The Subscription Economy; delivering Experience as a Service

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There is a fundamental change coming to the way we consume. We are no longer looking to own things, we want to rent them – and only for as long as those things add value to our daily lives. We have become subscribers, rather than customers. We are looking for experiences, rather than moments in time. This is the Subscription Economy and it is all about delivering Experience as a Service.

If this is new to you, Zuora, the worlds leading subscription management and billing solution, introduce the subscription economy in their excellent video here. There is also a Slideshare presentation by Tien Tzuo, CEO and Co-Founder of Zuora here.

This method of selling has been with us for a very long time; initially B2B, but now increasingly B2C.

Jet Engines as a Service

Rolls-Royce pioneered the first generation of their services 20 years ago and have been developing this ever since. Airlines don’t typically buy Rolls Royce jet engines; 80% are leased as a service with a full maintenance capability which ensures they run as expected. Every engine is under surveillance generating a wealth of engine operations data which is used to develop the next generation of engine. You can read more about their services here.


Underwear as a Service

Nowadays you can get anything through a subscription; toilet paper, underwear, food, kids activities, beauty products, the list is endless. Many of these organisations offer the subscription, but do they offer the experience? For the subscription economy to be truly successful, the critical element is delivering a personal experience. To do that, organisations offering a subscription need to learn about their individual customers – they need to connect with their customers – and ensure that the service becomes personalised. Perhaps I don’t like red underwear, and state that through my interaction with you. If in my next box I receive red underwear, I will try another provider and you will lose my business. If you deliver my fruit and veg box and I said no apples and then receive apples, I will try another provider and you will lose my business. Loyalty is almost dead.

The choice of provider is booming, so staying competitive is less about price and more about that personalised service. I need to believe that you know and care about me as an individual and my individual experience of your offer.

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Not every business is in a position to take advantage of the potential of this economic pivot. Many businesses were built to sell stuff, often in boxes; as many boxes as possible, and re-engineering to take advantage of subscriptions is really hard.

Everything about your business has to change. How you market yourself, how you sell, how you price, how you are structured, how you think, how you deliver, how you support, how you manage yourself and what you know about your customer. It all changes. Internal accounting practices have to evolve and a new language needs to be learnt. Annual recurring revenue, cost of goods sold, customer churn rate, total cost of acquisition are just a few of the new metrics which drive the success of the organisation built on the subscription economy.

The Subscriber Centric Business


A new culture has to be built to support the subscription economy; one that wraps itself around the subscriber. You have to put your customer absolutely at the center of everything that you do. Your business functions; Product, Ops, IT, Finance, Sales and Marketing all function to support the subscriber – nothing else matters. Fail to do this and your business fails.

At LINQ we are in the process of building out our platform so that it will appeal to subscribers. For example, our plans for pricing will see us move from user-centric to usage-centric. This will enable us to truly know who our customers are and what they are using LINQ for. This allows us to focus development on capabilities which have meaning, and respond to customer feedback. The value of our platform will be measured by the amount it is used by our subscribers.

This is a shift that is only possible if the subscription economy and the principles of a subscriber-centric business are built into the philosophy, ethics and culture of our business from the very beginning. We’re already well on the way with customers all over the world using LINQ. What matters next is that we continue to deliver an experience to them, which delivers the value our subscribers expect.