We attended a conference recently hosted by Zuora, a provider of software as a service solutions designed to help businesses transition to what they call “the subscription economy.” The Economist Group has also written about the trend it describes as a shift to new models of consumption of everything from toothbrushes to shoes, cars to extra bedrooms, and just about anything you can think of.
According to the Economist Group / Zuora research, 4 out of 5 companies in the U.S. believe their customers are switching to “new consumption models.” This is huge.
The research identifies three ways in which the trend is shaping how products and services are priced and delivered:
– 40% are subscription models
– 27% are sharing models
– 17% are rental models.
Disruptive Models and Accounting Challenges
Adapting to these new models requires considerable thought and planning. The biggest factor is accounting for revenue in relation especially to cash flow but also the rest of your books. Yes, it’s compelling to buy a toothbrush online for $3 and set a trigger for reorders every 1, 2 or 3 months at ToothbrushSubscriptions.com – set and forget! – but for the toothbrush manufacturer, just imagine what this does to their books. This is where Zuora comes in with a powerful software accounting solution for companies making the transition or starting from scratch. We think they have a future.
The trend is important to us because we view our role in the shift as a critical enabler of the physical production and distribution of products and marketing materials. In fact, products are increasingly becoming another marketing vehicle as they usually end up in your customer’s hand. And because we’re present at the point of customer contact, our systems can provide you with insight into their experience with your brand. We’re right in the middle of this trend and look forward to keeping you informed as we experience it.