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05/24/2016
Retail companies with aggressive e-commerce strategies are growing rapidly. While Internet retailing only accounted for 11% of total apparel sales in North America during 2014, this will soon change as e-commerce, S-commerce (social media commerce), and M-commerce (mobile-commerce) explode.
Let's define e-commerce as the space where data meets marketing to drive customer acquisition and satisfaction. Nowadays, consumers want to find what they want in a matter of seconds, and a company that knows how to reach them effectively through e-commerce is way above every other.
How should an e-commerce team be composed?
E-commerce selling tactics: Lessons from successful companies
1. Personalization/Data-driven selling
Amazon, Netflix, and Nordstrom - Amazon and Netflix are the forerunners of personalization. They can use data to know what customers like and dislike, track their cookies to identify what a customer has searched for, bought in the past, cart abandonment rate, where they are located, when and where they're connecting to the internet, whether they use Windows or MAC, how often they purchase online, and a complete history of their purchases. Based on this, they personalize customers' experience and upsell. The magic with this tactic is being able to change the algorithm and do AB testing until you acquire the customer. For example, if a customer searched for a specific shoe model, he or she will probably be interested in seeing a similar model. This also occurs when a customer searches for a movie on Netflix, and is more inclined to continue watching when provided with all of the movie options from that genre.
How to use customers' information? Once the user's cookies have been tracked, the company could send him/her recommendations of similar products. If a customer abandons the purchase for a specific product, the retail company could send him/her a personalized coupon to complete the purchase, or propose complements and gear that would go well with that last purchase. There are thousands of ways to play with filters and to do AB testing to keep the customer engaged.
Nordstrom is a company that has taken personalization above and beyond. They personalize a customer's page, which means my Nordstrom page will look completely different from my neighbor's page. They track customers' cookies, and every time the customer goes to the site, they get smarter, and the process is much more personalized.
2. Subscription model
STITCH FIX and BIRCHBOX - Stitch Fix and Birchbox are 2 companies that are constantly trying to drive repeat visits to their site. Stitch Fix offers a free consultation service with the creation of a subscription. The process begins by asking women for every detail from their measurements to dress size, occupation, and most common outfits. The key is that the form is quick and easy to complete. Stitch Fix offers fixed style options where customers' only task is to grade from like to dislike, or select among 4 dress occasions, such as casual/night out/business or cocktail. This way, customers have fewer options, they don't have to spend lots of time filling out the subscription, and Stitch Fix can retrieve valuable customer information in a matter of seconds.
After the subscription is created, the stylist chooses different styles of clothing based on the aforementioned categories, and the products are shipped to the customer's door. She can go through everything and return whatever she doesn't like. The process allows Stitch Fix to learn a customer's likes and dislikes and offer more accurate recommendations every time.
Birchbox is another company that has taken subscriptions to another level. Similar to Stitch Fix, they offer a subscription for customers to test the latest beauty products, with the option to buy the full-size product. What's to love about Birchbox? It's similar to Sephora's culture of offering women the advantage of trying products in store before they buy, except Birchbox delivers 4-5 monthly samples to the customer's home. Like Stitch Fix, Birchbox is based on the customer's preferences; it gets smarter every time and offers better and more accurate recommendations to its customers while offering the possibility to try beforehand.
So how could a company create effective subscription models and recommend personalized products for its brands? An idea for shoe brands could involve tracking the number of miles a user has put on his/her shoes, and contact the customer when it's time to purchase a new model, sending that specific customer a brochure with coupons for the next top model, and the option to order it online. As Boston is well known for the Boston Marathon, another option would be putting together personalized packages for runners with recommendations and giving them the advantage of trying products.
3. Experts/personal shopping:
Backcountry - Having a celebrity endorse your brand may be a good idea if you have the right person to do it. However, a more economical and even more engaging way to go is having different experts blog about real experiences they've had while using the brand's products, and offering a forum where these experts can connect with your customers to offer them advice and recommendations.
