Among the many digital economy trends written about in recent years, one of the most significant has been the adoption of a subscription business model. For organizations with a business model that also includes reselling third-party products and services, this shift to subscription services adds complications and potential challenges.
A subscription business model and an exceptional customer experience are equal priorities for many organizations. Much has been written about both: Subscription and usage services are considered the business model for the digital age, and a great customer experience is how organizations acquire and retain customers. I believe that by 2024, the category of subscription management software will emerge with a suite of applications and platform supporting the subscriber experience through the complete customer lifecycle to drive operational effectiveness.
The annual Ventana Research Digital Innovation Awards showcase advances in the productivity and potential of business applications, as well as technology that contributes significantly to the improved processes and performance of an organization. Our goal is to recognize technology and vendors that have introduced noteworthy digital innovations to advance business and IT.
As mentioned in my Analyst Perspective, Revenue Performance Management: Leadership and Operations for Optimal Outcomes, there is continuing pressure on sales leaders to deliver against sales targets in increasingly competitive markets. Among the various levers that sales leadership can use to support these efforts, are applications and processes that best position sales teams to achieve targets, such as planning and allocating territories, establishing quotas and devising incentive compensation plans supportive of organizational revenue goals. Once in place, continuous monitoring of lead-to-opportunity progress and pipeline health can aid in identifying areas for improvement as well as solidifying sales forecasts to better indicate gap-to-target issues and necessary adjustments to territories and compensation incentives.
There has been a lot of market activity around vendors offering sales-forecasting products (or functionality to address sales forecasting) as part of a wider technology offering for sales and revenue management. As I have discussed in my Analyst Perspective: The Art and Science of Sales from the Inside Out, the pandemic accelerated the prior trends that are now forcing sales leaders and sales teams to reexamine traditional notions of how B2B sales are conducted. In addition, with the rise of the subscription business model and digital e-commerce, a more holistic approach to identify where revenue is coming from and how to manage and optimize a predictable revenue stream is becoming a pressing need. I cover the basic premise of this management of revenue streams in my Analyst Perspective: Revenue Management: The Opportunity for Innovation and Optimization.
As laid out in my recent Analyst Perspective, Revenue Management: The Opportunity for Innovation and Optimization, revenue management is a new way look at generating and managing the top line. It unifies multiple sources: the traditional focus on new customers to existing customers as well as all types of revenue from new, additional channels. This could include customer retention, upsell and cross sell, in addition to other selling channels such as through partners or digital sales channels like e-commerce and subscriptions.
Subscription pricing models are no longer new. Many companies have experience with this pricing model even if there has not been complete adoption across their entire product and service offerings. Companies that use this model, or have spent time looking at the approach, understand the approach of a recurring revenue stream based on a repeating flat fee.
Topics: Performance Management, Sales, Customer Experience, Marketing, Office of Finance, Financial Performance Management, Price and Revenue Management, Digital Commerce, Predictive Planning, subscription management
Observed both here and elsewhere, average sales quota attainments appear to be in an exorable decline. As I discussed in my recent Analyst Perspective, "The Art and Science of Sales from the 'Inside Out'," vendors of sales technology have reacted to this by adding a slew of new functionality including the potential for artificial intelligence (AI) to be a game changer for sales. One can argue that this use of AI is still relatively immature having been generally available only since 2014, but that is still over five years of market availability.
As I have discussed in my Analyst Perspective, The Art of Sales, from the Inside Out, the challenges facing direct sales leaders are not going away. Declining quota attainment, lack of visibility into deal health and difficulty in forecasting quarterly sales remain a challenge for sales leaders, resulting in a continuing reduction in duration of tenure.
Digital commerce affects almost everyone’s lives. It is hard to remember a time when one could not sign on to a website like Amazon, order a product, pay for it and have it delivered to your front door within days, not weeks. Although catalogues have been around for a century or so, the digital-commerce revolution has changed the way we think about shopping for many of our everyday and special occasion products. Extend this to digital services, such as streaming videos or online games, and there is barely a sector that has not been touched by digital commerce. And, for organizations, it is an essential component of their revenue-management efforts that enables the digital transformation and monetization of goods and services.