Increasingly we live in a subscription-based world, where we subscribe to everything from music to movies to shaving supplies. Many argue that we are in the midst of a fundamental shift from a product-based economy to a subscription-based economy. When are we going to see promotions-as-a-service? Probably sooner than you think…
While it may sound like a wild idea, many commodities are now being sold as ongoing service packages. One of the pioneers of this type of business model is Salesforce.com. It’s been almost 16 years since Salesforce.com first introduced the concept of Software-as-a-Service (SaaS) by moving a software application to the “cloud,” eliminating the need for companies to install and maintain the software on their own server farms in their own storage facilities. It started with the Salesforce.com CRM software, but initiated a revolution that is now impacting almost every type of software and service.
Since the introduction of SaaS, cloud-based applications have revolutionized how both businesses and consumers use computers. Many consumers got started with picture storage services (like Picasa, Shutterfly), then soon evolved into using all-encompassing services (like DropBox, and Box) to store and share all of their files and photos. Of course, no industry has been more disrupted by online subscription services than the music industry, starting with illegal music sharing services like Napster, but then moving to more legitimate Music-as-a-Service companies. While album sales are falling at rapid rates, Americans streamed 164 million songs in 2014 alone through services like Pandora, Spotify and Google Play Music (Source: PBS). It is clear that there is demand for these services which require lower upfront investment and therefore attract a quicker-to-adopt consumer.
(Source: Tech Radar)
Parallel to the consumer service revolution, the B2B subscription service trend evolved at a comparable pace. First, every type of B2B application went SaaS, then came Platform-as-a-Service (PaaS, e.g. Force.com) and Infrastructure-as-a-Service (IaaS, e.g. Amazon cloud/AWS), that provided companies the ability to build their own applications on top of the infrastructure that companies like Salesforce.com and Amazon had already built. Here at Boundless, these services have helped us to quickly and safely deliver industrial-strength applications to our customers without having to worry about the infrastructure behind them.
The first generation DIY (Do-It-Yourself) SaaS applications are now increasingly being out-innovated by more comprehensive DIFM (Do-It-For-Me) applications, not just providing the applications for customers to do the job, but doing the job for the customer. For example, a first generation SaaS application like Constant Contact is great if you have a team of people to help you build the email, manage your contact list, track the results, and do the appropriate follow up, but if you are too busy or don’t have enough resources, a Marketing-as-a-Service company like Outbound Engine (whose hero image on their website touts “Your Marketing on Autopilot”) can do it all for you.
But it doesn’t end there. Lately terms like Anything-as-a-Service (AaaS) and X-as-a-Service (XaaS) are used to describe the movement toward offering pretty much anything you can think of as a service. Even traditional companies built to sell product are transitioning to recurring service models. If I have an HVAC company, why would I sell you a new air conditioning unit when I could rent it to you and create a never-ending recurring revenue model by letting you subscribe to it? Want to buy a new sprinkler system? I’ll provide you Watering-as-a-Service instead! Not surprisingly there are even companies that can help you set up SaaS subscriptions, like Zuora.
So how will this trend impact the Promotional Products industry? Check out Part II of the series to find out!