Retailers Going Digital: Take a Fresh Look at Monetization Systems
Not long ago, throngs of movie-watchers gladly bypassed renting videos from brick-and-mortar retailers in favor of subscription services that mailed a certain number of DVDs to their doorsteps every month. It was arguably the beginning of a massive trend toward subscription-based commerce in the entertainment industry.
How times have changed.
In just a few short years, subscriptions involving “snail mail” have given way to an increasingly digital model in which everything from boxed food, wine, clothing and cars to music, movies and software applications can be purchased or downloaded through online subscription services in mere seconds.
Due to this digital transformation, retailers today must be much more strategic, innovative and thoughtful about how they compete for the attention and loyalty of customers who now have unlimited purchase options and, therefore, expect superior encounters with brands they patronize. Customers want what they want — and they want it immediately.
In today’s digital economy, retailers must consider almost every aspect of the customer experience, from product quality, value and support to how they monetize cloud-based subscription services.
A recent Oracle survey of nearly 300 business executives identified customer experience as the most vital business objective for enterprises today. Furthermore, launching subscription-based services was singled out as a top priority for 75 percent of companies looking to digitally transform customer engagement.
Not surprisingly, the study also found a strong link between companies that have launched subscription-based services and those that are exceeding their plans for revenue growth. Conversely, companies that have yet to embrace subscription commerce aren't seeing the same kind of bump in sales.
To highlight a few statistics on this accelerating trend, retail-box subscriptions like Blue Apron and Orange Peel Box have grown 3,000 percent in the last three years, according to Shorr Packaging research. Dollar Shave Club, a recurring subscription provider of “guys” razors, was such a success it was purchased by Unilever for $1 billion in 2016. On the clothing side, Stitch Fix just went through a strong IPO, and recently Gap, Target, Under Armor and even Walmart have announced plans for subscription box services.
Shifting operations from a single purchase approach to a recurring revenue model requires a different view into monetization. Yesterday’s transaction-based solutions generally can’t evolve to meet today’s requirement — let alone tomorrow’s.
Nearly 54 percent of enterprises say their existing billing and monetization processes are incapable of handling current and future needs within their organizations, according to the survey. These businesses noted that, without a modern solution, they fear shrinking revenues, slower growth and loss of customers. Yet only 26 percent have implemented a modern monetization solution.
To compete for customer loyalty, retailers must move quickly. Whether looking to monetize apps pushed down to connected cars, using sensors to aggregate and monetize data, or transitioning products to a software-as-a-service (SaaS) delivery model, retailers need flexible pricing models that maximize choice, differentiate from competitors and accelerate time to market
Modern monetization solutions can provide these agile pricing and billing capabilities, powering a concept-to-cash-to-care ecosystem including financials, order management, e-commerce, customer support and revenue recognition features. Of note, 62 percent of enterprises indicated they're looking for a single vendor for CRM, ERP and monetization solutions as opposed to using separate vendors for each. Furthermore, 68 percent agree it's important for their monetization solution to tightly integrate with their CRM system.
Retailers are finding that subscription services delight consumers by giving them access to a variety of products they might not otherwise consider — often at more reasonable prices. At the same time, the recurring service model helps brands improve customer retention, which is critical to the long-term success of any business.
So regardless of what a retailer sells, it’s critical to boost recurring revenues and enhance customer retention through subscription and digitally delivered services built on strategic monetization strategies and solutions.
Jean Lawrence is the director of product marketing at Oracle, a provider of integrated cloud applications and platform services.
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