When my husband and I were preparing for a trip a few weeks ago, he decided to pack his video game controller but not the video game console. Not being a gamer myself, and setting aside the fact that we were going somewhere with some of the best beaches in the world, I asked why he would bring only the controller. His answer was that he subscribed to a service offered by the video game console manufacturer, allowing him to stream the games on any device and play them anywhere using the controller.
If you’re not familiar with the service I’m describing, think about this: modern video games require immense computing power and graphical display capabilities. The service described basically offloads all of that from the consumer and reduces it to an interactive video signal, which makes the product much more accessible. Isn’t that amazing? With Wi-Fi, 5G internet, apps development and subscription services, consumers can enjoy video streaming services anywhere, as long as there’s a decent internet connection. Hardware manufacturers can offer subscription services on top of hardware sales, generating new revenue streams while building longer term relationships with customers.
Subscription business models are some of the fastest growing revenue opportunities. As this coming holiday shopping season will likely be affected by continued supply chain disruptions, companies can benefit from subscription-based products and services—for example, consumer electronics, wine clubs, book clubs, coffee machines and beans, automobiles, gym equipment, printings, renewable energy and more. No matter which industry you work for, you should be looking for opportunities to create value for your customers and for your company. Are you ready for this new business model?
We are seeing and hearing two main challenges from customers: how to adapt their products to be sold as subscriptions, and how to adopt the processes and infrastructure needed to accommodate subscription transactions. Customers need help to manage:
Now let’s talk about how to make it all work.
First, consider an integrated subscription management solution that connects your front and back offices. An end-to-end subscription management solution simplifies the order-to-cash process, capable of fulfilling orders that combine physical goods, warranty coverages and subscriptions. Many subscription management vendors don’t offer the capability to process a mix of hard goods and services because they don’t have back-office applications such as supply chain management.
Second, understand your customers better with a 360 view of their subscription health and adoption. Use predefined AI models to surface churn probability and track KPIs such as monthly recurring revenue, total contract value and customer lifetime value. You can then take actions to increase renewal and customer retention.
Third, consider a solution that enables repeatable and automated processes. With the right execution, companies can grow new businesses by pivoting and diversifying product offerings such as product and subscription bundles. You can maximize profit by making smarter supply chain and fulfillment decisions. Your financial planning and reporting become easier. Revenue and cash flow become more predictable, and the cost of goods sold is spread out over time.
Oracle enables every customer to take full control of their subscription business. With Oracle Cloud solutions, businesses can:
Oracle’s subscription management is digitally connected with your order-to-cash process. It allows your customers to configure, manage and renew subscriptions, fulfill mixed orders, and automate the recurring billing, payments and revenue recognition processes, so organizations can focus on customer satisfaction and retention.