By: Marc Fiscalini, @PossibilIT
If you can choose between one-time or recurring income, what would you choose? Sure, every entrepreneurial mind understands that recurring business is best for your organization’s continuity. For this reason, organizations nowadays choose more and more to base their strategy on subscription-like structures.
Purchase vs. Subscription
To clarify the variables in a subscription model, it is good to discuss the differences between purchases and subscriptions first. To keep things easy, we leave lease contracts aside. Talking about purchases, the whole chain of processes deals with the execution of one transaction. In case of subscriptions, you choose to bind your customers for a longer period of time. The overview below clarifies the difference at a single glance.
”The more chaos in subscriptions, the more successful you will be in recurring business.”
Complexity and volume
Simple Bronze, Silver and Gold subscriptions of a membership administration is no reason to carry out big changes; even not if you tend to deliver high flexibility to your customers. This will only increase the complexity of your operational management; however, real change is necessary if your successful in creating subscriptions. The degree of volume and flexibility is what we call the ‘Subscription Chaos Factor’. It all comes to this: the higher your Subscription Chaos Factor is, the more successful you will be in recurring business.
‘Chaos’ as such affects several business units and systems. To reduce ‘Chaos’ you can automate processes.
Burning issues for the subscription economy
At what point do you know your company needs to take the next step in automation? Many organizations wait long before they start thinking about improvements, let alone they implement these betterments. Below you’ll find ten issues you can stumble upon:
- Implementation of new business models comes with spit and bailing wire.
- Your business sells a variety of products and packages.
- You have different subscriptions periods your customer can choose from.
- You still use Excel, Excel and Excel as your administration tool.
- You want to offer a customer different types of payment options.
- Invoicing processes can’t keep up with the volume or restrains monthly invoicing.
- Your customers complain about incorrectness on invoices.
- You miss income because of incorrectness on invoices.
- You cannot easily report details for compliancy, audits and accounting.
- Your customers ask for flexibility to change their subscriptions.
Yes, that’s me! Time to investigate your options
Do you recognize your organization in one or more situations listed above? Then it is time to investigate your options. Your research should focus on the gap between the IT systems you use now, and the tools that are available to organize your processes better and more efficient.
It is highly recommended you ask your current providers to help you in the research. They can give an overview of possibilities and impossibilities of your current systems and procedures. It can also be very refreshing to broaden your view by taking another point of view. In this research, make sure specialists advise you. Invite some on the subjects like Business Model Canvas, Big Data, Internet of Things and the subscription economy. Of course, large consulting agencies can do this for you, but take a good look at your own network: smaller businesses and even freelance entrepreneurs have as much knowledge and are able to help you in your research. It doesn’t have to cost more than your time.
After you have done your research, ROI calculations can help you make the decision to change or adept strategy, business models, processes or systems you use. This decision is step 1 of the change you are about the start.
To sum up, it may be said that a high Chaos Factor is a good sign and that it is time to invest time to explore that chaos. And if it turns out the ROI is positive; it only takes courage to change.
Don’t you know anyone who can help you to take the first steps? We are happy to share our network with you!
Marc Fiscalini's background is in the field of payment and subscription economy
PossibilIT BV, a Subscription Factory partner Company, offers IT Solutions to organizations that want to be the leaders of today and tomorrow. We develop, implement, and manage solutions based on our knowledge and experience to ensure continuity of business operations.
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