The Cloud Enables Smooth Billing in Subscription Services

Just a few years ago we ordered CDs and DVDs shipped by mail. Today we subscribe to everything from streaming video platforms to online software for paying our taxes and organizing our photos. Likewise, businesses used to spend millions building data centers while today they subscribe to cloud-based hosting services and pay for what they need as they go.

The Rise of Everything as a Service

This major shift to buying “Everything as a Service” (XaaS) provides customers with current versions of what they need, when they need it and at a predictable price. Additionally, XaaS helps businesses create recurring revenue streams, strengthen customer loyalty, and offer differentiated services across their business portfolio – when managed correctly.

New research from The Economist Intelligence Unit underscored the critical link between customer retention and subscription-based business models. The study found that global executives across industries see customer retention as the most important stage in the customer journey and in achieving long-term success of marketing and business strategies. Yet only 42% think they’re doing a good job with this critical function as they operate in hyper-competitive environments. This disconnect can be solved through the development and implementation of seamless, secure subscription-based pricing models and transforming business models to offer XaaS.

Transformation Across Industries

Forward-thinking businesses are already embracing the transformation to business models based on subscription services and reaping the benefits. This new XaaS approach fosters deeper customer relationships and strengthens loyalty in addition to creating predictable revenue streams.

While the cable industry may be the best example of disruption by companies such as Netflix, the retail industry is also undergoing the same transformation. Over the past three years, visits to top subscription services have exploded by nearly 3,000% in the United States with companies such as Dollar Shave Club and Stitch Fix moving beyond one-time transactions to subscription-based models that foster an ongoing customer relationship.

Another good example is services such as Verizon Hum. A small hands-free unit plugs into a car’s onboard diagnostic port and connects to a smartphone to offer customers a wealth of new subscription-based services, such as vehicle health monitoring, roadside and emergency assistance, stolen vehicle tracking and wifi. Customers pay a monthly subscription rate and Hum does the rest. Likewise, major car manufacturers are adding these services right off the assembly line. It’s at the customers’ discretion what they decide to turn on or dial up and then backend billing systems seamlessly take care of the rest.

New Models Introduce New Challenges

Despite their many benefits, these new subscription services models also introduce new challenges. How do you transition from invoicing your customer for a single transaction to monetizing a subscription service? What customer touchpoints are required when selling XaaS? How do you ensure compliance with ever-changing regulatory requirements and recognize revenue correctly over the course of the customer buying cycle? How quickly can you adjust your pricing, discounts and bundling when customer preferences change?

Cloud-based monetization solutions can address all these challenges and more. Billing software delivered through the cloud increases agility so innovative businesses can analyze customer behavior and rapidly launch new subscription services to meet emerging demand. Real-time tracking and analysis of how customers are consuming your services allow for notifications.

The ability to price based on any metric – time, clicks, downloads, gigabytes – enables creative companies to offer subscriptions that appeal to the way customers want to buy products and services, while compliant cloud monetization delivers the peace of mind that regulatory requirements will be met. Rigorous certification by the Payment Card Industry (PCI) helps ensure that credit card data security standards are met, while data center security processes safeguard customer information.

Monetizing the “Now” Economy

There is no question that consumer markets are at an inflection point. This new era is defined by instant interactions, context-driven communications and hyper-personalized experiences – the NOW Economy. Customers want what they want right now – and it needs to be seamless and easy.

If it’s too complex, if they have to enter credit card information every time, or if it requires more than a few clicks on a smartphone, they simply will move to another provider.

So whatever your business sells – software, clothing, wine, automotive services, media or more – it’s time to look at growing recurring revenues and customer retention through subscription-based services, while securely monetizing your new business model in the cloud.

Jean Lawrence is Director of Product Marketing for Oracle