During my time at the Social Shake-Up online marketing conference in Atlanta, I had the chance to check out a panel discussion on the "subscription economy." I'm so glad I did.
Zuora pioneered the subscription billing software used by big-name subscription services by Dell, Box and ZenDesk. Kelly Wells, Jonathan Davids, and Maria Poveromo chatted with moderator Brent Leary. Specifically, they talked about the way the subscription business model works, how it has worked for their companies, and why the time might be perfect for it to spread to new industries.
After their talk, I started thinking: could the subscription economy extend to online marketing?
It may not happen overnight, but I do think the transition is possible. Here are a few of the biggest reasons why:
Subscriptions Could Let Digital Agencies Lose the "R" Word
If you want to see a new client's blood pressure rise, just mention the word "retainer." Businesses and marketers hate this phrase, and I can understand why: it usually means spending money. Not only is it reminiscent of the old-school agency practices I dislike so much, but is just one example of the way companies pay their agencies without being 100% certain what they'll get in return.
In the old agency model, putting a firm on retainer was a way of booking their time in advance. But, if you didn't spend all the money you'd invested on ongoing work (or if that work didn't produce any real results), the cash essentially got "dispersed." While great cash flow for the agency, this is less than ideal for clients, as I have yet to meet someone who wants to pay for nothing (or the perception of nothing).
With a subscription model in place, creative retainers just might be a thing of the past.
It Could Provide More Clarity in Billing
While you might hate your cell phone company or the way they charge you for your data plan, the fee for their services is theoretically pretty straightforward - for your monthly rate, you get so many minutes of talk time or Gigs of data. That's the essence of any subscription agreement.
With subscriptions for consulting efforts, the same rules could apply. By paying a monthly fee, clients could be guaranteed a set number of hours or services (like access to an inbound marketing specialist like we employ at KAYAK) that could accumulate or "rollover" from one month to the next if unused.
That way, businesses could get the on-demand type of help they desire, at a predictable budget, rather than forking over larger sums at irregular times.
It Lets Clients Buy Expertise, Instead of Deliverables
As important as the billing issues are, this is the real payoff. In the old agency model, still being used by the vast majority of digital agencies, SEOs and web design firms, clients are essentially paying for workshops, websites, email blasts, keywords, and other "deliverables." You know, "things". What happens when advice or strategy is needed more than deliverables, or when it's not clear which deliverables are going to be most effective?
Under a subscription model, businesses would be buying expertise, coaching and real-time help, rather than siloed line items. That would free them up to explore what they really need to help their businesses grow - and free up the agencies they work with to devote their energy to giving it to them.
Most of the organizations we work with don't really need a new website, or search engine optimization plan. Instead, what makes the biggest difference is taking a new perspective on how these things can be improved. Being able to ask questions before being presented with a big invoice, will likely be significantly easier to agree upon.
When Will We See Subscription Options in Online Marketing?
While there are some companies already experimenting with this kind of business model, Kayak included (currently, we are still using the 'R' word), it will be interesting to see whether it can move forward and become the standard way of working with a digital agency in the future. Given that there is so much for businesses and their vendors to gain, I'll be surprised if we don't see more versions of subscription pricing for consulting popping up soon.