Backcountry, the online specialty retailer, sells gear for outdoor activities such as hiking, camping, rock climbing, ice climbing, skiing, and other outdoor activities. What they've done is create advocates for their brand and allow their customers to engage and chat with these advocates. Every customer can follow his/her own Gearhead depending on their interests (hiking, running, golfing, skiing, etc). The Gearhead is a real person who writes about his/her experiences as a blogger and gives his/her honest opinion regarding different products. A customer can chat with a Gearhead, ask about products, and ask for advice. Also, the Gearhead will get to know the customer and what type of products he/she likes.
The new thing about this is that Backcountry is allowing customers to interact in real time with pros who are actually using these products to go on adventures and offering honest opinions.
Some of the Gearheads of Backcountry. Source: Backcountry's website
J CREW is another company that succeeds at personal shopping. A customer can book an appointment with a personal shopper who will show them products, ideas to create outfits, and what they're doing is developing a personal relationship with customers.
4. Content
Lululemon - One of the main problems about shopping online is that customers are unsure whether the product will look the same in real life, or maybe they're concerned that the sizes are different and may not fit. Here is where the brand has to make it as easy as possible so customers can complete purchases.
Lululemon has done a great job showing the features of their products and ensuring customers know the value of the product they are purchasing. Let's say a customer goes online and sees a $150 bag. They always show specifications, high-quality photos of the product, and every detail that convinces the customer that the product is worth it. They also show why they made that product, fabric, and features, fit and function, and extra features to help convert customers.
If the company's product has a price point slightly above the competition, showing the extra value a customer is getting is essential. Videos and pictures are 2 great conversion points for consumers, taking great pictures for high-quality and high-price products may be the conversion for the customer. Also, allowing the customer to see every detail of the product, for example, highlighting the value-added features, such as the gel arch support, to emphasize the domestic manufacturing and craftsmanship dedication of every product.
5. The showroom trend.
Bonobos - Showrooming is a concept U.S. companies haven't quite grasped, but Europe has, and they're succeeding at it. A big barrier to shopping online is not being able to try on the product. So either the brand creates an excellent size/fit assistance online tool so women's fear of purchasing online diminishes, or the company creates showrooms offering women the same competitive price and convenience online retailing can offer.
A second reason to start with showrooms is the increase in mobile commerce. In Western Europe, mobile internet retailing increased by a CAGR of 102% from 2011 to 2014, thanks to the showrooming trend. As more customers switch to mobile commerce in the U.S., showrooms may be the answer.
Of course, companies are worried that consumers won't go for this since 73% of consumers are motivated to shop in-store by the desire for an instant purchase. However, when it comes to high-quality sports footwear where the customer may want to try the product, feel the quality, evaluate a product they'll use in their everyday routine, they'll surely be willing to try it in-store.
If the company's products are domestically sold and made in the U.S., they could set a showroom near their facility and deliver to houses, while avoiding the costs of sales assistance, huge inventory in every store, and a much more personal relationship with the customer. Recreational shopping would continue to exist, since customers will be able to have the products in their hands; the only thing that would change is where the transaction is being made.
An example of said success is Bonobos, the e-commerce business that is following the showroom trend, and the success is imminent. This company redefined the traditional retail format by venturing offline into physical stores with one difference: nothing to sell in the store. They have showrooms and allow customers to try on items, evaluate the quality, and place orders that will be delivered to their front door, while eliminating the cost of storing huge inventory and freeing sales assistants to focus solely on the customer.
From the Bonobos site.
These 5 tactics can be combined to develop one strong e-commerce strategy.
Mobile commerce and social media commerce are also something to watch. Some companies have started taking action. Myntra, the e-commerce site owned by Flipkart, has just announced closing its site and moving exclusively to mobile. Other e-commerce monsters such as Alibaba and Taobao may follow. Regarding social media commerce, according to Euromonitor, 43% of consumers around the world make purchases through social media; however, 11% to 15% of consumers use s-commerce in the US and UK, respectively.
Any retail company can use these strategies at the right time to innovate itself and leave competitors behind in the e-commerce revolution.
