The 4 Keys to a Sticky Managed Services Subscription Business Model
Pay-as-you go or subscribe?
Have you ever wondered why managed service providers usually hesitate to offer subscriptions?
What my experience as an on-demand strategic CFO for several managed services tells me is that the reason is rooted in the concern over the need to change customer behavior, as the traditional financial transaction for the industry has been on-demand, pay-as-you-go. Therefore, selling services requires consumers – both individuals and businesses – to buy into a completely new way of acquiring services.
Interestingly, both your customers and your organization need to change your behavior in order to have a subscription model that sticks. The White Paper, linked at the bottom of this article, we just published gives some hints on how to do this successfully.
Slow to subscribe
The managed services sector has been slow to adopt subscription business models despite the success of product companies in doing so. Recent subscription model pioneers include software developer Pivotal Labs, medical services provider OneMedical, mobile application QA tester Testlio and airline operator Surf Air. However, using a subscription model to sell services is still a new concept. The main concern seems to be the need to change behavior of the consumer of these services, which includes both individuals and enterprises. Importantly, this model also requires your company and your people to change behavior, as managing a subscription model is a different game that requires different skills.
The 4 keys to a sticky subscription model
In this White Paper, I’ve drawn upon my experience to identify several key success factors common to managed services providers using the subscription model. Pioneers will lead the charge in changing consumer behavior and reap first-mover benefits. Their success will depend on their ability to activate four key success factors:
- Gain an understanding of the customer’s true internal costs
- Provide an alternative to building an internal core competency
- Understand the nature of the customer’s needs
- Establish the organization necessary to support the subscription model
Download the White Paper to get the full insight into activating a subscription model that sticks.
GET THE WHITE PAPER HERE: