Spoilt for choice is what we are!
I'm talking about the surge in growth around streaming networks from Netflix, Amazon Prime, BritBox, and now Disney amongst many others.
As consumer behaviour started the 'unbundling' (cord cutting) of the cable and satellite networks in favour of eating their content in bite size chunks from a variety of providers we are now seeing the same thing happen with the consumer trying to juggle multiple payments and subscriptions due to ongoing and as yet downstream financial pressures.
Businesses of all kinds that subscribe to a variety of technical services under monthly/yearly SaaS contracts will also be reviewing the value and ongoing affordability.
SaaS companies aren't in the software-selling business; they're providing a service.
A software-backed service, usually delivered over the internet.
That means customers expect onboarding and customer support, as well as updates and ongoing improvements. In return, a SaaS company gets a more stable and long-term revenue stream (but needs to ensure it doesn't veer too close to becoming a professional services company).
This is worth highlighting because the worst mistake you can make is only focusing on one or two metrics and forgetting about others. The recurring nature of subscription-based revenue involves multiple parts that are all worth optimizing.
I'm pretty sure there's a software house out there currently working on an App that helps you monitor usage and value from each of these subscriptions - if not there should be!
If your old enough you might remember CD and Wine clubs you signed up to and then forgot about until the monthly or quarterly with the wine arrived on your doorstep.
This was what back in the day marketing would call a 'continuity model' or as is more widely known today a subscription model. In B2B tech land this is the founding principle around the SaaS business model.
We still see brands and companies who choose to promote the latest 'white paper' on 'how to boil your kettle quicker than ever before' - does this still work today - not the kettle thingy but the 'White Paper'?.
In exchange for access they require your personal info in the form of e-mail, title, number of employees, inside leg measurement and where you went on holiday with Auntie Beryl when you were twelve.
Without boring you with the subject of subscription marketing its a numbers game and the marketing cost are all front end loaded to get you to sign up with those attractive 'buy now' offers.
The key objective thereafter is to keep you in the system as long as possible and other than keep selling you the benefits and upgrades do as little as possible that might encourage you to cancel. Unfortunately some businesses have gone out of their way to make it hard for you do this which only makes you recall the brand experience bad when you are back in the market for a similar service.
ARR:
Annual Recurring Revenue. Not to be confused with the Accounting Rate of Return
The term ARR describes 'annual recurring revenues' and for many businesses and CFO's this is the holy grail for financing and funding the operational model.
So, as times get tough for both consumers and clients here's a few thoughts on how this might just be a key superpower to assist both sides of the business relationship.
Why not run and internal and supported with external research series of ideation workshops around the subject of perceived high value versus low internal cost to serve?
To do this requires a mindset that says 'any idea is valid until it isn't and is aimed at getting under the skin of why the customer/client values you over your competitor. I strongly suggest that this includes teams of people from every part of the business.
Lots of new technology business create 'freemium' models which simply means free to access and use certain features with the ability to upgrade to aid for premium features. The objective being the low cost and scalable recruitment of new customers which can then be modelled to move into the premium service on a recurring basis.
If your not a technology business take a leaf out of the Amazon prime model where the subscription to one service gives the subscriber access to another one for free e.g. delivery.
And once you have the kernel of an idea start to test it and sound it out via social media leveraging the teams that assisted in coming up with the ideas in the first place.
You may have heard the term T2D3 before. T2D3 refers to the growth trajectory that the most successful tech startups follow. They all Triple their ARR two years in a row then Double their ARR three more years in a row, resulting in $100M ARR and landing them at the $1B valuations coveted by investors everywhere. But hitting that hockey-stick growth figure is hard, which may be why you're here reading this.
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