vijay sundaram
Contributor
vijay sundaram I am the chief strategy officer of
zohoHe drives corporate strategy, execution, channel management, business development and enterprise sales. He was an entrepreneur and founder of companies in the fields of cloud, supply, chain, software, mobile advertising technology, and renewable energy.
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subscription economy It continues to expand unabated.by someone Estimate, companies with subscription licensing have grown three to four times faster than the S&P 500 over the past 12 years. As his CSO at Zoho, a B2B subscription-based technology company founded more than a quarter of a century ago, I see a growing disparity between provider interests and customer outcomes, especially in his SaaS. I realized that.
The prevalence and significant growth of subscription licensing has created an irreproachable model. But if you look closely, software is no longer cheaper, broader, or deeper for customers. Meta, Netflix, Microsoft, Oracle, SAP, Salesforce, and others have recently announced price increases. 24% higher For certain products or services. New layoffs are also underway in the tech industry. Somewhere along the way, economies of scope and scale broke down, and enterprise customers were saddled with monthly, per-user checks.
Rather than contributing to this chasm, software providers can drive growth by passing on the unique benefits of cloud and subscription licensing to their customers. After all, this was the original promise of the model nearly 20 years ago. In my experience, longevity in the market depends on increasing productivity, agility, and revenue for enterprise customers. In other words, adding value rather than limiting it improves both the health and sustainability of the subscription economy and its merchants. Providers can approach this strategy in the following ways:
promote flexibility
Migrating from one tool or system to another is arduous, costly, and disruptive. Even if trial accounts are offered, they have limitations on data processing, storage, usage, and duration, and lack functionality. Increasing the length and scale of customer trials has two benefits for vendors. First, providers can understand the impact of users on enterprise performance, resources, and costs, allowing enterprises to make changes to delivery and pricing without impacting existing paying customers.
Companies can stand out by offering solutions through subscription licensing.
A second benefit of building customer flexibility and choice into your product is new business growth.As a point of Harvard Business Review outside, the Financial Times conducted an experiment in which it removed the ability for customers to view three free articles on the site and instead immediately imposed a paywall. Website traffic fell by 30% and new subscribers declined over time. “If you force every user to convert on the first visit, you’ll lose 79% of conversions, which equates to tens of millions of dollars in customer lifetime value.”
This is because customers prefer to experience the product and build a trusting relationship with the manufacturer before making a purchase decision. In the case of software, deals can run into the millions of dollars, and businesses are willing to shop around until they find the right solution from a trusted vendor at an affordable price. But with the current state of the industry, they may continue to shop forever.
