Mary Meeker is famous for the insight of her Internet Trend Reports so of course I read them. Two slides stood out in relation to the trend I am tracking and the report I am working on. I captured my views with some annotations.
To own or to use is not a new concept. I started grappling with this at least 12 years ago when I worked for a technology division at Sony and we developed a mobile music streaming service with Vodafone. That was in the day before iPhone was launched, before Spotify, when the iPod was on its way up. I remember at the time, the naysayers saying, no one will pay a subscription for a mobile service for music they don’t own. CAN YOU IMAGINE THAT??? Check out the video I recorded of the service back in the day in case you don’t believe me.
Erich Fromm wrote To Have or to Be in 1997 – from the blurb:
To Have Or to Be? is one of the seminal books of the second half of the 20th century. Nothing less than a manifesto for a new social and psychological revolution to save our threatened planet, this book is a summary of the penetrating thought of Eric Fromm. His thesis is that two modes of existence struggle for the spirit of humankind: the having mode, which concentrates on material possessions, power, and aggression, and is the basis of the universal evils of greed, envy, and violence; and the being mode, which is based on love, the pleasure of sharing, and in productive activity. To Have Or to Be? is a brilliant program for socioeconomic change.
How does that resonate for you 22 years later, in this day and age?
I’ve not had a chance to post for a while and there has been a fair bit of activity in the space so I have quite a bit to share.
I have also run a few numbers through the data visualisation machine and come up with the infographic at left – feel free to use and share.
So herewith some of the best posts from recent weeks.
New SaaS Delivery Models Require New Customer Success Delivery Models. A solid piece on how Customer Success roles need to change in the maturing SaaS space. Sticking with the SaaS space, this article does a really good job of explaining how to manage your vendor if you use a SaaS product: How to manage SaaS Vendors in the Subscription Economy. And for some other really good posts on these themes:
- 5 Blisteringly Successful Customer Success Strategies
- New research report by Gainsight: The State of the Customer Success Profession 2019 (sign up required)
- A practical guide to understanding and reducing SaaS churn – an investors perspective
New entrants to the space
- Hertz who launches a monthly car rental subscription.
- Then there is Sanofi who turns to subscriptions to offer patients insulin at $99 per month.
- And Volkswagen rolls out subscription model in the UK.
- Last but not least, Urban Outfitters Inc are to start renting out clothing.
This collection of announcements above 👆 shows the sheer breadth of industries effected by the As a Service trend – nothing is off limits.
Industry specific news
There were a batch of articles and new research:
- New research highlights how increasing interest in the subscription economy will revolutionise the automotive dealer service experience.
- From McKinsey: How sharing the road is likely to transform American mobility.
- Great opinion piece by Kara Swisher in the New York Times: Owning a Car Will Soon Be as Quaint as Owning a Horse.
- The Rise Of The Industrial Subscription Economy
- Forget Games as a Service, We’re Headed Towards Consoles as a Service
- Apple is now the privacy-as-a-service company
- Fashion as a Service
Here is a good summary of the trend which includes commentary on all the different industries being effected by the subscription economy: Subscription Services Draw Companies Closer To Customers. As with so many of the posts that I reference to the subscription economy, this one points to its darling Zuora, as you can see from the source of the chart. But their standing at the top of the subscription economy heap (as a company that powers the economy) may be under threat as new entrants join the fray: Stripe billing launches in Europe to power subscription companies across the continent.
There are other signs of a growing consolidation and integration in the Subscription Economy and Customer Success industries with the announcement by Medallia of their Strikedeck acquisition. Also Customer Success leader Gainsight’s announcement of the broadening of their portfolio into a “Customer Cloud”.
Nuggets from the last few weeks. If you have any similar announcements, reports or good articles, please share in a comment as I’m collecting them for a new eBook / trend report 😁
- New EV startup Canoo will only sell cars on a subscription basis. The interesting thing here is not so much about a new entrant in the electronic vehicle space but that it chooses a subscription only model.
- The Subscription Economy: Powering the Next Era of Gaming. The big news a few weeks back that is behind this post was about Google’s new gaming service they announced the launch of (Stadia). A cornerstone of their new service was of course subscriptions and they are not alone in their strategic thinking.
