The subscription economy has been growing exponentially for over a decade now, but it is hitting different industries at different points and with varying impacts. For some, like those in the SaaS and high tech fields, they’ve thrived thanks to the wild success of subscription revenue models. But for other industries like healthcare or manufacturing, the inclination towards subscription-based offerings has been hesitant, to say the least.
However, according to the latest Subscription Economy Index, subscription business is outperforming the more traditional S&P businesses by a large margin, including in manufacturing. This data even includes the past year, 2020—an indication that even in a pandemic year full of economic challenges and market uncertainty, subscription revenue is yielding big returns for the manufacturers that embrace it.
Manufacturing is a vast field to transform digitally, however, and not every manufacturer will experience the pivot to subscription models the same. So before you dive off the deep end into the sea of consumption and usage-driven revenue, let’s review three major areas manufacturers, in particular, should consider before pivoting to a subscription model: identifying the relevant excess opportunity, aligning your brand with societal trends, and honing in on your ideal subscription-based customer.
Identifying the relevant excess opportunity for subscription management in manufacturing
Market trends have proven time and time again that it’s typically newcomers from outside the industry that step in and transform the way business is done—they can see what those so embedded in the industry can not: excess opportunity in the customer base. But this doesn’t mean longstanding organizations that predate the hippest and newest companies have no chance. What it takes is leaders with a vision for how their customer’s wants are changing.
In manufacturing, this may look different than the traditional consumption-driven services like Netflix, Spotify, or other entertainment streaming sources. Rather than curating cultural taste, manufacturers are prime to establish new models of using—rather than owning—the equipment, parts, or materials they produce for customers. Maybe this looks like a monthly subscription for customers always coming back for …
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