By Mike Morini
A rock-solid monetization strategy is the key to building a recurring revenue model for any business. The Aria team helps dozens of cloud services companies execute these strategies and it has been interesting to see best practices developing around generating recurring revenue.
We see four primary components of a winning monetization strategy with our customers. Each business selects a revenue model; sets a price strategy; creates a channel strategy; and overlays a contract. There are countless ways these elements can be mixed and matched, which is where the challenge lies. Ultimately the two big decisions you face are determining how your customers want to buy your product and what is right for your business. Of course, it’s one thing to have a great strategy, but it’s quite another to execute it.
For more on building a monetization strategy for recurring revenue see the whitepaper,
DigitalBridge Communications, a Virginia-based internet service provider and Aria customer, is a good example of how these principals can be applied. It delivers broadband WiMAXX services to customers in small and medium size communities in Idaho, Indiana, Montana and South Dakota. Their residential customers set-up broadband service themselves within minutes on the company website and can immediately begin using the portable service anywhere within the coverage area for both voice and data.
DigitalBridge uses a standard subscription model. We are all familiar with the standard subscription model: Think of a newspaper or magazine subscription. The customer is offered access to a product or service over a specific time period and payment is divided in equal installments over the duration of the subscription.
For it’s pricing strategy DigitalBridge chose to charge customers a flat rate fee for unlimited usage, rather than employing a tiered rate based on usage. In addition, the provider offers its voice product bundled with a high-speed speed Internet for a discount with a two-year contract.
DigitalBridge also layers a channel management approach to their offering by creating a formalized program that segments its different customers within each community it serves. With specific offerings geared to home users, businesses and schools, DigitalBridge created three similar but mutually exclusive offerings. For businesses and schools the provider offers professional installation and the ability to apply branding to their offering. Segmenting their offerings also enables DigitalBridge to communicate targeted marketing messages to each audience.
With its monetization strategy for building a recurring revenue model for its business firmly in place, DigitalBridge outgrew its legacy billing infrastructure. The service provider needed to integrate its billing with several back-office systems and telecom hardware. At the same time it was necessary to rapidly rollout a new billing system without incurring a great amount of upfront costs.
Using the Aria Subscription Billing Patform, DigitalBridge migrated 10,000 customer accounts from legacy systems and ended up saving 80 percent compared to on-premises billing systems they considered.
While best-in-class billing infrastructure can certainly make a difference, DigitalBridge primed itself for success by putting in place the right monetization strategy generating recurring revenue: both its customers and its business.
Let me know how you’re setting up your monetization strategy for recurring revenue. And check out our white paper on the subject, too.