- Apple was another company with big subscription related announcements. This article does a superb job dissecting the announcements and showing how they need to look to services for growth (since their products have hit a wall): Apple’s Services Event. This article title pretty much nails it: Apple’s Two-Word Plan for the Future of the Internet: Subscribe Now
- Industry specific
- Auto: Car Companies Face ‘End of Ownership’ Crisis
- Retail: The Netflix model – How Philips and Husqvarna are embracing the subscription economy. Another one was an announcement from Burker King – Burger King Offers $5-a-Month Coffee to Woo Breakfast Crowd
- Some really good general analysis here on the trend: The subscription economy is changing the mindset of a generation
As I think more about this whole space and track the developments in it with posts like this, I’m trying to envisage dynamics of the perfect business in it.
That gave rise to the DanelDoodle at left. Just some fun and very quick so not sure they are absolutely right. I’ll get a better feel for this as I complete my new trend report / eBook on the subject and it may become clearer and a little more scientific.
Anyway onto latest developments which is always the purpose of these posts in the form of announcements, articles, etc.
- Interbrand and Zuora Join Forces to Help Global Brands Succeed in the Subscription Economy. With Zuora a leading proponent and supplier of solutions for the Subscription Economy and Interbrand a global brand consultancy, this is a significant partnership that will help new players in the As a Service world. They’ll get the technical infrastructure needed to change their business models plus the help to shift their strategy, experiences and messages to customers.
- ‘It’s a battleground’: Why retailers are turning to subscription programs to build loyalty. Focus is on Canada but good McKinsey stats from global activity that supports the growing strength of the play for retailers, on the back of Amazon Prime and others’ success.
- How Apple and app developers will try to entice you to subscribe, not just pay once. I’ve captured in other posts in this series how Apple seem to be transitioning to subscriptions. This proves it. I already have one subscription to an App myself and have had for more than a year now. This is different to Spotify for example and here is how you manage your subscriptions from your iPhone.
- Hate Doing Laundry? No Sweat. Tide Just Announced It’ll Do It for You. P&G brand Tide being extended into this new category is a pretty logical and sensible strategy. I’m sure we are going to see more like this where its not just a subscription play for the sake of it.
- Grover launches e-scooter subscription service. Love that this is coming from Europe.
- The auto industry (and manufacturing more broadly) continues to be the subject of suggestions that they shift their strategy to an As a Service model.
- From McKinsey in this article, the observation (mentioned in the video in the article) that: “The biggest change we foresee is moving from a predominantly product-faced automotive industry to a services and solutions based industry.” That from the same McKinsey that suggested Customer Success 2.0 was the new growth engine.
- And its also affiliated services that should be subject to the shift – some excellent research quoted here: Reinventing After-Sales Service In A Subscription Economy World.
- All is not well though in the auto subscription world as I discovered with GM shuttering its ‘Book by Cadillac’ Car-Swap Subscription Plan. Teething problems like this will abound.
If you have any As a Service examples please share in a comment as I’m collecting them :)
When Ikea considers changing its business model then you know something is afoot. The big news this last week was Ikea thinking about making certain items available on a subscription basis.
Good article on that here where the screenshot at left is from.
It’s looking at doing so on a trial basis so this will be a very interesting one to keep track of and see how things progress.
That article linked to above points to the concept of a circular economy which I was not even aware of but should be in the context of the As a Service trend that this post is about. The pasted paragraph below from the article says it all:
When Amsterdam’s Schiphol Airport remodeled a terminal, it didn’t buy light bulbs; instead, the company signed a contract for “light as a service” from Signify, the company formerly known as Philips Lighting. Signify owns the physical lights, giving it the incentive to make products that last as long as possible and that can be easily repaired and recycled if anything breaks. The service is one example of a shift to a circular economy model.
iPhone as a Service
I’m currently on Apple’s iPhone Upgrade Programme which in my view is its foray into the as a Service model. I captured how they are getting a little more tactical in my last Update on As a Service trends. Other than the obvious benefits they are targeting, that tactic shows how important it is to start treating your customers that sign up to a recurring financial commitment, with white gloves, so come time to renew, they do.
Volvo leading the race?
I cannot speak as intimately for Volvo’s execution on their subscription and as a Service promise but they are certainly talking a good talk. By all accounts they are struggling to keep up with demand. I’ve already written about my recent experience buying a car, which is all but a subscription service except in name. That experience is definitely not firing on all cylinders 😬
In my new eBook / trend report I will cover the As a Service trend (see point 9 here for more on that) and the role customer success plays in it. This post and others that follow will document examples of where I see companies exhibiting behaviours of this trend.
I first wrote about them in these two separate blog posts below:
I’ll also capture screenshots and include commentary in a daneldoodle as I have done below – click on each to enlarge.