In this article we are going to refer to the business model that will be trending this 2020: the “Xaas, Everything as a Service”, the “as a service” year.
Many predictions have been made for 2020, but if there is one prediction that has stood out among the others, it is that this year will be the “year as a service”, a business model based on subscriptions versus one-time purchase.
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Origin of Xaas: Everything as a Service
The “as a service” trend began in the technological world, specifically in the software industry with the Software as a Service (SaaS) model, and quickly spread to other technological environments such as Platform as a Service (PaaS) and Infrastructure as a Service (IaaS), until reaching the current trend of Everything as a Service (XaaS), which is still a technological trend but has served as a model for the entire economy to make the change towards an “as a service world”.
Large technology companies such as Google, Microsoft, Apple, Oracle and SAP have already been basing their growth strategy on subscription and service-oriented business models for years.
<blockquoteThe “as a service” model is a subscription-based business model that will be the trending in 2020.
The Everything as a Service model in different sectors
But the subscription-based “as a service” business model has already moved beyond the technological sphere to become a global phenomenon. For example, Amazon, which started out as an online bookstore, has incorporated its own premium subscription service, and has diversified its offer to include a division of technology services also based on the “as a service” subscription model.
This model has also reached sectors that at first glance do not have a direct relationship with the digital world, such as the automotive sector or the consumer goods industry. All major automotive brands are defining their strategies to be able to offer vehicles as a service or simply mobility solutions, which will also be based on an “as a service” model.
Likewise, the retail sector is constantly launching initiatives based on the digital world to facilitate purchasing, more convenient delivery to the customer and different added-value services such as extended information on the products it sells (properties, benefits, origin, comparison with other products, etc.).
Why is the “as a service” model so successful?
There are many factors, but basically they all fall into two categories:
- Customer benefits: For the customer, the “as a service” model is a convenient model, which allows easy access to the product or service they are contracting, breaking the barriers of a high entry price and in many cases allows pay-per-use (i.e., we only pay for what we consume or use).
- Benefits for the company: What companies are looking for are results and, if the “as a service” business model based on subscriptions continues to grow, it is because it is generating good results for companies. The model in itself is no guarantee of success, but the company that applies it and manages to build customer loyalty and retention becomes the kind of company desired by any financial director, by ensuring recurring revenues.
In addition, having a good customer base boosts horizontal sales, with new products or services that can be offered to existing customers.
Factors for success in this new world
The factors are similar to those of any other business approach, i.e. Product, Price and Promotion:
- aving a good product tailored to the customer’s needs,
- A competitive price
- A good promotion of the product to get the maximum number of customers.
However, in the subscription-based business model, a new key factor is introduced: Customer retention.
Customer retention is the key factor for success in the subscription-based economy. Without retention, the “as a service” model does not work, and the best way to increase retention is to add good Service, Product, Price and Promotion.
Excellence in customer service, along with the aforementioned factors of Product, Price and Promotion will determine the level of customer retention.
It is in this service area where ServiceTonic combines a multi-channel Service Desk, process automation and information management to provide excellent customer service and help increase retention in the “as a service” world.
