Years to Days - Navigating Subscriptions

We’ve been talking about the channel’s shift from traditional, multi-year perpetual licensing to subscription/consumption or hybrid models for some years now. It’s no longer an emerging trend, but the new norm. What I do find interesting however, is how each channel player has adapted to this shift. Besides the providers that were “born in the cloud” or built with consumption at the core, what changes have all the other providers made within their business to support this method of IT consumption?

Moving from the sale of licenses and products to much smaller and more frequent transactions requires new processes and systems to help support monthly billing and renewals, especially for those businesses that have relied on spreadsheets up until now.

Many have turned to different ERP systems to remedy monthly billing issues. And some have been spending years trying to build their own renewals engine in an effort to stay ahead of ongoing renewals (which is lunacy might I add, and I will cover this build vs buy dilemma in my next blog)! Streamlining billing and renewals management is absolutely critical, because which business in the channel can rely on makeshift systems or spreadsheets to handle today’s volume of transactions? It’s simply impossible. But, if all you are doing is prompting a renewal transaction, then you are not considering the customer journey, or the long-term profitability of your business. Why would the customer renew with you every 30 days if they cannot see any value in their purchase?

Not too long ago, sales reps in the IT industry would sell a big deal and then move on to uncover the next big deal before the ink had even dried on the first contact! There was little motivation to ensure the customer actually used the technology, it was all about “landing” the deal, implementing, locking in maintenance for several years, and then moving on. But that approach simply doesn’t work anymore. Driving customer adoption, optimising the customer experience and presenting upsell/cross-sell opportunities throughout the entire customer and product lifecycle is mandatory for long term success. Without that, your renewal will always be at risk.

Recently, I had the pleasure of interviewing Forrester’s Channels Analyst Jay McBain about how channel businesses have been adapting to this shift:

“In this subscription world, the actual transaction is really only the first 30-day lease of a customer. Those retention partners out there that are driving adoption, integration, making it more sticky, driving upsell, driving cross-sell – there’s an entire set of post transaction partners which I call the retention channel that are – in a subscription business based on retention and renewals, absolutely critical. The transaction is getting less sexy in the equation and companies are looking at this trifurcated model of the entire customer journey and the partner journey that sits on top of that. That, in definition, is an ecosystem.”

It was great to see that Jay’s observations mirrored the LIPS strategy (Land. Invest. Protect. Surrender) I created earlier this year. LIPS is a methodology that vendors, distributors and resellers can apply to their business to ensure an end-to-end strategy that considers every single stage of the customer journey and product lifecycle.

Here’s a high-level overview of what LIPS entails:

Land
When you Land a deal, the customer journey is only just beginning. You may have closed the
initial sale, but there’s so much more you can do throughout the entire customer/product lifecycle. In LIPS, Land represents collecting data to enable a long-term customer success strategy. It also involves ensuring that your customer is 100% satisfied with their investment and has adopted/is using the technology they have purchased. Customers who do not see true value will happily switch providers, resulting in churn.

Invest
Invest is the most important aspect of the LIPS strategy, because it helps increase customer lifetime value and enables incremental revenue growth. Invest requires a consultative approach, that enables you to proactively manage your customers’ IT investment strategy. By analyzing your customer data using targeted artificial intelligence, you can create proactive proposals that help add value to the initial sale. As a result, you become part of your customers’ IT strategy, rather than just another IT supplier. But in order to get Invest right, you need to collect and manage your installed base data the right way (more about how is in the full white paper).

Protect
Protect is all about protecting existing revenue streams and ensuring that no renewal gets missed – even all those low value contracts. Which is why renewals should all be processed automatically, except for your larger accounts that require extra engagement. Automation is particularly mandatory for subscription or consumption-based models, where churn can be monthly, weekly or even hourly, which presents additional risk for lapsed renewals, unsupported/redundant assets still in use, all of which lead to lost business.

Surrender
All hardware and software assets will at some point reach the end of their useful life. Which is why I have Surrender as the final stage to LIPS, to ensure a forward-thinking obsolescence strategy. Without this, the entire product lifecycle has not been considered - from “cradle to grave”. To help plan for Surrender upfront, you will need advanced and proactive tracking of each and every asset, throughout their entire lifecycle. Which is easy to do, but only if you have the right platform in place!

Discover more about the LIPS methodology by downloading our full white paper. Or, if you’d like to know more about how you can execute LIPS in an automated, efficient and intelligent manner using the iasset.com platform, then please feel free to reach out.