Cloud-Based Software Licensing

In 1997, a pair of management consultants – Michael Treacy and Fred Wiersema – published a book entitled, “The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market,” 1 which suggested companies could only become a dominant player
in their industry by achieving a proficiency in one of the following areas:

  1. Product differentiation
  2. Operational excellence
  3. Customer intimacy

Treacy and Wiersema believed the cost involved in gaining superiority in more than one of these disciplines was prohibitive, and recommended corporate executives focus their resources on only one or risk becoming mediocre in multiple areas and losing their competitive advantage. Today’s business environment is even more challenging. The competitive pressures have never been greater. Fortunately, software and technological innovation is making it possible for businesses to gain a competitive advantage and deliver on all three of Treacy and Wiersema’s disciplines -simultaneously.

Advances in the Cloud have given businesses unprecedented visibility and data on customers. Data that can help you understand your customers, better serve their needs, and in turn, increase their loyalty and lifetime value. By opening up new ways to connect and engage with customers, the result is a deeper understanding of what customers need to remain loyal, and provide high customer lifetime values. 

In the past, the sale ended when the order came in. The main focus of most organizations was getting the order and hoping for repeat business in the future. Today things are different. Thanks to subscription and pay-as-you-go business models, the spotlight has to be on finding ways to make things easier for your customer and in maximizing revenue while helping them get more out of their implementations. Today the focus is on developing stronger long-term relationships with your customers.

Yet, the relationship with the customer is constantly changing. The cost of acquiring customers is just one of the reasons why many businesses have moved from just selling products to selling services. Converting standalone products into subscription services gives companies a better opportunity to build ongoing relationships with their customers. For these companies, giving customers a better experience is a key differentiator.

However, many companies fall short at the first hurdle with poor adoption of their new service-based products. What’s the reason? Often, businesses don’t know because they lack visibility into how their customers are actually using their service products and what they’re trying to achieve. 

Software monetization solutions can address these issues, and do more than simply control access and permissions for software. Software monetization solutions also provide an invaluable source of information to help companies meet their customers’ needs, and keep them as customers.

Software monetization solutions can also help companies increase the value of their customer relationships. Research shows that the longevity of the client relationship directly affects the financial stability of a company. Building strong customer relationships can even reduce sales and marketing costs, as well as the likelihood that the customer will deflect to a competitor. 

According to a 2014 Gartner survey on marketing's role in customer experience, 89% of marketers expect to compete primarily on the basis of customer experience by 2016.

This whitepaper will discuss the market forces that are reshaping the competitive landscape and show how a variety of businesses are utilizing cloud-based software licensing to implement a software monetization strategy to become the market leaders in all three disciplines described in Treacy and Wiersema’s book. 

THINK strategies believes that the best way for a company to achieve a competitive advantage is by developing a better relationship with its customers and the first step is in leveraging technology to make those experiences and interactions easy.