Let's define e-commerce as the space where data meets marketing to drive customer acquisition and satisfaction. Nowadays, consumers want to find what they want in a matter of seconds, and a company that knows how to reach them effectively through e-commerce is way above every other.
How should an e-commerce team be composed?
- Finance: A finance team that makes sure e-commerce strategies are generating profits to boost the company's growth and create a positive ROMI.
- Marketing: A brand marketing team that will propose customer acquisition tactics and continuously focus on driving traffic to the site. Specifics include SEO, optimizing paid, earned, and owned media, retention marketing strategies, creating appealing stories, and new possible products for the company.
- Analytics team: Every marketing effort should be measured with marketing analytics tools and KPI's to see which strategy worked best, which products are best-sellers, understanding which factors drive customers to purchase, or how and where to target a specific customer. Some specific metrics the team would deliver: Percentage of sales from Mobile/Social, New Visitor Conversion Rate, Average Order Value, CPC, Churn Rate, Cart Abandonment Rate, and Customer Lifetime Value.
- Customer service: Companies that are constantly listening to their customers are extremely successful. It is cheaper to maintain a customer than to acquire one, which is why resolving customers' issues and giving excellent customer service is essential.
- Merchandising/planning: Understanding which of the products will be best sold on the website and knowing when and which new products to launch. Also, teams can use analytics to see which products are the most searched, and this could turn into product innovation. If the company is not carrying the product that's being searched for by customers, merchandising could approach the product development team with ideas to develop new ones. This team will not only manage the merchandise on site but will also be essential to identifying opportunities for the company. They have to manage the calendar, product launch, inventory, stories, and make sure the content and benefits of each product are visible.
- Development: A team of coders to bring all ideas to life is always necessary. Having in-house coders would allow constant innovation of the site. If marketing wants to launch a video carousel or interactive visuals, coders can help with the task.
- User experience: A team that creates the path and the structure to navigate through the page. When customers go online, they should be able to find what they want in a matter of seconds. The customer decision journey should be smooth and comprehensible in order for the customer to complete the purchase and return. This team may perform AB testing to select the best user experience. For example, show customers 2 different paths and allow them to select the one they prefer.
- Creative: When customers land on the company's web page, they should immediately feel related to the brand. This team makes sure imagery, fonts, videos, and the entire look represent the company culture.
E-commerce selling tactics: Lessons from successful companies
1. Personalization/Data-driven selling
Amazon, Netflix, and Nordstrom - Amazon and Netflix are the forerunners of personalization. They can use data to know what customers like and dislike, track their cookies to identify what a customer has searched for, bought in the past, cart abandonment rate, where they are located, when and where they're connecting to the internet, whether they use Windows or MAC, how often they purchase online, and a complete history of their purchases. Based on this, they personalize customers' experience and upsell. The magic with this tactic is being able to change the algorithm and do AB testing until you acquire the customer. For example, if a customer searched for a specific shoe model, he or she will probably be interested in seeing a similar model. This also occurs when a customer searches for a movie on Netflix, and is more inclined to continue watching when provided with all of the movie options from that genre.
How to use customers' information? Once the user's cookies have been tracked, the company could send him/her recommendations of similar products. If a customer abandons the purchase for a specific product, the retail company could send him/her a personalized coupon to complete the purchase, or propose complements and gear that would go well with that last purchase. There are thousands of ways to play with filters and to do AB testing to keep the customer engaged.
Nordstrom is a company that has taken personalization above and beyond. They personalize a customer's page, which means my Nordstrom page will look completely different from my neighbor's page. They track customers' cookies, and every time the customer goes to the site, they get smarter, and the process is much more personalized.
2. Subscription model
STITCH FIX and BIRCHBOX - Stitch Fix and Birchbox are 2 companies that are constantly trying to drive repeat visits to their site. Stitch Fix offers a free consultation service with the creation of a subscription. The process begins by asking women for every detail from their measurements to dress size, occupation, and most common outfits. The key is that the form is quick and easy to complete. Stitch Fix offers fixed style options where customers' only task is to grade from like to dislike, or select among 4 dress occasions, such as casual/night out/business or cocktail. This way, customers have fewer options, they don't have to spend lots of time filling out the subscription, and Stitch Fix can retrieve valuable customer information in a matter of seconds.
