Channel still reaping benefits of subscription models
The subscription and recurring revenue model seems to be well on its way to wide scale adoption in the channel if the results of a recent survey by Westcon-Comstor are to be believed.
According to Navigating the Shift: The role of distributor marketplaces in partner success, just over a fifth of almost 300 partners in the UK and Australia who took part in the survey claimed they had gone as far as possible, or as far as they wanted to go, in their adoption of the subscription model.
That might not sound too impressive, but it’s not the most significant finding. More interesting in terms of the forward momentum of the subscription model is that 59% reported they had further to go but felt they were doing well. Only 19% felt there was still a lot more for them to do.
It’s hard to frame those numbers as anything but positive in terms of the channel’s adoption of the subscription and recurring revenue model. There are challenges, however.
According to the survey, just over half (52%) cited the need to manage a complex multi-vendor portfolio as their biggest challenge. No wonder some are looking to distributors to try and simplify and automate the renewal process. As Westcon-Comstor notes: “Multiple vendors, multiple products, multiple renewals with multiple billing cycles can all be challenging to manage at scale.”
In terms of operational requirements for moving to the subscription model, 52% wanted an understanding of how the market was changing and 45% were looking for data on customer lifecycle and renewal dates.
Westcon-Comstor says that having the right customer data is crucial to the shift to the subscription and recurring revenue model, “including transactional data and data insights that help partners grow their customer base and add more value over the duration of the customer lifecycle”.
Unsurprisingly, as a distributor, Westcon-Comstor argues that “the optimal way” to simplify these issues and challenges is through distributor marketplaces.
Asked to identify the key benefits of a distributor marketplace, 51% of partners replied that access to multiple vendors was key, 48% were attracted by consolidated and simplified ordering and billing and the same percentage highlighted the ability to manage hardware, software and services all from one place.
Those who had already started using distributor marketplaces cited self-serve stock availability, online ordering and pricing as the biggest advantages.
Commenting on the results, Westcon-Comstor CMO Patrick Aronson said: “Our experience is that channel partners are keen to modernise and embrace the recurring revenue and subscription business model. It’s great to see the dynamic and forward-thinking partners we know reflected in this report. As a distributor, insight into the challenges our partners face is key to creating the right marketplace solution they need to serve their customers as best they can.”
It’s important not to overlook the significance of distributor marketplaces as a vehicle to make the subscription and recurring revenue model more effective for partners. It’s also important to acknowledge that the attraction of these marketplaces is that they are, to all intents and purposes, part of the natural evolution of distribution to match the requirements of a subscription and recurring revenue model.
Westcon-Comstor’s report suggests that more and more partners are becoming comfortable and attuned with the new(ish) model. With 80% of partners well on the way to adopting the model, there seems little likelihood of the momentum stalling.
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