Previously, we talked about what the subscription model is, its advantages for printers and how this business model can be applied to offerings in order to adapt and stay agile with the evolving consumer landscape. Today, we are going to talk more in depth on how printers can adopt a multi-faceted approach to pivot in the post pandemic times with the subscription model.

According to an article by Emarsys in 2021, the subscription economy has grown nearly 6X since 2013 which is more than 435%. Additionally, subscription businesses have grown 5-8X faster than traditional businesses and even during Q4 of 2020, subscription companies grew 7X faster than companies within the S&P 500. You will also realise that the biggest consumer segment belongs to Gen Z who are born between 1997 and 2012 and millennials come second, causing profound implications for many businesses.

Based on studies by Euromonitor International, Gen Z will form the biggest consumer segment worldwide through 2030. Nine hundred and sixty million of these individuals will be in Asia and the companies that want them as employees and as customers will need to evolve accordingly because Gen Z is a cohort that cares specifically about ESG (environmental, social and corporate governance). Millennials also claim a close spot as they consider climate change a serious threat to society.

The combination of subscription and ESG is making many companies rework their policies and product/ or service offerings to cater to this influential group of consumers. Taking these factors into consideration, it is critical for printers to remodel their businesses and capture a larger market share with this specific market segment in mind. Hence a multi-faceted approach will be the right way to pivot.

Change In Business Model - From "Make To Sell" To "Sell To Make"

The previous article talked about the benefits of subscription models for businesses so we will talk about the benefits for consumers instead today and why it is important to switch to this business model for printers.

Consumers are turning to subscription based product and/ or service offerings mainly due to the following reasons:

• Lower initial costs and up-front investments

• Pay per use model

• Turning fixed costs into variable costs

• Access to new and consistent experiences regularly

• Customizability

Many Gen Zers and millennials treat subscriptions as part and parcel of their lives because it gives them an impression of affordability to new or premium products and/ or services without being tied down. Therefore many manufacturers which were using the "make to sell" business model have converted to using the "sell to make" business model to capture a larger pool of customers and to create an alternative stream of income.

To successfully turn from the product based business model to service based business model, the manufacturers had to redefine the values in their businesses as it is a total shift from the previous business model to the new one. Printers have also started to adopt the service based business model aka subscription model in the case of Heidelberg Subscription and HP's Instant Ink. 

Having said that, subscription models can vary according to your product and/ or service offerings and there are 6 types of subscription models:

• Ecommerce subscriptions - Allows recurring purchases of products. Eg. Autoship subscriptions give customers a regular supply of the same products that they use on a constant basis and curated subscription boxes include a unique selection of products in each order so they are good for a rotating selection of office snacks or skincare/ makeup essentials, for instance.

• Software-as-a-Service (SaaS) subscriptions - Usually monthly or annual licensing models for software such as video conferencing solutions, sales performance management or customer relationship management tools etc. These are often paid on a per-user basis.

• Premium access or service models - Usually starts with a free subscription that includes basic functionality which users can unlock later to access the premium features.

• Usage-based subscription models - Uses IoT (Internet of Things) connectivity as leverage to track how much a customer uses a product or service and bills them accordingly on a recurring basis. Some examples include data storage solutions and email marketing tools that bill based on the total number of contacts.

• Product-based subscriptions - Usually charge monthly or annual fees in exchange for the use of products such as office furniture or electronics like laptops, printers etc.

• Service-based subscriptions - Offers product support on a recurring basis. This is typically included with a purchase such as warranty or offered as an upgrade by a sales representative.

Printers can consider using the e-commerce, product-based or service-based subscription models. It is recommended to consider what are your best sellers before coming up with the subscription model and types of bundles. They can be designed with the option of charging an additional fee if customers want a faster turnaround time or better material in a mid-priced subscription bundle.

Statistics have shown that 65% of consumers are willing to pay more for faster delivery . Another survey by Akeneo has mentioned that 80% of consumers would pay up to 30% more, while 10% would be willing to pay over 50% more for products that have purpose in their brand values. This also provides a good gauge on what types of materials you should keep stock of and/ or reduce in your inventory.

Change In Operation - Less Labour And More Automation

Currently, 71% of hours are worked by people and 29% by machines. The World Economic Forum predicts that in the next four years, the ratio will turn almost equal. Automation is useful for dull and repetitive tasks and for businesses who have shortage of manpower either due to budget or not being able to find experienced employees.

For the traditional printers, you need to have trained and experienced employees to do the work and should they fall sick or resign, you would have to find replacements and retrain the new employees. This will cost time and opportunity cost as well as loss of revenue. More errors might potentially happen because the new employees are still undergoing training.

However, with automation, you not only minimise the errors but also improve the overall efficiency. It can be as simple as automating your prepress workflow, shipping/ billing process, preflight work, estimating/ scheduling job process, submitting jobs via online portals and imposing print work etc. So instead of needing to hire at least 6 employees to do the work, hiring 4 will do because of automation.

Change In Equipment - Upgrade Of Older Machines

In addition to the paragraph above, older machines are getting phased out and as the demand decreases, so does the supply and this order usually and often affects the pricing when it comes to maintenance and purchasing spare parts when necessary. The pricing increases when the supply and demand is low and will ultimately affect the total cost of doing the printing job which further decreases your profit loss margin, this is a universal law in business and economics.

For traditional and commercial printers, a minimum order quantity (MOQ) is required and that is usually in the thousands range. It is costly for small print runs because the custom plates can be quite expensive and the process takes a longer time compared to digital printing. Errors are more difficult to correct during the course of the printing process due to the nature of the printer features and custom plates. Not to mention, trained and/ or experienced employees are required to do the work.

With digital printing, smaller print runs can be done and completed in a shorter period of time. You can also fix any errors mid way. This is explained clearly in the case of West Coast Label from Singapore. So instead of being only able to deliver in 7 to 10 working days, you can now deliver in 3 to 5 working days and most customers appreciate the shorter waiting time. You are able to serve more customers and increase your revenue without losing much opportunity cost. It also makes you a preferred printer for the Gen Zers and millennials because digital printing helps to reduce wastage of raw materials which in turn, contributes to the green economy.

Newer machines and/ or technology can cater to print on demand and this is where subscription models are really critical in boosting sales turnover. Concurrently, newer machines and/ or technology also help printers to cut down on unnecessary inventory, operational and labour costs. At the end of the day, you are not only enjoying a bigger profit margin but are also making a difference in climate change.

Change In Customer Relationship - Providing The Customer Experience Consumers Want

In business, what works today might not work tomorrow and businesses will need to change and evolve according to consumer preferences and needs because it is the consumer who shapes the economy. In this case, it proves wise to go with the flow rather than against the flow.

The modern consumer highly values authenticity, personalisation and customisation in their experience with brands so a great customer experience is crucial to your business flourishing. When customers have a great experience with your business and/ or brand, they will naturally refer family and friends, becoming free brand ambassadors for you.

One great way to provide a great customer experience is to know your target audience, their demographics and preferred channels so you can maximise your focus, effort, time and budget on the specific channels via a customer-centric marketing approach. Eg. Gen Z loves to use Instagram and TikTok while millennials prefer to use Facebook and Google.

In summary, for printers to enjoy continual business longevity and profitability, it is imperative to relook at your business model, product and/ or service offerings, customer demographics, workflow, equipment and marketing channels. Just like how diamonds are faceted to shine that dazzling sparkle to attract people's attention and love, a multi-faceted approach is crucial to pivot successfully and ensure sustainability.