After the subscription is created, the stylist chooses different styles of clothing based on the aforementioned categories, and the products are shipped to the customer's door. She can go through everything and return whatever she doesn't like. The process allows Stitch Fix to learn a customer's likes and dislikes and offer more accurate recommendations every time.
Birchbox is another company that has taken subscriptions to another level. Similar to Stitch Fix, they offer a subscription for customers to test the latest beauty products, with the option to buy the full-size product. What's to love about Birchbox? It's similar to Sephora's culture of offering women the advantage of trying products in store before they buy, except Birchbox delivers 4-5 monthly samples to the customer's home. Like Stitch Fix, Birchbox is based on the customer's preferences; it gets smarter every time and offers better and more accurate recommendations to its customers while offering the possibility to try beforehand.
So how could a company create effective subscription models and recommend personalized products for its brands? An idea for shoe brands could involve tracking the number of miles a user has put on his/her shoes, and contact the customer when it's time to purchase a new model, sending that specific customer a brochure with coupons for the next top model, and the option to order it online. As Boston is well known for the Boston Marathon, another option would be putting together personalized packages for runners with recommendations and giving them the advantage of trying products.
3. Experts/personal shopping:
Backcountry - Having a celebrity endorse your brand may be a good idea if you have the right person to do it. However, a more economical and even more engaging way to go is having different experts blog about real experiences they've had while using the brand's products, and offering a forum where these experts can connect with your customers to offer them advice and recommendations.
Backcountry, the online specialty retailer, sells gear for outdoor activities such as hiking, camping, rock climbing, ice climbing, skiing, and other outdoor activities. What they've done is create advocates for their brand and allow their customers to engage and chat with these advocates. Every customer can follow his/her own Gearhead depending on their interests (hiking, running, golfing, skiing, etc). The Gearhead is a real person who writes about his/her experiences as a blogger and gives his/her honest opinion regarding different products. A customer can chat with a Gearhead, ask about products, and ask for advice. Also, the Gearhead will get to know the customer and what type of products he/she likes.
The new thing about this is that Backcountry is allowing customers to interact in real time with pros who are actually using these products to go on adventures and offering honest opinions.
Some of the Gearheads of Backcountry. Source: Backcountry's website
J CREW is another company that succeeds at personal shopping. A customer can book an appointment with a personal shopper who will show them products, ideas to create outfits, and what they're doing is developing a personal relationship with customers.
4. Content
Lululemon - One of the main problems about shopping online is that customers are unsure whether the product will look the same in real life, or maybe they're concerned that the sizes are different and may not fit. Here is where the brand has to make it as easy as possible so customers can complete purchases.
Lululemon has done a great job showing the features of their products and ensuring customers know the value of the product they are purchasing. Let's say a customer goes online and sees a $150 bag. They always show specifications, high-quality photos of the product, and every detail that convinces the customer that the product is worth it. They also show why they made that product, fabric, and features, fit and function, and extra features to help convert customers.
If the company's product has a price point slightly above the competition, showing the extra value a customer is getting is essential. Videos and pictures are 2 great conversion points for consumers, taking great pictures for high-quality and high-price products may be the conversion for the customer. Also, allowing the customer to see every detail of the product, for example, highlighting the value-added features, such as the gel arch support, to emphasize the domestic manufacturing and craftsmanship dedication of every product.
5. The showroom trend.
Bonobos - Showrooming is a concept U.S. companies haven't quite grasped, but Europe has, and they're succeeding at it. A big barrier to shopping online is not being able to try on the product. So either the brand creates an excellent size/fit assistance online tool so women's fear of purchasing online diminishes, or the company creates showrooms offering women the same competitive price and convenience online retailing can offer.
