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Monetizing 5G: Five tips for CSPs from Robbie Kellman Baxter

Subscriptions are big business nowadays. Whether you’re cooking a delicious meal from your weekly HelloFresh box, settling down to watch a movie on Netflix, or firing up a podcast on Spotify in your Audi e-Tron 55, you’re participating in a new type of economic model: one that gives you what you want as a service, on tap and with no hassle, for a regular and affordable fee.

Subscription models are the key to monetizing new 5G services

Flexible, as-a-service style subscriptions will likely be the best way to monetize 5G-enabled services, from personalized gaming bundles to drone-based inspections. And that’s good news for CSPs, as their long experience operating as subscription businesses makes them well placed to define these new revenue models.

But according to author and consultant Robbie Kellman Baxter, that market maturity could actually work against CSPs, as traditional ways of packaging and selling connectivity may not be right for the more complex 5G world.

“A lot of CSPs are in what I call the ‘Lead’ phase,” she says, referring to her Launch-Scale-Lead methodology for building a successful subscription business. “Once you’ve scaled, the challenge is maintaining a leadership position. And a lot of mature businesses make the mistake of over-indexing on existing customers and not looking at the horizon, to what new customers want.”

That means CSPs keen to move up the value chain will need to rethink and adapt their subscription models to embrace the new opportunities of the 5G era. Baxter offers these five tips:

#1 Identify an underlying and ongoing customer need

Long-established subscription businesses often have trouble recognizing when their offering no longer delivers what customers really want.

If I were a CSP right now, I would be thinking about what is hard for the consumer or the business customer when it comes to 5G. What problems aren't being solved, what goals could they achieve with 5G, and how can I be their trusted source for that?

 
Baxter cites the example of newspapers, which answered a customer need for information about what’s happening in the world around them. In the pre-digital age, the best way to meet that need was through a daily news sheet. But newspaper companies made the mistake of fixating on the product (a daily paper), rather than the customer need (access to information). When the internet came along with a better way of meeting that need, newspapers found themselves in deep trouble.

To make a subscription business disruption-proof, staying focused on the customer need is crucial. “If I were a CSP right now, I would be thinking about what is hard for the consumer or hard for the business customer, or hard for my region, when it comes to 5G” she says. “What problems aren't being solved, what goals could they achieve with 5G, and how can I be their trusted source for that?”

#2 Establish your “forever promise”

The next step is to think about how, in an ideal world, customers would want that need to be met. The goal for CSPs is to get to what Baxter calls a “forever promise”, which she sees as the key to long-term customer loyalty in a subscription world.

Ask yourself: If we were starting today, what would we offer? It’s a good way to uncover the distance between what customers need and what you're actually delivering.

 
“It’s the promise you make to your customers about what problem you're going to solve, or what goals you're going to help them achieve,” she says. “It’s the thing that makes customers relax into their relationship with you, trust your pricing, and not look for alternatives.”

Companies setting out to establish their forever promise often find it can’t be fulfilled through their existing business model. “Ask yourself: If we were starting today, what would we offer? How would we deliver on our promise?,” Baxter says. “It’s a good way to uncover the distance between what customers need and what you're actually delivering.”

In her work with Electronic Arts, for example, Baxter has helped the company to evolve towards a place where players can enjoy any game, at anytime, anywhere, with anyone – packages included boxed games available for individual purchase through to an “all you care to eat” subscription.

#3 Adopt a membership mindset and an as-a-service delivery model

The purpose of the forever promise is to keep subscribers loyal for as long as they have a need that the business can meet better than anyone else. That requires CSPs to forge a new kind of relationship with subscribers: one that meets an emotional need as well as a practical one.

According to Baxter, the customer should feel a sense of belonging, and that the CSP is always looking out for them. That means making a leap from thinking of customers as transactional buyers to thinking of them as members of a club they won’t want to leave. That in turn entails looking afresh at every aspect of the customer relationship, from delivery to pricing to service.

Robbie Kellman Baxter

On the delivery side, for example, members usually want to be able to access what they want, when they want it, with as little friction and overhead as possible. It’s this mindset that has driven the rise of as-a-service models like Rent the Runway and Spotify: companies that have taken away the cost, friction and burden of ownership to deliver just the thing the customer most values.

“As-a-service is a great tool for rethinking and repackaging the value so it's more aligned with the outcome that you're trying to achieve for that customer,” says Baxter.

#4 Decide which ecosystems to join and what role to play in them

But how does a membership-style model work when there’s more than one provider in the mix? Enterprise use cases, like autonomous transportation or full factory automation, require specialist solutions from different companies to be woven together, often in bespoke ways.

Consumers, meanwhile, will be looking for easier ways to get the things that mean the most to them, whether that’s gaming, entertainment, leisure activities, home automation, travel or something else.

Robbie Kellman Baxter

Realistically, complex needs like these can only be met by an ecosystem of providers – and for CSPs, establishing what to offer, who else to work with and how the money will flow will be crucial decisions. According to Baxter, the underlying customer need – rather the CSP’s current products and capabilities – should be the guide.

“Once you know what the customer needs, you can decide what you’re going to offer,” she says, “You might say: we can do these three things, but these other two things we don't do here, and we never will. So who do we want to partner with, so that we can deliver the whole experience?”

Whatever the chosen path, one thing is essential. “It has to look simple for the customer,” she says. “The one who makes it look most simple is the one the customer is going to want to buy from, because they understand what they’re being charged and what they’re getting.”

#5 Map out the steps to delivering on your forever promise

Finally, Baxter says, it’s vital to have a roadmap. Evolving from a transactional model to a value-based, membership-style model based on a forever promise is a big jump, even for CSPs with decades of subscription experience.

“A lot of organizations have the vision and the first step, but they haven't penciled in the other steps,” she says. “What do they do if it works? What if it doesn't work? Where do they go next? What's preventing them from moving faster, and how can they accelerate?” “Even if this is just sketched on a whiteboard, it’s a good way to start thinking about where you’re trying to go, what hurdles you might encounter, and how you’re going to tackle them.” 

Robbie Kellman Baxter

The takeaway for CSPs: Re-assess subscription models now for the new world of 5G

5G brings new opportunities for CSPs to add value and build lasting relationships with consumers and enterprises. Now is the time for CSPs to review their current subscription models and adapt them to 5G customers’ desired outcomes. Robbie Kellman Baxter’s five tips can help CSPs to identify their forever promise and start delivering lasting customer value in the 5G world.

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