platforms.”

 It allows marketers to develop products and services and monetization models to match their businesses, as well as to test potential future models without back office IT changes.

“Marketers will certainly benefit from this agility by giving them the ability to quickly experiment with new monetization models and A/B test different pricing/business model configurations with different customer segments,” she says. 

“Also, these platforms have strong notifications/alerts engines because of the focus on retention in a subscription relationship so marketers will love that.”

Title image by Sebastian Pichler