Subscriptions have all the hallmarks of a can't miss revenue model. Customers love how they lower their barriers to access, while companies embrace their simplicity and ease of communication. Investors prize them because they generate more predictable long-term revenue flows than conventional one-off transaction models.
Proponents of the so-called subscription economy a term coined by the CEO of platform provider Zuora – argue that customers are better served by subscription experiences built around services than by static offerings or a single product. Software giant SAP asserts that a subscription model shortens time to market and speeds delivery of services to customers, in addition to accelerating cash collection and enabling businesses to define and modify pricing models.
Two unanticipated risks, however, currently. threaten to undermine these vendor advantages as well as the premise that subscriptions offer a better customer experience. These risks are supply chain disruption and inflation, the two most persistent causes of economic uncertainty over the past two years. Their combined effects are confronting many managers of subscription-based businesses with a challenge that never seriously crossed their minds during the relative stability of the 2010s: Can we still afford to meet the obligations we've made to our customers?
Subscription Models at Risk
Supply chain disruptions such as delayed shipment of inputs and finished goods, as well as ongoing labor shortages - mean that what a company promises its subscribers today might no longer be available at the same level of quality next week or next month. This creates the potential for dissatisfied customers, exacerbating a more fundamental risk in the subscription model: the ease with which customers can cancel. The same low barriers to entry that make subscriptions accessible also make them easily interchangeable.
Diese Geschichte stammt aus der Spring 2023-Ausgabe von MIT Sloan Management Review.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der Spring 2023-Ausgabe von MIT Sloan Management Review.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
The Trouble With Your Innovation Contests
Not all innovation contests should be winner-takes-all or judged by senior executives. New research shows how to structure contests to meet specific goals.
Scaling Automation: Two Proven Paths to Success
Lessons from two leading hospital systems show how to overcome the obstacles to automation.
How Tech Fails Late-Career Workers
Managers must make deliberate choices to support older workers' use of complex technologies.
Building Culture From the Middle Out
Midlevel leaders are critical to fostering an organizational culture that’s healthy and vibrant.
Why Manufacturers Need a Phased Approach to Digital Transformation
Those that succeed with this difficult work break it into three stages, each with its own guiding metrics.
Will Large Language Models Really Change How Work Is Done?
Even as organizations adopt increasingly powerful LLMs, they will find it difficult to shed their reliance on humans.
How to Make Better Friends at Work
Friendships in the workplace can enrich our lives and make us better leaders and workers if we make the effort to cultivate truly healthy relationships.
Health Care Platforms Need a Strategy Overhaul
To succeed, digital health platforms must shift their approach in three key areas.
Steer Clear of Corporate Venture Capital Pitfalls
Big companies and risk capital can be awkward partners. Here’s how to get corporate venturing right.
New Markets, New Opportunities: Identifying Where and How to Make Your Play
How do leaders determine whether to build a new business around a promising new technology?