subscription economy mereo

The Subscription Economy Is Here — and Your Buyers Demand the Shift

My last month’s bank statement puts me at seven … no 14 or more current subscriptions. I’m subscribed to Amazon Prime, Spotify music service, HBOMax, Netflix and Disney Plus TV and movie streaming, Dinnerly meal deliveries, home alarm, bi-monthly nutrition supplement deliveries, education mystery boxes for my son, news outlets, Office365, Adobe Creative Suite and a handful of outdoor magazines. There remain few areas of my life that are free from a recurring payment and dependable, on-demand services at my fingertips. And as a consumer, I wouldn’t want it any other way.

The subscription economy has arrived in full force, across all industries, markets and sectors. No longer are one-time transactions cutting it for a large majority of buyer expectations. And companies not “born” into the subscription model by design are struggling to embrace the shift — and reap the potential rewards.

Yet, the meal delivery and music and entertainment subscriptions that get a chunk of change from me every month face risk. The minute I stop finding any of these valuable, I can cancel. If I see a similar subscription service that promises more value, I can change.

The same risk exists for B2B subscriptions — and this is one of the greatest challenges Mereo has identified for B2B product, sales and marketing teams to consciously and strategically overcome.

How can you enable your salespeople with a subscription solution and differentiated value messaging that communicates and delivers real value to your buyers?

To answer this question, it is important to first understand why this shift is happening in the B2B realm — as well as the potential gains both your B2B organization and its buyers can realize.

Just-Right Conditions Driving a Boom in Subscription Service Offerings — and Buyer Expectations

Three macro forces are responsible for driving the subscription economy:

  1. Digital transformation is changing how products and services are consumed in all industries. The pace of technology — thanks to cloud, mobile and social — is opening up new possibilities for how products are delivered. This has only been further fueled and accelerated by the unique distant engagement requirements as a result of the pandemic.
  2. B2B buyers expecting B2C benefits. As consumers, we increasingly value access and outcomes over ownership. We want the freedom to use services anytime, anywhere. We crave the latest technology, product model or version update. Our expectations have continuously been reset to a new higher level with each new and improved digital experience. B2B buyers are individually, first and foremost, consumers. They get subscriptions. They know what potential value they offer and can spot any holes in yours. And they can also identify value when you accommodate their shifting solution preferences with long-term outcomes-focused commitments.
  3. Accelerated growth. B2B organizations are facing significant growth targets and challenges alike. Past industry powerhouses are being outpaced by “cloud native” companies that were built from the ground-up on these changing customer demands. To scale, they must adapt their offerings to meet customer buying expectations. They must rework their entire business approach to find new ways to reduce costs and improve efficiencies. Market valuation and subsequently market investment has shifted to favor those that are successful in delivering recurring revenue streams from subscription services.

According to recent Gartner research, “By 2022, more than 80% of software providers will change their primary business model from traditional license and maintenance to subscription models, regardless of whether the software resides on premises or in the cloud.”

Buyers Will Subscribe to Value

The “subscription economy” is not just a fancy buzzword or gimmicky pricing play — it is a business model built on the long-term relationship between a seller and a buyer. 

The notion of relationship here is extremely critical — more so than ever before. In the subscription model shift, we are leaving a product-centric, one-time transactional focus behind. We embrace a buyer-centric relationship mindset, one that demands the full embrace of a Seek to Serve, Not to Sell™ strategy.

As a seller, you must continuously keep your buyers’ needs, expectations and current experience feedback in check — and prepare to make adjustments that follow their lead. You have to continue to seek out ways to differentiate your value from your competitors and truly solve your buyers’ problems, as they evolve over time.

In most subscription setups, the buyer holds the power to easily cancel because they no longer are finding value or because they see more value from a competitor. B2B subscription sellers need to strive for “stickiness” by keeping up with current and evolving buyer pains — and solving them for real valuable outcomes.

Subscriptions Deliver the Potential of Equal Value

When done well, a subscription service can and should return value to both buyer and seller. Sellers already should have an expectation to earn the value they deliver.

For many B2B buyers, these gains are often aligned to:

  • Lower barrier to entry
  • Faster time to value
  • Flexible finance options
  • Simplified and predictable expenses
  • Overall improved relationship with the provider

For the B2B seller, the benefits come from:

  • Predictable revenue streams
  • Visibility into future income
  • Improved customer retention
  • Easier cross-selling and upselling
  • Increased long-term customer value

Subscribe to the Unbeatable Seek to Serve™ Approach

Is your B2B organization seeking to shift to a subscription offering — or to infuse long-term relationship value into current offerings? Mereo has the proven tools and frameworks to help your teams shift to a subscription model while:

  • Embracing renewable value by keeping a pulse on your buyer pains and desired gains.
  • Identifying any gaps with an expert objective outside third party.
  • Aligning that value and its differentiated messaging across all departments.
  • Delivering that value to your buyers, for long-term sustainable revenue performance.

Contact us to learn more about our approach and recent winning client outcomes.