A second reason to start with showrooms is the increase in mobile commerce. In Western Europe, mobile internet retailing increased by a CAGR of 102% from 2011 to 2014, thanks to the showrooming trend. As more customers switch to mobile commerce in the U.S., showrooms may be the answer.
Of course, companies are worried that consumers won't go for this since 73% of consumers are motivated to shop in-store by the desire for an instant purchase. However, when it comes to high-quality sports footwear where the customer may want to try the product, feel the quality, evaluate a product they'll use in their everyday routine, they'll surely be willing to try it in-store.
If the company's products are domestically sold and made in the U.S., they could set a showroom near their facility and deliver to houses, while avoiding the costs of sales assistance, huge inventory in every store, and a much more personal relationship with the customer. Recreational shopping would continue to exist, since customers will be able to have the products in their hands; the only thing that would change is where the transaction is being made.
An example of said success is Bonobos, the e-commerce business that is following the showroom trend, and the success is imminent. This company redefined the traditional retail format by venturing offline into physical stores with one difference: nothing to sell in the store. They have showrooms and allow customers to try on items, evaluate the quality, and place orders that will be delivered to their front door, while eliminating the cost of storing huge inventory and freeing sales assistants to focus solely on the customer.
From the Bonobos site.
These 5 tactics can be combined to develop one strong e-commerce strategy.
Mobile commerce and social media commerce are also something to watch. Some companies have started taking action. Myntra, the e-commerce site owned by Flipkart, has just announced closing its site and moving exclusively to mobile. Other e-commerce monsters such as Alibaba and Taobao may follow. Regarding social media commerce, according to Euromonitor, 43% of consumers around the world make purchases through social media; however, 11% to 15% of consumers use s-commerce in the US and UK, respectively.
Any retail company can use these strategies at the right time to innovate itself and leave competitors behind in the e-commerce revolution.
01/25/2016
Entrepreneur Article - CHUCK LONGANECKER - CONTRIBUTOR - Founder of Digital Telepathy and Filament.io
Since consumer buying habits are trending toward more simple and hassle-free shopping experiences, more and more companies are jumping into the subscription space and seeing incredible growth. Last year, Dollar Shave Club was expected to generate $60 million in revenue, nearly tripling its 2013 revenue. Even more impressive, Honest Company was expected to bring in $150 million in revenue in 2014, landing the business a $1 billion valuation.
But along with the increasing success of subscription-based businesses comes the cautionary tale of the failure to adapt. Take, for instance, the decline of movie rental giant Blockbuster. Faced with Netflix's budding success, Blockbuster failed to recognize the changing needs of the modern consumer. By the time it rolled out its "no late fees" campaign, the last nail had already been hammered in place. In 2010, just 10 years after the arrival of Netflix, Blockbuster was worth just $24 million with $1.1 billion in losses.
When we look at the success of software-as-a-service (SaaS) companies, many of which are offering monthly or annual service subscriptions and pulling in multi-billion dollar valuations -- hi, Dropbox and Salesforce.com -- it's more evident than ever that customers prefer subscriptions. Yet professional service industries are falling behind. The only hope? We must adapt.
For customers, the value lies in the convenience. First, there's the autopilot simplicity of subscriptions that removes the thinking out of a purchase decision. Subscribers never have to remember to reorder every month, which gives them the reassurance that they will have whatever they need before they actually need it. Everything arrives at your door like magic -- removing the hassle of making a trip to the store or website to place an order. Second, subscriptions offer a flat rate, which helps customers stay within their budget -- always. Lastly, subscriptions usually bring added value to the customer through bundling or getting it all for the price of one.
For businesses, the value of a subscription is the ability to predict revenue through recurring sales. In fact, according to John Warrillow, creator of The Value Builder System, recurring revenue is perhaps one of the most compelling factors in a company's valuation. "The more guaranteed revenue you can offer a potential acquirer, the more valuable your business is going to be," Warrillow says. "Because a high percentage of the revenue of a subscription-based business is recurring, its value will be up to eight times that of a comparable business with very little recurring revenue."
