When last did you use a digital camera? For most, it has likely been a few years. The smartphone in your pocket opened the door to digital imagery – think Instagram – and all but shut the door on the need for a camera in the other pocket.
When Kodak, the company that invented the digital camera in 1976, the company that had grown to a 145,000-person, 28 billion-dollar global company, ultimately filed for bankruptcy in 2012, it put a peg in the sand that marked a dramatic shift from linear thinking to exponential thinking. When a product, such as imagery, becomes digitized, it jumps from a linear path to an exponential trajectory. Peter Diamandis, author of a book entitled Abundance: The Future is Better than You Think, called this shift “the new Kodak moment”.
Much like the digital imagery technology rocked the bricks and mortar world of business 2 years ago, the exponential Subscription Economy™ is forcing today’s enterprises across the commercial landscape to change how they do business.
Subscriptions used to be just for newspapers and magazines, but not anymore. The last few years have seen a dramatic increase in companies using the subscription model to offer everything from music, movies, and textbooks to cars for a monthly fee. Every day, more traditional players are joining the Subscription Economy in response to changing consumer habits.
One of the best aspects of the subscription model is that it enables a business to build a strong relationship with its customers. Part and parcel of doing that is understanding that subscription relationships grow a little bit differently than those involving a one-time transaction. The idea is to have elements built into your subscription model that allow customers to ease into a relationship with the product or service. Then, once that relationship has been established, it’s important to strengthen it and put elements in place to grow that relationship further and increase the product or service footprint within the organization.
For most companies, this shift means relearning a lot about selling, pricing, packaging, and building customer loyalty. Companies need to move away from a manufacturing-oriented, product-focused way of thinking, and embrace a world of services that fundamentally change customer relationships. For a subscription strategy to be effective, pricing and packaging need to be full-featured, transparent, and customer-experience friendly.
Between now and 2020, the world’s population of digitally connected people is expected to jump from two to five billion. That growth will also add thousands of linear businesses to the exponential technology sphere. Forward thinking companies are already crafting their digital strategy and the necessary subscription model to capitalise on exponential growth. They will have to make sure that they have the right systems to support variable levels of commitment and usage and the tracking required. These systems extend from the back office to money collection, and they need to be designed to enable a flexible subscription approach.
For the linear thinkers, one-time transactions continue to work, as they have in the past, so what’s the rush? And, let’s face it, establishing relationships, traditionally and digitally, and remodelling how you price and package your service, takes time and effort. However, it is important to consider, when you have your inevitable “new Kodak moment,” do you want to be the one who blinked when the flash went off?