'Subscription economy' to aid Aussie business
A global conference series has outlined the revolutionary ways in which a “subscription economy” can assist Australian SMEs in their day-to-day operations.
Speaking at Subscribed Sydney, David Gee, chief marketing officer at relationship business management provider Zuora, outlined the changing landscape of the global economy.
“We now live in a subscription economy,” Mr Gee said. “You see it in the headlines. Subscriptions, not iPhones, are the fastest-growing component of Apple’s revenues. The biggest companies in the world by market capitalisation are now Apple, Google, Amazon and Facebook – all of whom have a subscription model.”
According to Mr Gee, the best companies are constantly reinventing themselves, and in a modern economy this means a shift to a subscription model.
“Unilever recently paid $1 billion to buy the Dollar Shave Club. Surf Air in California has a subscription model for flying. General Electric has moved from light bulbs to subscription services. IBM sells its Watson cognitive computing services on the subscription model.”
“There is a common thread to all this. The way people buy has changed for good. We have new and different expectations. We want on-demand fulfilment and a personalised service. Sellers have to make the transition and turn customers into subscribers.”
Also speaking at the conference, Danny Gravell, CIO at Sensis, described how the company had transformed its own business model as it shifted from a focus on phone directories to digital marketing services.
“We have simplified the whole company. Thousands of products and services have been replaced with a range of modern marketing services, from digital directories to content services to websites,” Mr Gee said.
“The subscription economy is challenging the role of many people in the organisation – the CEO, the CFO, the CIO, the CMO.
“The business needs to be customer-centric, with a whole new class of financial metrics such as CAC (customer acquisition cost), LTV (lifetime value) and ARR (annual recurring revenue). There are new financial imperatives, around owning the relationship with the customer, who is now the subscriber,” he concluded.