Predictable recurring revenue, increased customer lifetime value, more opportunities to upsell and cross-sell—there are countless advantages of subscription business models for B2B companies. And for many, adopting a subscription management solution is critical to unlocking them.
Simply having a subscription management solution, however, doesn’t guarantee such benefits. But there are several steps you can take to assess your organization’s readiness and set your team up for success.
As you’re considering implementing a subscription business model, ask yourself the following questions:
For most organizations, adopting a subscription business model is a significant overhaul. Before you make such a move, test subscription selling on a limited scale and evaluate whether it will empower you to meet company and industry needs in a timely manner.
Testing subscription selling will help you identify the shifting financial risks and considerations that come along with it. For instance, to recognize subscription revenue, you’ll likely need to adopt a new set of accounting compliance standards. Make sure you’re prepared to make operational adjustments as needed.
Selling on a subscription basis may require you to reconsider how your offerings are packaged and configured, whether that means augmenting your existing offerings or defining new ones altogether. You should also consider the logistics of integrating a new subscription management solution with your configure, price, quote (CPQ) system. This will help ensure that new and changing product bundles can be priced and quoted efficiently.
Some customers may need assistance navigating your new buying option. For example, customers who were used to paying up front for a product may need help understanding a subscription that has them pay incrementally based on usage. Be sure you have the information you need to create step-by-step guidance to get customers comfortable with your new subscription experience and ensure orders can be placed and captured accurately.
Think through how a subscription business model will impact your current processes for contracting and renewals. How will you account for changes to a contract’s associated assets, usage, or pricing? And in the case of customers with multiple active contracts, can you combine agreements to ease the administrative burden?
Subscription options are extremely attractive to B2B buyers. Among other benefits, subscriptions ensure uninterrupted access to critical products and services, with a set-it-and-forget-it ease that’s hard to dislike. Still, convenient, self-service purchasing and automated billing are just a small part of the sales experience. For example, if sales channels feel disconnected or self-service customer support options aren’t sufficient, they’ll impact the perceived convenience of the selling experience overall, negating some of the most compelling advantages of subscription selling.
In B2B, there’s no “ideal” candidate for subscription selling. Whether or not the model is right for your business depends on your ability to make strategic changes to support it.
Interested in exploring further? Check out our Essential Strategies for B2B Subscription Business Models.
Elizabeth Shaheen is a senior product strategist for CPQ and subscription management. Her background includes 14 years of brand and product management experience in B2B, B2C, and DTC businesses. Elizabeth has extensive experience in setting strategy, driving execution, and obtaining measurable ROI for marketing and sales initiatives.