HP is Doubling Down on Customer Relationships with Subscriptions

By Tien Tzuo May 1, 2020

“Companies are reimagining the products and services they offer — rethinking their roles within their own industries, and outside of them as well,” says Kevin Dobbs, Accenture’s As-a-Service practice leader for high tech industries. “Many are finding the need to offer intelligent and connected products that will be delivered through as-a-service subscription business models.”

 

Almost every aspect of our lives is now being re-imagined, not the very least our home office, where, naturally, I am writing this. As part of our ongoing series profiling the way subscription businesses are doubling down on their customer relationships, this week we’re talking to Anthony Napolitano, Vice President and General Manager of the HP Consumer Print Services and Solutions business which is responsible for HP Instant Ink. As home printers are now doubling as work and school printers, we thought we’d check in with Anthony to hear his thoughts on dealing with a brand new user cohort, value propositions, data-based decision making, and “the new normal.” 

 

Thanks for taking the time, Anthony. I have to say, I recently rediscovered my printer.

You and everyone else!

 

I know! It feels like for a long time, printers just kind of sat there, like furniture. But obviously, like so many other people, my home is now my office, and my printer has quickly become an essential part of my home office. But before we go there, let’s talk about HP Instant Ink.

Sure, I’ve been running HP Instant Ink for about five years now. It’s a subscription service where our customers save up to 50% on ink by paying a low monthly rate based on the available page plans selected. We monitor the ink levels in the cartridges and we automatically reorder and ship ink to our customers before they run out. The Instant Ink value proposition is very clear: savings and convenience. We’re currently in 18 countries and growing.

 

That’s a pretty cool concept, and so obvious. HP sends you the right amount of ink, because it’s talking with your printer? How does HP know?

All our new printers are connected to the HP cloud.

 

So it’s like our printers suddenly “woke up” with all these new super powers. They can take care of themselves. The same thing is happening with cars, kitchen appliances, tractors, the list goes on. 

Yep.

 

That’s very cool. Here’s something that’s also really interesting to me: You’re not buying the ink, you’re buying the outcome, whether it’s a formal business report or a family photo that’s going on the fridge. HP is saying: “let us handle the logistics, so you can focus on your work, school projects, etc.” And the fact that it’s all enabled by a connected device. This is very much an IoT story as well as a direct-to-consumer story. 

That’s right, that’s the convenience portion of our value proposition. We enable our customers to focus on the output they are creating instead of the supplies that go into their printer. That addresses the problem of running out of ink in the middle of a print job. The printer is connected to the cloud, so we can anticipate your printing needs, and you can focus on your project.

 

Since you know what your customers are doing in real-time, I’m assuming that means you’ve also been able to respond to the crisis fairly quickly. How’s that going? What are you seeing? 

Well first, we’ve been receiving testimonials from our customers like: “The convenience and quality of the ink, not having to worry about running out, is a tremendous asset to me as a teacher who is now working on a curriculum for stay at home children.” So that’s really great to hear. It feels like our service has moved from being convenient to a necessity to our customers.

 

Because the old scenario was that when you ran out of ink, usually in the middle of a job, you had to get in a car and go drive to the store to buy it. But thanks to all this new usage data, that pain point has disappeared. 

Well, data is obviously central to our service. We can adjust quickly to all this new demand, because we’re seeing it happen in our business intelligence analysis.

We’ve got a brand new cohort of users who just joined us over the past month or so, which we’ll be studying closely, to see how close or far they skew from the baseline in terms of usage and engagement. With subscription models, you’re always iterating. But it’s obviously still pretty early.

 

That’s probably the biggest difference between this economic crisis and the last one — there’s so much more data now.

Yes, we have to earn the trust of our customers every day! They’re constantly telling us what they like and what they don’t like. And the nice thing is that once you feel like the data is pointing you towards a new feature or service, you can test those ideas before they go to scale. And if it doesn’t work out, you can quickly move on to another idea.

 

Looking forward, it’s pretty obvious that even if the new normal looks like the old normal, it’s still going to be fundamentally different. We have a whole new vocabulary and set of skills that didn’t exist five weeks ago. What kind of implications will this have for subscription businesses?

Everyone’s value proposition is being put to the test right now. Before the crisis started, if you were unclear about exactly what you were solving and who you were solving it for, well you’re definitely finding out right now. Especially in the consumer space, where everyone is taking a hard look at their credit card statements. We are very proud of the significant savings and convenience we are providing to our customers.

In the near future, we’re all going to be completely re-evaluating so many aspects of our lives: education, medicine, work, the list goes on. All of this is happening remotely right now. And the question for a lot of companies and institutions is going to be: Now that this shift has happened, am I still relevant? Does what I do still make sense? Am I serving an essential function, especially in a time when everyone is being careful about their finances?

Everyone is going to have to change, it’s just going to be a question of to what degree. I mean, we’ve moved from being a printer vendor to a home office solutions provider. We just have to let our subscribers lead the way.

 

I look forward to catching up with you in the new normal. Thanks a bunch, Anthony. 

Likewise.

 

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For more insights from Zuora CEO Tien Tzuo, sign up to receive the Subscribed Weekly here. The opinions expressed in the Subscribed Weekly are his own, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.

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