B2B Subscription Models Continue to Disrupt Incumbents

Internet-based subscription services were validated again recently with the $1 Billion sale of Dollar Shave Club to Unilever. Subscription-based successes are also emerging in B2B via professional services, including marketing communications and UX design firms.

New York, NY – September 19, 2016 – While successful SaaS providers like Salesforce and Drop Box are dominant in many B2B categories, the professional services category now has similar subscription-based companies disrupting incumbents.

An article from Chuck Longanecker in Entrepreneur in 2015, ‘Why You Should Use a Subscription Business Model’ referenced several successful companies employing a subscription model in the professional services space, including the writer’s own UX design firm.

One of the examples was Pivotal Labs: “There are already a number of successful service providers using the subscription model. Global web and software developer Pivotal Labs offers their services through coaching subscriptions — clients retain their team’s expertise and learn their processes by working side-by-side with them on location. Their success didn’t go unnoticed. EMC acquired them in 2012.”

Pivotal has gone from strength to strength since then. Business Insider reported in August that “Pivotal’s core Cloud Foundry business has doubled its annual revenue run rate to $200 million. And the company has snagged a $253 million investment led by Ford, with participation by Microsoft, in a deal valuing the company at $2.8 billion.”

Longanecker took the plunge and converted the business model of his UX design firm Digital Telepathy to subscription only. He says “Clients were initially confused, but once they experienced how our new approach improved our alignment on strategy, design output and working speed, our retention rates catapulted. Since switching to the subscription model, our revenue has increased by 300 percent.”

Other versions of professional services delivered via subscription continue to emerge and gain traction. An example in the marketing communications space is Lightbulb Worldwide, started by ad industry veterans and based in New York. Lightbulb delivers creative ideas to brands for a monthly subscription fee. By running lean, Lightbulb is able to deliver agency-caliber creative for a fraction of the cost of a traditional ad agency relationship.

“We have a solution that’s perfect for the small to medium size brands in the larger companies,” says Tim Nicholls, founder and CEO of Lightbulb.

Today, many brands are part of a much larger portfolio of brands in one of the major holding companies like Procter & Gamble, Unilever, Diageo and GlaxoSmithKline, where a few mega brands receive the lion’s share of the marketing budget.

Lightbulb’s Nicholls continued, “The reason we exist is because agency costs to service their clients are so high. We are an online service, so we can provide creative ideas at a much more cost-efficient price for those brands with tight budgets.”

As Pivotal Labs has demonstrated, and newer converts such as Digital Telepathy and Lightbulb Worldwide suggest, a strong demand for the subscription model in professional services is emerging. Incumbents who fail to pay attention could be the Blockbuster Video of tomorrow.

For more information on the creative ideas subscription, see: http://www.lightbulbworldwide.com/

Distributed by iWire News

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