Unfortunately, many SMEs struggle to turn it into a sustainable business model. Most begin with a simple concept which is easy for customers to understand and adopt, but is also easily replicated. So when a competitor enters the market and undercuts them on price, differentiation becomes even harder to achieve.
So, how can SMEs ensure that their adoption of a subscription-based service approach is successful?
Here, we provide some top tips.
1. Offer the right payment choices
From the outset, you need to think about what payment options to give your customers. You must decide whether you want to enable people to pay by credit card, direct debit, PayPal or other methods such as bank transfer, for example. And you need to put in place the right systems to enable this. The kinds of solutions you implement will depend on your business model and types of customers. However, the top priority should always be to make the process as simple as possible.
2. Ensure you package your solutions properly
While most consumers are happy to pay a standard price for a standard product, businesses typically want to negotiate a better price and may also look for the product with which they are being provided to be differentiated in some way. So again knowing your customer well and having a flexible way of packaging and pricing your products and services is important to be able to address their needs – whether they are a business or a consumer.
3. Focus your business model on recurring revenue.
By having a subscription and a regular contact point, customers that require additional products and services can just add those to their account. In monetisation terms, creating a stronger relationship with customers through subscriptions, makes it easier to win repeat business and upsell more.
4. Make sure you put flexible billing in place
A business model based on subscriptions and usage needs flexible pricing options – but traditional on-premise billing systems are typically too expensive or not agile enough to handle this requirement. Cloud billing can be key here, reducing the time taken and cost of setting up new services and enabling businesses to rapidly turn creative ideas into monetised solutions.
Louis Hall is CEO of Cerillion Technologies.
Share this story