This consistency in revenue also allows subscription-based companies to easily calculate the lifetime value of a customer, manage inventory, offer simple pricing, and many other business benefits.
What if services were offered on a subscription-based model instead?
Fed up with the risk and constant guessing game of scoped projects, I took the plunge and converted the business model of my UX firm, Digital Telepathy, to subscription-only. Instead of signing project agreements or monthly retainers with a detailed scope, we simply offered all of our services under a flat-fee subscription. Clients were initially confused, but once they experienced how our new approach improved our alignment on strategy, design output, and working speed, our retention rates catapulted. Since switching to the subscription model, our revenue has increased by 300 percent.
In addition, the subscription model positively impacts our clients by providing results that are aligned with their business objectives, not just a project plan. In other words, we went from creating project deliverables to being an extension of their team and impacting their bottom line.
On the other hand, if the client has just closed a round of funding and needs to accelerate the launch of their SaaS site to satisfy investors, they can increase their subscription to increase the pace. Or let's say a client is opening another location and is in need of more design work, the graphic artist could increase their service subscription to meet the needs for that month. Subscriptions allow clients the security of knowing that everything is month-to-month, and nothing is set in stone -- especially scope.
As a company, subscriptions also allow you to scale if you continue to add value to the client and impact their bottom line.
Moreover, it also forces service providers to be accountable in their client relationships. In a project, the goal is to finish, whereas with a subscription, the goal is to accomplish the objective -- and continue to provide value over time. We must always be pushing for innovation and exploring ways to make a greater impact, to be proactive instead of reactive. For instance, lawyers would look to draft stronger contracts and proactively look out for trademark infringements, using new tools to do so.
Product and SaaS service subscriptions offer value to both the company and the customer. Following their lead, professional service providers such as web designers, marketers, financial advisors, and more can reap the benefits of subscriptions and grow their companies. Sure, it's a bit different than the way things are usually done -- but if we can do it, you can, too.
Since consumer buying habits are trending toward more simple and hassle-free shopping experiences, more and more companies are jumping into the subscription space and seeing incredible growth. Last year, Dollar Shave Club was expected to generate $60 million in revenue, nearly tripling its 2013 revenue. Even more impressive, Honest Company was expected to bring in $150 million in revenue in 2014, landing the business a $1 billion valuation.
But along with the increasing success of subscription-based businesses comes the cautionary tale of the failure to adapt. Take, for instance, the decline of movie rental giant Blockbuster. Faced with Netflix's budding success, Blockbuster failed to recognize the changing needs of the modern consumer. By the time it rolled out its "no late fees" campaign, the last nail had already been hammered in place. In 2010, just 10 years after the arrival of Netflix, Blockbuster was worth just $24 million with $1.1 billion in losses.
When we look at the success of software-as-a-service (SaaS) companies, many of which are offering monthly or annual service subscriptions and pulling in multi-billion dollar valuations -- hi, Dropbox and Salesforce.com -- it's more evident than ever that customers prefer subscriptions. Yet professional service industries are falling behind. The only hope? We must adapt.
Valuable for the company -- and the customer
The subscription model owes its success to the optimal balance of value it provides to both the company and the customer.For customers, the value lies in the convenience. First, there's the autopilot simplicity of subscriptions that removes the thinking out of a purchase decision. Subscribers never have to remember to reorder every month, which gives them the reassurance that they will have whatever they need before they actually need it. Everything arrives at your door like magic -- removing the hassle of making a trip to the store or website to place an order. Second, subscriptions offer a flat rate, which helps customers stay within their budget -- always. Lastly, subscriptions usually bring added value to the customer through bundling or getting it all for the price of one.
For businesses, the value of a subscription is the ability to predict revenue through recurring sales. In fact, according to John Warrillow, creator of The Value Builder System, recurring revenue is perhaps one of the most compelling factors in a company's valuation. "The more guaranteed revenue you can offer a potential acquirer, the more valuable your business is going to be," Warrillow says. "Because a high percentage of the revenue of a subscription-based business is recurring, its value will be up to eight times that of a comparable business with very little recurring revenue."
