Key Learnings along the Subscription Funnel in the Economy of Things

Key Learnings along the Subscription Funnel in the Economy of Things
13.01.2020 Kathrin Kempf
Digitalisation is massively changing business processes in marketing, sales, service and product development. iq! has already accompanied many companies on this journey. One result of this experience is the development of the Subscription Funnel, the next stage of the classic Sales Funnel. In addition, iq! has compiled the most important learnings that need to be considered along this new funnel. In many cases, iq! has observed that these “sticking points” determine success or failure in the new Economy of Things. 
iq!’s Learnings along the Subscription Funnel
Source: iq! Management Consulting


Gain reach fast (and don’t get lost in Features). Many companies spend most of their budget on content or feature development. This can involve products, services, websites or campaigns. The big drawback is that often only a small portion of the budget is left for generating reach or testing scalability.
iq!’s recommendation: A clear focus on reach generation and MVP testing instead of a sophisticated, short-range solution. Once the usage data of many different customers is available, the product or service can be easily optimized and enhanced with additional functions.
Personalize the Omni-Channel Customer Journey based on Customer Lifetime Value & preferences. The Digital Subscription Funnel makes a lot of things measurable. It becomes easier to build detailed customer profiles and assign value to the customer. This knowledge should be translated into customer-specific customer journeys based on customer value and preferences.
Establish Direct Sales (the Economy of Things cuts out middlemen). Digital products establish a direct connection to the customer. And thus make the middlemen of trade obsolete. This direct sales channel should also be taken seriously and built up by manufacturing companies. Because savings and sales potential are waiting in it.
Make User registration your priority and Usage the Top KPI. The most important currency in the Economy of Things is the registration of users. Once this direct channel to the customer is fixed, all subsequent efforts to satisfy him and generate sales with him are facilitated. Apple, for example, has made a company that sells computers and mobile phones the central hub of various ecosystems in which services are distributed. But this is only possible with a central customer ID and customer profile.
Become a service provider (because every company has to!). Products can be digitized and enriched with services. Customers prefer to pay for use rather than ownership (e.g. mobility-as-a-Service, heating-as-a-Service). Digital products enable a direct transfer into physical services. All these developments mean that manufacturers are increasingly becoming service providers. However, this requires enormous adaptations within the manufacturing industry.

Found Customer Success Teams in order to convert usage into more Business. In order to become a service provider in a digital world, teams must be created that take care exclusively of the new users. Salesforce has done this and named them Customer Success Teams. And the name says it all. Here, everything is done to provide the customer with a successful user experience of the companies’ products and services. This starts with the smooth installation of the necessary software and ends with the sale of value-adding upgrades and add-on products.

Subscription is the business model for the Economy of Things. When manufacturers become service providers, it is only a small step to adapt the business model to the new sales content. Usage-related billing models have many advantages: The customer remains connected to the company via the subscription. Although the company initially forgoes part of the product price, it can count on long-term and predictable revenues. Adobe was the first company to replace product sales with subscriptions and set a success story in motion. Zuora, a Subscription Economy service provider, publishes an annual index that underscores the success of companies that have changed their business model based on usage.


Build a digital organization next to the „analogue“ enterprise. A separate digital unit has several advantages: Bundling of the digital resources, flexible and fast market entry, nevertheless connection to the “old” organization and simple know-how transfer possible. Read more on page X in article Y.

Create a Customer Facing IT next to Corporate IT. It is easier to leave the IT for the Economy of Things in a lean unit of its own instead of integrating it into the widely ramified Corporate IT. In this way one can limit oneself to the most necessary interfaces and otherwise operate autonomously. More about this on page X in article Y.

Find the right Partners for Ecosystems that are priority to the customer. Networked products and services should be part of a comprehensive solution that really adds value for the customer. It is important to proactively seek the right partners and the desired role in such ecosystems.

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