Monday, November 23, 2015

Forrester's Next Wave? -- Adaptive Subscription Billing with FairPay (+ Zuora, Vindicia, Recurly, Digital River...)

The recent inaugural Forrester Wave Report on Subscription Billing Platforms, shows that the trend toward subscription models -- as an aspect of relationship marketing -- has become very important in many industries.
Key drivers behind the experimentation and subsequent adoption of transformative business model relationships include a desire for stickier customer relationships, a thirst for customer insights, an eagerness to capitalize on the cloud, and an inclination to experiment with connected products.
The next-generation FairPay strategy (as described on the Harvard Business Review Blog) has not yet surfaced through Forrester's radar, but it is on the radar of some of the companies Forrester reviewed, including Zuora, and Vindicia.

FairPay further transforms subscriptions and similar recurring relationships, to re-center the customer journey on value -- adaptively seeking win-win value propositions. This can change the fundamental nature of the customer relationship and how we think about pricing and selling services. It is especially relevant to B2C businesses (and SMB-oriented B2B).

Companies in the subscription/recurring revenue space should be thinking about FairPay and how to do controlled trials to see how it can transform their business. More about that below, but first some general insights from Forrester. (A free copy of this $2,495 Forrester report is available from Zuora.)

"Innovation Is Enabling An Era Of Continuous Customer Relationships"
Firms are shifting from one-time perpetual sales or fixed monthly subscriptions to consumption models that blend one-time, subscription, and usage-based billing... CEOs recognize this shift toward business models that reflect the value of the relationship with the customer:
“There’s a secular movement that’s happening . . . more to an annuity relationship as well as a subscription relationship. These are the long-term relationships we want to have with all customers.” Satya Nadella, CEO Microsoft (May 2015)
“If you went to bed last night as an industrial company, you’re going to wake up today as a software and analytics company.” Jeff Immelt, CEO GE (October 2014)
“We’ve gone from selling boxes, cloud, mobility, or any other solution, to partner with customers on their outcomes.” John Chambers, CEO Cisco (May 2015) 
The report outlines "four key drivers behind the experimentation and subsequent adoption of transformative business model relationships that firms have with their customers" -- two of these are significantly enhanced by FairPay:
  • A desire for stickier customer relationships. ... an additional emphasis on loyalty...
  • A thirst for customer insights. ...to build long-term relationships, monitor engagement, and perform sentiment analysis. 
The eight vendors Forrester reviewed all serve both B2C and B2B businesses, "Zuora, Vindicia, Digital River, and Recurly had unique strengths in supporting consumer or hybrid B2C or B2C-focused subscription scenarios." ("Apttus, Aria Systems, goTransverse and SAP hybris were especially well suited to supporting complex B2B billing scenarios.")

Forrester also noted that some of these vendors have strong relationships with Big Five consulting firms, as well as many ERP and CRM platform providers.

I have had discussions with some of these companies (notably Zuora), and have had expressions of interest by them in adding FairPay support to their offerings if a customer has interest. Should your firm want to consider testing FairPay, please contact me to assist in assembling the appropriate resources (including such platform vendor services, as well as academic researchers willing to help design and evaluate trials). I have been working on FairPay as a pro-bono project, and am happy to explain the concepts, and help companies develop applications of it, at no charge.

How FairPay strengthens customer relationships to change the subscription game

Why you should want to try FairPay? The short answer is better and more profitable relationships with more customers who value your services. It is especially attractive in markets like digital content and services that offer experience goods that are cheap to replicate but costly to create, and for which managing and quantifying the customer's perception of value is a challenge not well met by one-size-fits-all pricing methods. FairPay adaptively seeks personalized price discrimination in a way that customers accept as fair.

This blog includes an Overview of FairPay and a sidebar on How FairPay Works (just to the right if reading this at FairPayZone.com). There is also a guide to More Details (including links to a video). Some of the posts most relevant to subscription billing platforms are:
A significant and growing portion of our economy is conducted in ongoing customer relationships -- FairPay is the way to adaptively seek win-win in those relationships, to make them stronger and more profitable over time. Let's work together to see how to make that happen for your business.

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