This consistency in revenue also allows subscription-based companies to easily calculate the lifetime value of a customer, manage inventory, offer simple pricing, and many other business benefits.
Time for services to launch subscriptions
As I mentioned earlier, while products and SaaS have caught onto the subscription model, it seems that professional services have not. Sure, we have the monthly retainer, but these agreements are usually locked in based on pre-purchased services rendered and tasks completed. It doesn't allow for flexibility like subscriptions do.What if services were offered on a subscription-based model instead?
Fed up with the risk and constant guessing game of scoped projects, I took the plunge and converted the business model of my UX firm, Digital Telepathy, to subscription-only. Instead of signing project agreements or monthly retainers with a detailed scope, we simply offered all of our services under a flat-fee subscription. Clients were initially confused, but once they experienced how our new approach improved our alignment on strategy, design output, and working speed, our retention rates catapulted. Since switching to the subscription model, our revenue has increased by 300 percent.
In addition, the subscription model positively impacts our clients by providing results that are aligned with their business objectives, not just a project plan. In other words, we went from creating project deliverables to being an extension of their team and impacting their bottom line.
Positive impact of a service-based business
1. Flexibility
Subscriptions allow you as a company to plan resources and predict revenue. Your client wants to change the focus of the project? No problem -- nothing is "out of scope" because there isn't a scope. Service subscriptions allow you to be flexible in your tactics without having inconsistent service due to recalculating costs. It gives your company the ability to provide different types of services, not just deliverables. This is also a benefit to the client, as they always know that resources (whatever they may need) will be available to them as their needs change. It gives the option to change their objectives on the spot and adjust the game plan month over month.2. Ability to scale
If the client's needs change dramatically, a subscription will give them the ability to scale work up or down, without worrying about contracts. For instance, if a client is in the middle of a website redesign, and they suddenly need to invest funds into a special product initiative they are rolling out, they have the ability to decrease their subscription for a few months. Work will continue, but at a slower pace.On the other hand, if the client has just closed a round of funding and needs to accelerate the launch of their SaaS site to satisfy investors, they can increase their subscription to increase the pace. Or let's say a client is opening another location and is in need of more design work, the graphic artist could increase their service subscription to meet the needs for that month. Subscriptions allow clients the security of knowing that everything is month-to-month, and nothing is set in stone -- especially scope.
As a company, subscriptions also allow you to scale if you continue to add value to the client and impact their bottom line.
3. Stronger relationships
The subscription model is also not about getting a project done and then moving on to the next client. It allows us as a service provider to grow a relationship with the client and cater to their business or design needs as they change. It builds a substantial level of trust since the client knows that you have their best interests in mind and understand their business.Moreover, it also forces service providers to be accountable in their client relationships. In a project, the goal is to finish, whereas with a subscription, the goal is to accomplish the objective -- and continue to provide value over time. We must always be pushing for innovation and exploring ways to make a greater impact, to be proactive instead of reactive. For instance, lawyers would look to draft stronger contracts and proactively look out for trademark infringements, using new tools to do so.
Subscriptions can work
Services must adapt to avoid falling behind like Blockbuster. There are already many successful service providers using the subscription model. Global web and software developer Pivotal Labs offers its services through coaching subscriptions -- clients retain their team's expertise and learn their processes by working side-by-side with them on location. Their success didn't go unnoticed. EMC acquired them in 2012. Innovative medical startup One Medical Group has remade the office visit into a convenient and efficient process. Members of One Medical pay an annual fee of $149 to $199 (depending on the city) and enjoy benefits such as same-day appointments made online, more personal treatment plans, and direct access to doctors outside the office. The group raised its second round of funding in 2014, bringing in $40 million in additional investment.Product and SaaS service subscriptions offer value to both the company and the customer. Following their lead, professional service providers such as web designers, marketers, financial advisors, and more can reap the benefits of subscriptions and grow their companies. Sure, it's a bit different than the way things are usually done -- but if we can do it, you can, too.
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