Disrupting An Industry Near You … Or Maybe Already Remaking The Winners and Losers of Your Business
You see the signs around you every day … whether it is listening to your Internet radio, virtually hailing your Uber limo ride, finding and paying a flat-fee for legal document creation instead of by the hour… we are surrounded by Services. They have become so pervasive, we don’t even think of them as we use them. Services are being productized and are now more accessible and easy to consume.
At the same time, starting from when the salesperson at Best Buy tries to upsell you on the insurance (or what they call, “the cheese”), or paying for that service contract you got for “free” from your telco provider with the latest smart phone, or the fact that Amazon pitches the Kindle as a “platform” for content and services … products are increasingly an excuse to sell more services … services that are beyond just one sale, but an ongoing and more predictable revenue relationship with each customer.
A recent consumer survey that Avangate conducted revealed some interesting new data around online services. Some of the key findings include:
- 63 percent of US adults already use at least one Online Service daily with over 50 percent of those adults paying for those same services
- Over half of US adults would consider paying for Online Services if they were offered as a trial (60%) or could be purchased with the ability to self-service modify their service options at any time (50%)
- 90 percent of consumers do not update their credit cards on file, directly dropping retention and revenue.
- Some of the top customer frustrations with Online Services include: difficult-to-reach live support (49%), inflexible purchasing options (41%), and slow customer service/resolution (35%).
An infographic of the complete results can be found here.
Businesses around the world are not missing the point – they see it in decreasing revenue and margins for their traditional products, deceasing effectiveness of traditional marketing at converting customers … all coupled with lowering barriers to entry and increased global competition.
Welcome to the New Services Economy.
I’m not the first to write about this. The rise of services has been well documented – McKinsey cited that for the middle income countries, the service sector not only represented 50% of GDP, but over 85% of job growth. The thing that is new is how the combination of online, cloud, and mobile, coupled with the rapidly dropping costs to build new products, has led to now being the time for the cambrian explosion of new online services – be it SaaS and Cloud Services, Information Services, eBooks and Entertainment, or even Legal and Financial Services.
In the following weeks, I’m going to explore more of the new Services Economy and how this connects to our favorite topic – how can businesses make money online, and around the world. We will discuss on how these changes are also affecting business models in the following areas:
- The implications of this New Services Economy to the suppliers in this market
- The new intermediaries of these services – from traditional resellers, affiliates, to newer marketplaces
- Finally, some thoughts on how these markets continue to evolve.
It’s going to be exciting, and I invite you to join us.
