According to a new report, subscription-based companies are proving their resilience in this challenging economy brought on by COVID-19 by being flexible with customers, being quick to pivot to new offerings and showing goodwill by offering free trials.
A subscription-based business model in pro AV – affectionately referred to as AV-as-a-service (AVaaS), has been a source of much debate in the industry. Some say it’s a tried-and-true business model that ensures the continuity of revenues and customer relationships while others say it doesn’t provide enough bang for the buck.
However, Zuora, a cloud-based subscription software provider, says in a new report that only half of subscription-based companies across all industries have seen an impact. Further, 20% are actually seeing growth.
It’s unclear where pro AV falls in these categories, but Zuora breaks it down by industry here:
- Industries reporting accelerated subscriber growth are OTT video streaming, digital news & media and E-learning.
- Industries reporting a limited impact include general software, information services, communication software, telco & utilities and memberships.
- Industries reporting slowing growth include consumer IoT, business IoT services and software for small businesses.
- Industries reporting declines include travel, hospitality and real estate.
For industries reporting negative impacts, Zuora recommends being flexible and continuing to focus on the long term while taking immediate steps to preserve those customers.
There’s no reason to collect payments from your customers if they aren’t using the services you provided and installed for them. Many industries shave done so during the pandemic, like fitness centers, student loans, financial institutions and travel.
According to Zuora, those companies have reported a 5% lower annual churn rate compared to their peers. That means customers that are afforded the opportunity to suspend payments see that act as a gesture of goodwill and are more likely to stick with that provider.
Credit memos, discounts and adjustments
Zuora also found that many subscription-based companies are reporting a spike of customers who can’t pay on time. Instead of maximizing cash, companies are offering credits to be used later, providing temporary discounts and adjusting payment terms.
According to Zuora, companies that service industries hit hard by the pandemic are offering discounts or refunds to their customers, including restaurants and the automotive industry.
This will lead to better customer relationships for AV integrators that work with industries hit hard, like hospitality, travel and restaurants.
Free and bundled plans
Many video conferencing providers and remote work solution providers like Zoom, Google Meet, WebEx and others offered free access in some capacity due to COVID-19 and the increased demand for those solutions.
According to Zuora, many other subscription-based companies followed suit by offering free trials or temporary free access to services. As a result, membership has skyrocketed for many tech-savvy companies.
If your AV company has some low-cost solutions that could be offered as part of a free trial, that could go a long way toward retaining those customers that are going through difficult financial times.