This story was first published at CIO-Online.com in French with the title, Comment les grandes entreprises françaises se préparent à l’économie de la souscription.
The 2019 edition of Subscribed France, the annual event of Zuora, several French groups shared their experience around the implementation of new subscription business models.
What are we talking about when we highlight the need to offer a new experience to customers? Faced with consumers who increasingly favor usership over ownership, innovation is now as much about services as about products themselves. Most executive boards have understood that these developments are part of a fundamental trend, where leasing is gradually replacing the purchase of goods.
Under the impetus of the marketing and innovation departments, more and more players are studying the implementation of new offers, designed on the principles of subscription. However, for companies in the traditional economy, this transition represents a radical change that requires a complete rethinking of existing tools, culture and processes.
Jean-François Pinard, Saint Gobain Group: “Our goal is to offer turnkey solutions.”
How to move from a traditional approach based on the sale of products to the implementation of rental models? The customer feedback highlighted at the Zuora Subscribed France 2019 conference provides some answers.
Mastering usage, a challenge for long-term competitiveness
One of the common points of the various companies that testified over this morning was a desire to get to know their customers better. For the Michelin group, which recently launched its own application store for its professional customers, this includes building customer loyalty and supporting them in their mobility challenges, while exploring new sources of revenue. Through flexible subscription packages, professionals can access fleet management, vehicle inspection and other tools developed by the group, according to their needs.
The Seb Group, for its part, has set up a Digital Factory to reflect on new uses around its historical business, the production of small electrical household appliances. “Isn’t it our role to answer the question “what are we going to eat tonight?”, says Xavier Boidevezi, VP of the Digital Factory at the Seb group. Around its connected products, the company aims to build a service platform, open to Foodtech start-ups. “For us, the threat does not come so much from our industrial counterparts, but rather from new entrants that we would not have seen coming, and who would position themselves as intermediaries between consumers and our products,” says Xavier Boidevezi. The key to competing on equal terms with the latter is to control usage.
For DSC, a Saint Gobain brand, it was the desire to help their professional customers adapt to new regulations that triggered the testing of a new offer, based on subscription. Indeed, with the 2015 energy transition law, then the ELAN law, collective housing must implement the individualization of heating costs for their residents.
“Many of our plumbers or heating customers could not afford to meet the trustees’ requests. We have created a solution, Temperly, that allows them to address this issue,” explains Jean-François Pinard, Director of New Product Offers and Services at DSC (Saint Gobain Group). The solution, proposed in rental form, is based on small connected meters installed on the heating network of each dwelling. The subscription includes the installation of meters, maintenance, but also access to applications that allow consumers to monitor their consumption in real time.
New entities to support this cultural change
For companies from the industrial world, the transition to a service model represents a major cultural change, which is similar to the creation of a new internal business. “When we launched Temperly, the finance department looked at us with a certain perplexity, because Saint Gobain had never rented before,” remembers Jean-François Pinard. For these reasons, a high degree of autonomy is necessary. The entities in charge of managing these initiatives are similar to real internal start-ups, when new companies are not simply set up.
This is the case for Recygo, a joint subsidiary of the Suez and La Poste groups. It was created about two years ago in response to a finding: only 20% of companies have set up waste sorting and recycling systems in their offices. To make the process easier, the company has set up an all-inclusive service, offered in the form of subscriptions: provision of sorting equipment, employee support, collection, etc. Customers also benefit from indicators to know the quantities of waste collected and recycled, “a way to highlight social and environmental responsibility (CSR) approaches,” says Corinne Sieminski, President of Recygo.
The support of management also plays an essential role, as these steps go beyond the company’s usual processes, particularly in terms of accounting (cash management, invoice reconciliation, etc.) and legal aspects. Usually, product design in the industrial world follows a well-defined and rigorous process. “To build digital solutions, you have to work differently, in agile mode,” points Xavier Boidevezi. At Michelin, the AppStore project was launched in eight weeks, in eight countries, to test this approach quickly and on a scale adapted to the size of the group. “When you embark on such a transformation, the challenge is to provide proof,” explains Fabrice Guinot, Business Marketing Manager at Michelin.
Processes that require new information systems
To be able to carry out these experiments successfully, the teams must have their own resources, but also their own IT. Indeed, the information system is one of the keystones for deploying this type of offer, “the core of the reactor” according to Corinne Sieminski. However, to have all the necessary agility, it is most of the time necessary to rebuild an information system “from scratch”. “When we created the company, we first welcomed developers, before hiring the other employees,” says Recygo’s president. In order to move quickly, the company relied on SaaS solutions, such as Salesforce CRM, Zuora’s “quote-to-cash” platform and SlimPay for payment. Six months were enough to build this IT base.
The same is true of Saint Gobain. “We created a separate information system because the existing accounting processes did not allow us to manage the rental mode. For example, it is impossible to remove a product from inventory for an amount equal to zero,” illustrates Jean-François Pinard. To manage the invoicing of its Temperly solution, the company therefore relied on Zuora’s solution, with some additional developments, necessary to take into account the specificities of the activity. “It was only at the end that we set up the necessary links to repatriate the financial data into the group’s ERP system,” explains Jean-François Pinard. An IoT platform has also been deployed to collect and process data from the connected meters.
Spreading agility within the company
For all these actors, the implementation of such models implies a real internal change management. At Saint-Gobain DSC, the sales teams had to learn a new profession in order to sell service and not just connected products. For the sales forces, this type of offer is easier to offer, because customers benefit from packaged solutions, where everything is understood,” says Corinne Sieminski. For large groups, these initiatives are also an opportunity to explore new ways of working, and to gradually spread this agility to other professions.