Winning with Subscribers: Top Trends and Best Practices for Selling and Managing Subscriptions Online

Elastic Path™ Elastic Path™

Winning With Subscribers

Top trends and best practices for selling and managing

subscriptions online

Elastic Path Software

Featuring: David Chiu, Digital commerce strategist at Elastic Path

Software

http://www.elasticpath.com/webinar/online-subscriptions








Introducing Elastic Path Software

Digital Commerce for Innovators

• We help the world’s biggest brands sell digital goods and services

• We provide a flexible digital commerce platform and expertise in

commerce strategy and implementation

• #1 ecommerce blog www.getelastic.com

• For more on-demand digital commerce resources

www.elasticpath.com/resources

http://www.getelastic.com

http://www.elasticpath.com/resources


Agenda

Everything changed – or did it?

Rewards and risks of the subscription model

Best practices in the subscription space

Key features in a successful implementation

Get going: Subscription alternatives



Apple in-app subscriptions – February 15, 2011



Google One Pass – February 16, 2011



Recurring revenue, LCV

Predictability and loyalty

Billing information on file

Increased customer insights

Easier up-sell opportunities

Tier and loyalty possibilities

Ancillary revenue streams

Marketing benefits



Recurring revenue, LCV

Predictability and loyalty

Billing information on file

Increased customer insights

Easier up-sell opportunities

Tier and loyalty possibilities

Ancillary revenue streams

Marketing benefits

High customer expectations

Consistent content quality

Delivery service levels

Customer service and CRM

Packaging and distribution

You will compete with “free”

You need to sell an experience

Business process complexity



Source: OECD via GigaOM Pro, 2010 Source: GigaOM Pro, 2010

Mobile apps Games and social networking Digital music Ebooks Film and video Lifestyle services News and info Business and consumer software Business services



“What will be the most prevalent business model in your sector in the next three years” Source: Accenture Global Content Study, 2009

“Which factor represents the most important source of revenue growth for your segment in the next 3 years” Source: Accenture Global Content Study, 2009



When do subscriptions succeed over other monetization models?

Ubiquity coupled with experience (frictionless)

“I will subscribe if you can get it to me in a way that I cannot imagine living without.”

Exclusivity “I will subscribe if I want it, but absolutely cannot get it anywhere else.”

Amortization “I will subscribe if other ways to get it involve spending a huge pile of cash.”



Ubiquity*

Experience

Exclusivity

Amortization



Ubiquity*

Experience

Exclusivity

Amortization



Ubiquity

Experience

Exclusivity

Amortization

Source: MMOGCHART.com, 2009



Ubiquity

Experience

Exclusivity

Amortization


Best practices in the subscription space – maybe

Ubiquity

Experience

Exclusivity

Amortization


Best practices in the subscription space – maybe

Ubiquity*

Experience

Exclusivity

Amortization



Customers subscribe to experiential services, not to content

Customers pay for access to content, not for the content

Multiplatform access is a big deal – and getting bigger

Watch for tension between ubiquity and experience

Make the recurring payment part as effortless as possible

Provide clear and responsive customer service options

Treat your subscribers like the valued members that they are

Successful subscription-based products and services will have at least one (preferably two) of ubiquity, exclusivity or amortization plus a customer experience that is market average or better.



Subscription product definition, pricing, and characteristics

Activation date, duration, tier, tier fluidity



Billing, renewal, and cancellation options

Payment platform – including recurrence and dunning



Customer account management, customer service access

Ancillary revenue generation – gift subscriptions



Apple in-app subscription service

Content types:

Platforms:

Payments:

Implementation:

Recurring cost:

Periodicals, video, music

iOS

iTunes store platform

Low

High (30% rev share)



Premier mobile ecosystem 160MM+ devices Desirable hardware 2-9% web traffic/market Mobile “plug and play” Proven effective funnel

Limited to iOS platform iTunes store billing 30% revenue share Customer data control “Shuttle” restrictions Multiplatform price cap

Possible antitrust actions Instant platform for

content owners Strong multiplatform

players could still benefit “Need to be here”

Possible antitrust actions Pain for content licensees Restrictive customer data

policies may impact ubiquity initiatives

“Need to be here”

Strengths/Opportunities Weaknesses/Threats



Google One Pass payment system

Content types:

Platforms:

Payments:

Implementation:

Recurring cost:

Periodicals, other media*

Web, mobile except iOS

Google Checkout

Low

Med (10% rev share)



Web and mobile spaces 10% rev share (vs. 30) Variety of pricing models No “shuttle” restrictions Relatively permissive

customer data rules

Google Checkout billing 10% rev share (vs. 2.5) Unproven funnel Somewhat less “plug and

play” for mobile at launch

Google brand and trust Stronger foundation for

multiplatform initiatives More consistent with

programs to increase channel ubiquity

Android Market revenue share details

Google Checkout track record questions

10% may still be marginal value for licensees




Outsourced subscription SaaS

Content types:

Platforms:

Payments:

Implementation:

Recurring cost:

Services, other media

Primarily web

Most types

Medium

Low (2-5% interchange)

http://www.vindicia.com/

http://www.authorize.net/

https://www.paypal.com/cgi-bin/webscr?cmd=_home



Strong presence for Web Extensive monetization

models for products and services

Service-oriented APIs Lower interchange costs

Limited application/focus in mobile space

Mobile may require add Not specialized for

content publishers (yet)

For enterprises with custom requirements, SaaS provides lower CoE

Solid platform for channel ubiquity programs

Customer data ownership

Issues with mobile market walled gardens

SaaS sometimes limit customization possibilities

Cost-benefit needed for very high volumes


http://www.vindicia.com/

http://www.authorize.net/

https://www.paypal.com/cgi-bin/webscr?cmd=_home



Ecommerce platform subscription feature

Content types:

Platforms:

Payments:

Implementation:

Recurring cost:

Any

Web, mobile except iOS

Any type

Medium to high

Varies (incremental)

http://corporate.digitalriver.com/store/digriv/ContentTheme/pbPage.Homepage/sectionName.home

http://www.atg.com/en/



Full customization Extensive monetization

models for products, services and content

Lowest interchange costs (almost zero increment)

Higher implementation costs than other platforms

Potentially higher support Longer time to market

Allows very unique and complex features/models

Single platform for all customer touchpoints (multi-model enterprises)

Customer data ownership

Issues with mobile market walled gardens

Constant upgrade cycle to maintain ubiquity

Cost-benefit needed for all transaction volumes


http://corporate.digitalriver.com/store/digriv/ContentTheme/pbPage.Homepage/sectionName.home

http://www.atg.com/en/


Review and takeaways Winning with Subscribers

Subscription fundamentals do not change with new services

Subscription is a demanding monetization model

Experience and access, not content, are king

Growth will come from packaging and delivery advancements

Aim for 2 out of 3: Ubiquitous, exclusive or amortized

Don’t forget that CRM is amplified in a subscription model

Look for solutions that provide mobile access to content

But … consider cost/benefit for each ecosystem carefully

Innovate “strategic workarounds” to maintain the big three


Questions

For more on-demand digital commerce resources

www.elasticpath.com/resources

[email protected]

1.800.942.5282 (toll-free in North America)

www.elasticpath.com

http://www.elasticpath.com/resources

Technology

Winning with Subscribers: Top Trends and Best Practices for Selling and Managing Subscriptions Online