The Subscription-based Model
The subscription-based sales model is well-known for disrupting the traditional buy-to-own approach. Consumer goods companies like Netflix and Amazon have demonstrated the massive profitability of recurring or subscription sales versus one-time product sales – and other sectors are keen to reap the rewards too.
Recent automotive industry sales trends reflect an increase in the demand for flexible vehicle subscription models. This option offers consumers an alternative to outright ownership, transforming the traditional original equipment manufacturers (OEM) sales model from one that is primarily focused on a one-time product sale and aftermarket services, to an all-inclusive sales and customer service model. Volvo is an example of a brand embracing this approach enthusiastically – it plans to double sales by 2025.
While moving to the subscription sales model does offer both you and your customers great benefits, there are some challenges that need to be considered too. In this blog, we highlight some of the potential stumbling blocks you need to be aware of, as well as the rewards you can look forward to. Let’s take a closer look.
Implementing a new business model successfully is not an overnight process. It requires a lot of preparation and planning, including a thorough review of existing pricing processes. In some cases, you may need to completely overhaul your previous structures.
Any change to your business has an internal as well as external impact. To maintain customer wellbeing, you need to ensure that there is effective communication and collaboration between the sales and customer service teams. Customer Relationship Management (CRM) systems are crucial here. They track all customer-focused behaviour and provide real insights into purchasing history and trends. What’s more, your teams can access the data and identify which products and services are selling and which aren’t – and adjust their approach accordingly.
A major benefit of the subscription-based sales model is that it will help decrease silos within your business. In a traditional OEM set-up, there are typically different sales teams for each product and service. Unfortunately, this division of labour can create commercial and operational challenges, including ‘territory’ disputes when it comes to certain customers. Subscription-based models encourage teams to work together to make the sale. It enables teams to bundle their products and services into a much more compelling and relevant offer.
Without divisive silos in place, information is far more transparent and accessible. This allows your salespeople to be proactive and identify opportunities to up- and cross-sell products and services with greater success. When it comes to repeat customer orders or regular purchases like insurance or a maintenance service, a subscription model can make the customer’s life much easier. By enhancing the convenience and efficiency of their buying experience, your business benefits from a boost in loyalty.
Put your data to work
Subscription-based sales models create even more customer data than before. How you use this data is crucial and will determine much of your success. Subscription-based models allow you to stay in touch with the customer at all stages of the buying journey. You are tracking their choices, concerns and need to use this information to deliver more targeted sales and marketing campaigns.
The subscription-based model is one of the most significant sales trends currently disrupting the automotive industry. And it makes sense: OEMs are in the business of selling a product that requires a lot of upkeep. Customers benefit from accessing the vehicle they need without the burden of full ownership, and you benefit from deepening your customer knowledge and gaining lucrative insights. How you put your data to work is key: do it well and you’ll benefit from becoming a truly customer-driven business.
Contact sales-i to find out how your business can use data to boost its sales performance and productivity.