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How to optimise your subscription business model

Written by Tom Carpenter | January 20 1970

Welcome to our Drive to Subscribe blog series, created to provide readers with insight into the world of subscriptions while drawing parallels with the world of Formula 1. In this, part three, we look at the parallel between a subscription business model and how F1 teams operate. You can find part one here which explores the approach to a successful subscription, and part two here which delves into successful subscription product development.

An F1 team is like most businesses. It has groups of people focused on specific activities. When it is not a race week these groups can operate reasonably independently BUT come race week it all changes.

During the weekend things change fast, mechanics, drivers, strategy and even marketing and press teams need to be working much more seamlessly together to be successful.

There is a strong parallel here to organisations pivoting or growing a subscription business model. Organisational operating models for one-off purchases are like F1 teams in the off-season or breaks between races. There are occasionally ‘race day’ events which require more collaboration, such as purchases, usage issues, re-purchase or renewals. However, there isn’t the same need to convene teams regularly or fundamentally change the organisation’s business model. Subscription offerings on the other hand require close collaboration across teams almost constantly, just like our F1 teams each race day. Therefore to be successful, they require implementation of a new subscription business model to remove the usual silos between functions.

A subscription business model is an organisational design whereby the distinct and separated functions we are used to e.g. marketing, sales and service are blended together to form multi-disciplinary teams focused on retaining existing customers.

Driver comms

A subscription business model should offer constant communication for your customers 

50 years ago, F1 teams set their drivers off in the race and then watched helplessly as the driver navigated the race on their own, perhaps with some rudimentary signage to support when to pit. When they did pit, this looked like a frantic and unplanned event even though it was fully expected and known what needed to happen. Leap forward to today where every aspect of performance and support for the driver is considered with digital assists, significant insights and comms to maximise their performance. 

This evolution of how teams operate to support their drivers constantly is critical for teams to survive in a highly competitive arena. How organisations like you support and manage your customers in today’s world is very similar with expectations now being for real-time management of all aspects of customer (driver’s) interactions.

Just like F1 teams – organisations who provide insights to their customers are in constant, personal and relevant communication (just like Lewis Hamilton’s race engineer knows when to just shut up and let him drive!). In reality, this means more focus on personalisation with your products and in surrounding marketing and support. It also means using product/service usage data and behavioural data to interact with customers in real-time making recommendations and tailored offers to them.

Driver control

In today’s world, communication alone can be a bit of a blunt object. In F1, drivers have control of aspects of the car’s set-up. The information they receive from the pits helps them to make better decisions in the car. In our world of business, customers now expect similar control of the products and services they receive. Organisations that provide self-service tools to support users in use of their products and the ability to tailor them are most likely to successfully retain customers and attract new ones.

Race day

– Reorganising your business

On race day although everyone has a role, they all work seamlessly together. The pit wall directs proceedings, asking their strategy team to feed them information and run simulations in real-time to decide when to pit and what tyres to have on. The mechanics consider what they can do to cool the car and have a crucial role come pitstop time to not lose time to other drivers. The drivers engineers act as the bridge between the drivers and the rest of the team managing their emotions, getting info from them and feeding info back to them. The PR team are fully attentive to what is going on throughout the race, ensuring post-race they manage any fallout from incidents in the race to ensure the whole team can focus on performance and not drama.

For a subscription business model to survive, organisations need to act like every day is race day. 

Traditionally, subscription offerings, particularly in the B2B space, have been more transactional. Subscription contracts, although monthly billed would be inflexible with 12/24/36 month fixed terms that come up for renewal.

Organisations would therefore continue to structure themselves around the initial purchase and point of renewal. However, this does not align with modern customer needs and expectations. It’s important that just like in F1, the subscription business model also evolves.  Therefore it is essential to ask yourself some key questions about how you are set up to ensure your subscription business model is optimized to drive lifetime customer value such as:

  • How are your product teams learning what customers like and feeding this back into development?
  • Is Marketing more tightly integrated into your products to ensure the customer can see the value constantly?
  • For B2B businesses are sales and marketing working together on retention strategy and comms to ensure the customer receives a personalised experience which increases chances of retention?

Look out for our follow-up blogs on how your teams need to be reorganised to best set yourself up to service your customers with subscription products.

In the next blog in our Drive to Subscribe, we’ll look at how to deal with subscription uncertainty.

If you need help revving up subscription success for your business, please get in touch.