Subscriptions Are All Around Us
Subscriptions are all around us. Subscriptions are here to stay. You only have to look as far as your Netflix account. They have had great success using a subscription model and customers benefit from a flat monthly fee for all-inclusive service. Netflix was founded in 1997 and two years later they introduced their monthly subscription service. In 2003 they reached 1M subscribers. In 2017 the number of Netflix subscribers equal that of all the cable subscribers combined. Blockbuster by contrast failed to see the changing needs of consumers and didn’t adapt quickly. Ten years after the arrival of Netflix, Blockbuster had 1.1 billion dollars in losses. Subscriptions are prevalent across the IT products industry. Adobe, Amazon, Salesforce, Cisco and Microsoft among others offer subscriptions.
For customers, a non-subscription IT product purchase is typically depreciated over five to seven years and upgrading sooner is usually discouraged by their finance department. Purchasing new IT products and upgrading them in three to five years can be financially daunting. Buying subscriptions helps deal with the mismatch between technology and financial cycles. This keeps the customer’s finance department happy and helps the customer maintain control over their IT products and better meet their business demands.
From a vendor standpoint, subscriptions make sense. The Challenger Sale model as described by Gartner shows that 53% of customer loyalty is driven by the sales experience, more than by the brand, product, service and price combined. Customer loyalty is attributed mostly to HOW a vendor sells and not WHAT they sell. Subscription selling enhances customer interest in all aspects of selling and helps vendors build a tighter relationship with the customer.
Infoblox offers a subscription that includes use of software, and access to customer care and services for the subscription period. It does not include hardware & hardware maintenance which needs to be purchased separately. Customers receive the latest technology at a predictable cost. It’s simpler since customers avoid tech upgrade and end of life issues. It saves customers money by helping them avoid over provisioning. They can make a right sized purchase and change as needed, planned or unplanned. And it’s more flexible since customers can enable software portability on-premise, cloud, virtual machines or containers and upgrade anytime. Multi-year subscriptions eliminate the recurring budgeting exercise and enable an easier transition to SaaS.