Digital Transformation and the Subscription Model

Bringing clarity to the new possibilities of digital transformation and the business model of subscription-based everything.

Bigfish has worked with a lot of tech companies—in today’s economy that’s no surprise. For the last several years we’ve been helping them build awareness of, demonstrate the benefits of, and actually sell into the huge and growing possibilities of digital transformation.

Now I don’t pretend to be a tech expert, but I know this much. Digital has changed every aspect of doing business: operations, logistics, marketing—you name it.

On the awareness front, I’m struck by two things. First, that parts of our target audiences still don’t fully understand the potential. Secondly, that they often don’t understand that digital transformation is an ongoing process rather than an end point.

In terms of potential, think about the growth in win-win subscription-based relationships with clients. They get hassle-free, recurring product based on a pre-determined, but flexible budget…you get a steady, predictable revenue stream. Or think about Amazon, whose account-based engagement with customers happens in a cloud at peak fulfillment, upselling, and cross-selling efficiency.

In terms of process, think about big data. Digitally connected machines/devices are learning about what you do, and about what they do themselves, and constantly adjusting accordingly. Importantly, that isn’t a one-off: New possibilities to react and adapt are pretty much endless.

Next, I’m going to briefly talk about some familiar names in the subscription-based arena.

First, Adobe.

Rather boldly, this consumer and business software giant completely switched from selling boxed sets of their Creative Suite to selling monthly subscriptions of Creative Cloud. Adobe customers are automatically updated to the latest-and-greatest version of the product as part of their monthly fee—of course, Bigfish is a customer!—and Adobe is no longer troubled by pirated versions of their product in circulation, the long development cycle for new versions, or by customers reluctant to ante up for the new versions and updates. Adobe’s success in just four years is quite impressive.

Next, OnStar.

This GM subsidiary is a prime example of subscription-based/IoT synergy. For a monthly fee, you get hands-free communication, turn-by-turn navigation, vehicle diagnostics, protection and recovery from theft, and the security of emergency assistance. The customer service/safety play is now a much-imitated but still dependable revenue stream for GM, not to mention a real comfort to the 7 million people (and counting) who got OnStar emergency help.

Lastly, Disney.

They just announced they’re abandoning their relationship with Netflix to pursue their own direct-to-consumer online streaming model. They purchased a technology company to help make it happen, they look to offer sports, and of course, old favorites and new original content. Investors are wary so far—the media space is already crowded and evolving. On the other hand, I won’t be surprised when smart marketing of blockbuster Disney exclusives has households with children excited about buying bundled packages.

As my examples illustrate, there’s no shortage of advantages for us to highlight when it comes to win-win subscription-based sales, from protecting intellectual property to better service to attractive bundling. Of course, it all depends on seamless security and service, and convincing companies who fear change and who already have an investment in legacy technology to upgrade with new possibilities in mind.

Finally, I’m going to dive into a clear intersection of digital transformation and subscription-based access to products and services: Outcome, or consumption, or engagement-based sales and marketing.

What I’m referring to is the collection of data. Information about results happening, thanks to digital, in real time. Analyzed and turned into intelligence and insights that propel next moves.

In simple terms, that could mean something as basic as getting your supply chain geared up to stock more of those red t-shirts and less of the green. But as any business knows, there are plenty of layers of complexity to peel back.

Consider Spotify and Amazon. They know what users do and don’t like. So, they give them more of the former and less of the latter. Along with promotions and incentives and thank yous.

Now consider software paid for via subscription and licensed by number of users, and various elements of performance capacity. As you consume that software, the software focuses on your engagement.

And, lo and behold, the proprietor of the software supports your mission by improving that product. They improve by adjusting your license and payment according to your actual needs. In other words, the scale and performance of your platform is further tailored. And, the value of the software goes up as the term of your subscription proceeds, all because your service provider is paying attention.

You know what else goes up? The likelihood of you signing on the dotted line to renew your subscription.

Outcome…consumption…engagement-based models. Paid for in bite-sized chunks, with agility and customization at the forefront of service provision. Clarifying the possibilities, helping make them happen—those are exciting challenges. Fortunately, my team sees the digital creative possibilities as pretty much endless, too.

Friends, these are exciting times.

Reading about best practices is nice. Practicing them is even nicer.

About the author

Joe Pizzimenti

Joe is the principal and founder behind Bigfish Creative Group. Chartered in 2006, Bigfish has [...]