The subscription economy and SaaS solutions

By John Crossan, VP EMEA, Zendesk
 
Five years ago when the subscription economy was in its infancy, we worked with many innovative businesses, such as Uber, Airbnb, Amazon and Dropbox, to really start to drive the notion of putting the customer at the heart of the business. These companies saw how consumers could and should be more connected with businesses.

They adopted SaaS solutions to enhance and improve their customer relationships and experience by engaging them where they wanted and when they wanted through multiple communication channels, the omni-channel approach. Half a decade on and the subscription economy has changed the face of business, with more than eight in ten Europeans relying on subscription-based services, and four in five people now having at least one subscription service .

Really, this movement was a result of a number of elements from the rapid adoption and wider use of smart devices, an always connected mentality from consumers, enhanced competition for businesses which meant they constantly needed to find a competitive advantage; as well as advancements in IT infrastructure such as AWS enabling a cloud of services and solutions for businesses of all sizes to use as they wanted and when they wanted.
 
For the first time, disruptive businesses were able to compete with larger established businesses by using the same or equivalent tools but in a much more agile way. The cloud, in particular, enabled these disruptors to scale rapidly like never before and build a competitive business in the blink of an eye while at the same time reaching customers around the world from anywhere. The business made in a bedroom was born.
 
Five Years On – What’s Changed?
 
Think back to five years ago to how you lived then compared to how you live now. Hailing a taxi was done standing on the pavement with a wave of your hand as opposed to on a phone with a swipe of your finger; a holiday was packaged not personalised, ordering takeaway food meant trawling multiple websites instead of just one; and pretty much nothing was delivered same day.
 
As businesses spotted the opportunity to disrupt traditional industries like transportation, retail, food and travel and had a means to do this at rapid scale, the rise of the subscription economy started to gain traction. Customers were placed at the heart of the business amid a focus on the value of long term relationships with every consumer.
 
Social media adoption grew and people became comfortable, familiar and efficient in communicating to the masses through the click of a button. First they started to broadcast a dialogue of their everyday lives; what they had for breakfast; where they were going to that afternoon. Soon after, they started to hold businesses to account but also celebrate when a company met their expectations.
 
This new power of communication coupled with the value consumers saw these new businesses placing on them gave rise to what we now term ‘the expectation economy’. Consumers who expect a business to behave in a certain way based on past experience, shared knowledge and awareness. Over the last five years, the power has shifted from the business to the customer.

The Big Business Conundrum
 
So, where did this leave established businesses? Essentially, it left them with a decision: push against this turning tide of consumer power or join the disruptors and embrace it.
 
For many, they believed this presented a new challenge, ‘be bold or succumb’. Be bold to tackle a gargantuan challenge by changing the entire culture of your customer engagement strategy or succumb to the ‘too hard basket’, ignore the issue and see your business gradually shrink. Traditional customer service solutions required many months of implementation, training and iteration; they also required six or seven figure budgets. You had to channel your inner crystal ball to consider how you might need to scale in the future. It wasn’t an agile, on demand experience.
 
Today there is a third option. SaaS based customer relationship solutions are designed to enable a business to try, buy and implement incredibly quickly. Business should be able to truly try the customer service solution fully, they shouldn’t need a user manual to get started. The software should be easy enough to use so that anyone within the business can pick it up quickly; and simple to introduce into the business so the IT infrastructure doesn’t need re-engineering. Importantly, it should be there and able to grow with the business as it scales or in times of peaks and troughs like the Christmas buying period for retailers.
 
Follow The Leaders
 
When you look at the traditional industries that have really started to adapt to this new era of consumer power, it’s really the ones with the most direct customer touch points that appear to have adapted first such as retail, travel, transportation and the public sector. Businesses such as Tesco, John Lewis, Trivago, Deliveroo, Cabify, and Gov.uk have recognised the need to change the way they appreciate their customers and instilled a mentality into their external facing employees to really focus on the lifetime value of the customer.

As a result, these early adopters have been able to establish trust and loyalty among their customer base and, in return, are being repaid through advocacy or continued business.
 
In Summary

Even now, businesses are still not listening to the needs and wants of the customer. A survey of the UK retail industry by Zendesk revealed a demand for an omni-channel experience with over 40 percent of shoppers preferring to communicate with customer service teams through technology i.e online communication channels such as Chat and Message, as opposed to face-to-face. While another recent Zendesk survey into the UK travel industry found that 40 percent of people want vendors to remember their preferences and provide a much more personalised experience.
 
Businesses need to listen to this and consider customer service as being a sales opportunity not a business cost. A Zendesk survey in Germany found that 46 percent of respondents would rather visit a dentist or get stuck in a traffic jam than call customer service, that should be a wakeup call for businesses.