November 20, 2020

Fromentertainment to niche box deliveries, subscriptions are growing everywhere. With businesses focusing more on providing the best customer experience along with the influx of multiple usage-based billing models, the rise in subscriptions is no surprise.

The hottest topic right now is the unexpected growth in subscriptions. There has been a 300% growth in subscriptions for digital news and media! New York Times exploded with over 600,000 digital subscribers in just three months in 2020. Global online music streaming subscriptions spiked 35% in Q1 2020 and by 2025 are expected to surpass 1.1 billion. Streaming and subscription pioneer Netflix has increased their subscriptions by 123%.

The Rise of the Subscription Platforms

As subscriptions are rising, so are software subscription platforms. The global subscription platforms market is expected to grow from $4 billion in 2020 to $7.8 billion by 2025. Major factors driving this growth include rising adoption of cloud-based solutions and reduced subscriber churn.

Platforms such as Oracle Subscription Management Cloud enable businesses to create predictable, recurring revenue models by offering an end-to-end subscription solution that enables companies in every sector to adapt to evolving customer behavior and adopt modern subscription business models.

The Flexibility of the Cloud

The Cloud is an enabler of progress in business processes. It enables key benefits to meet changing business needs including cost savings, service growth, and greater flexibility. Cloud- based technology, along with the various ways in which services can be developed, applied, and managed, are emerging at a rapid pace. The global cloud market is estimated to hit $383 billion by 2026, up from $82.5 billion by 2020.

• Cost savings is the biggest advantage. A cloud subscription company lets you save major capital
  costs, as no physical hardware investments are needed.

• The cloud provides a strategic advantage over the rivals. This allows you to access the new apps
    at any time without wasting time and resources on equipment.

• As requirements alter, the company will scale up or scale down operations and storage
    accordingly.

• The ability to login easily minimizes any downtime and productivity loss.

• Both cloud services can be readily accessed by workers operating on site or at remote locations.
    All they need is a link to the Internet.

• The cloud has virtually infinite storage space and can easily increase storage capacity at
   negligible rates at any time.

• When you decide to use the cloud, rapid deployment will render your whole system completely
    functional in a few minutes.

• There are many other advantages too.

"As we’ve all moved to being “in”, we’re looking for ways to get the things we want and need brought to us. Subscription services accomplish just that and the growth of those services as well as the limitless categories of products and services we can subscribe to will only continue to grow in the future." -- Brian J. Friedman - GVP Global Strategic Sales, SoftClouds, LLC

Oracle Subscription Cloud – An Intro

Long before Oracle entered the cloud based subscription platforms market, Oracle Communications Billing and Revenue Management (BRM), an on-premise subscription solution, was their subscription/revenue management system. It was used to develop product deals, build customer accounts, evaluate sales, and maintain customer relationships.

The Oracle Subscription Management Cloud is now a 360-degree network that offers a full subscription sales, authoring, and executable subscription management solution. You can have monthly subscriptions to digital media, coverage-related services, and complex items such as cloud data storage that are based on use.

Oracle Subscription Cloud Features

Oracle Subscription Cloud offers great flexibility through the following features:

Business Model Flexibility - Oracle subscription is an agile solution for a subscription business because:

• It supports complex goods and services.

• The management of quotes and agreements is made as clear and versatile as possible.

• A consumer can self-serve while minimizing complex management and manual procedures.

Sales, CPQ, and Commerce - Complex procedures are streamlined across several systems and touchpoints because:

• Supports thousands of engagement points through models of pricing, distribution, and billing.

• Provides sales and support teams with the tools required for simple adjustment, management,
   and renewal of deployment options.

• Delivers negotiated rates, use, or terms with quotations and orders based on subscription.

Use Case – Today’s user needs everything customized per his wishes. A user wants a Dell laptop with a specific RAM, laptop cover, memory etc, . These choices can be instantly processed with a powerful CPQ in place and can be easily paid with different subscription plans per month or per quarter accordingly.

Renewals and Insights - Renewal management is improved by ensuring that:

• Renewals are simple and affordable

• Minimized customer churn with smart insights to help identify customers at risk early to
   increase renewal rates.

