In the UK, subscription spend has tripled in the last year, with 89% of British adults signed up for a subscription service.
According to data from Ofcom, video streaming services such as Netflix and Amazon Prime now have more viewers than traditional services. With subscriptions to the top three streaming services reaching 15.4 million in Q1 2018.
>See also: Why service is the new cash cow
Pini Yakuel, Founder and CEO of Optimove, said: “This next generation of consumer prefers a personalised, on-demand product.”
“The one-size-fits-all model no longer works, both in terms of product offering and in terms of customer engagement.”
“Subscription businesses have access to vast amounts of data, enabling them to provide a service that traditional businesses are unable to offer.”
The rise of the subscription model
The proliferation of subscription offerings in music and video streaming services is not an isolated trend.
Across the globe, many organisations that would have traditionally only sold products are trying to now wrap services around their offerings as a way to future-proof them from commoditization.
Take, for example, the automobile industry, major players like Mercedes, BMW, and Porsche AG, have all recently launched access to their vehicles via a subscription.
>See also: Reinventing the wheel – servitization and the automotive industry
New Challenges
With the increase in recurring-revenue business models, essentially all companies are now tech companies, this brings a whole host of challenges to CTOs and business leaders. Especially when it comes to staying ahead of the competition.
>See also: 5 tips to make goods-as-a-service a success
Yakuel argued: “In order to continue gaining traction, subscription businesses’ focus must be on increasing longevity by nurturing long-lasting relationships with subscribers, and increasing the value of the product they offer their customers.”
“This can be achieved by leveraging the data at these companies’ disposal in order to create a variety of product offerings that are relevant and appealing to each and every one of their distinct customer personas.”