• Intelligent determination of customer cross- and up-selling possibilities

Use Case – Companies like Netflix use real-time intelligent insights that help identify at-risk customers early so that appropriate action can be taken to bring them back. Customer churn can be minimized and more opportunities with respect to cross-sell or up-sell are only possible through an intelligent renewal system.

Dynamic Pricing Models

• Consolidating mixed orders into a single summary invoice of fixed, one-time, periodic, and
   consumption or usage-based charges.

• Choosing the model of pricing and billing that meets the current guidelines for revenue
   recognition.

Business Success Metrics - Track key performance indicators:

• Identify how subscriptions are affecting the company,

• Include recurring monthly income, overall contract value, per consumer average income, churn
   rate, lifetime value of customer, and more.

Use Case – A subscription business has 100 customers and loses 10 customers that month, churn rate is 10% so to grow, it will need to sign up more than 10 customers in the next period. When such real-time indicators are available, it is easy to pin down the cause and improve the rate.

“Our new contactless experience economy has accelerated the move to subscription-based relationships. Today it’s all about convenience. And all companies, both B2C and B2B, need to adapt to the convenience-experience expectations of their customers, or they will be disrupted and displaced.” -- Mark Robertson, Enterprise Sales - Oracle Corporation

The Future of Subscriptions

Here is what we think the future of subscription will be:

Prediction 1 - Subscription Data and Cloud

The cost of obtaining an active consumer is high. More and more businesses are shifting their business to the cloud and embracing the subscription model. Rich consumer data is readily available in real time. They will have greater opportunities to engage customers, upsell and eventually scale their subscription business. As a result, in this environment, companies in the cloud and with customers on top of mind will readily scale.

Prediction 2 - XaaS and Subscription

What was originally limited to the world of tech, all as a service, or model XaaS, will continue to gain traction in 2021 and beyond. Example - Volvo developed its own subscriptions and Porsche built an all-inclusive, monthly vehicle subscription for "Porsche Passport" - This is a smart business strategy as the conventional idea of owning anything is increasingly rejected by Millennials.

To monetize the service, the "as a service" model has to focus on subscriptions. When more and more companies discover that subscription commerce provides a convenient, affordable, and sometimes tailored way for products and services to be purchased by both businesses and customers, the recurring revenue model evolves and grows.

Prediction 3 - Machine Learning, Cloud and Subscription

Biggies like Amazon, Starbucks, and Netflix are already using ML to anticipate and understand consumer behavior and their choices. Now Machine Language can discover more actionable insights with growing competition in the subscription market environment and with all the vital cloud data. This information will be used mostly to win back canceled customers or those who are about to cancel.

Prediction 4 - Subscription businesses will have to move to a better cloud architecture

Today's organizations need a center-based agile hub that revolves around subscribers providing dynamic pricing and rating; event-driven order, billing, and revenue recognition; time-based metrics; a subscriber identity record to retain and track all subscriber information.

To support subscription models, modern companies need new technology that is "subscription conscious."

Our Thoughts

For quite a while now the subscription economy has been on the rise, with businesses seeking to create deeper and longer lasting relationships with consumers while producing guaranteed profits that contributed to the decline in ownership and the rise in the preference of users.

Cloud proves to be a better choice to better understand the ever-shifting consumer needs in this environment of stiff competition. At the end of the day, solutions that personalize and provide real-time actionable insights are going to win. The reliability, flexibility, scalability the cloud can provide with respect to data should make a cloud first strategy the top of every business that is adopting/adopted a subscription business model.

Here are some platforms that are doing a good job designing a better subscription model for today’s consumer but we think, out of them all, Oracle is a better choice as it is a leader in cloud business and now with a strong platform in hand, quietly working its way up as a leader in the subscription world too.

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This post was written by Balaji Ramachandran, Founder & CEO of SoftClouds. He has over two decades of experience in Technology, Business Development and Operations and a very strong foundation in Customer Relationship Management for SMB and Enterprise. Utilizing his profound expertise, he has spoken in conferences around CRM & Technology around the world.