As consumers, we pay subscriptions for all kinds of consumer electronics today. Companies pay via subscription for different back-office software, cloud infrastructure, and more. Because they are so popular and provide a lower barrier to entry for new customers, subscription-based models are clearly here to stay for the long term.
In some cases, as is the case with connected devices like mobile phones and smart watches, these subscriptions are enabled and managed through a cellular carrier. Other times, subscribers sign up directly via the manufacturer of a product or service. In this post, we will break down the differences between the two common models: Direct Carrier Billing and Direct OEM Subscriptions.
With direct carrier billing (DCB), users can buy products or subscriptions through their existing cellular carrier. Then, charges are added on to customers’ traditional cell service bill.
Originally, providers used this service to sell add-on features for cellphones like ringtones and wallpapers. Today, DCB has evolved to include other products or services like in-app purchases, digital media, and even physical goods.
While on the surface this may seem to be the simplest setup for end customers, it could create additional complexity if the rest of the customer onboarding process is cumbersome, causing them to avoid ever activating devices in the first place.
Crucially for manufacturers, this method also effectively ends your interaction with your customers while often placing the burden of onboarding and troubleshooting completely on their shoulders.
This is not a recipe for delighting customers or obtaining more frequent purchases of your products and services. On the other hand, direct subscriptions between OEMs and end customers tend to work differently.
OEM subscriptions enable manufacturers to have a direct, ongoing financial relationship with their customers by providing the tools needed for customers to onboard themselves and for OEMs to monitor and manage all aspects of their physical and digital offerings.
Manufacturers that want more control over customers’ subscriptions, or that want more flexibility to offer more value-added services, might decide to provide subscription plans to their customers directly, instead of deferring to a carrier billing model.
These direct subscriptions are becoming a more prevalent and more popular choice among manufacturers, as it becomes a point of differentiation for them and can even help extend the life of their offerings.
Consider also that direct relationships also provide OEMs with more insight into their customers. Things like: When they purchase products, how they use them, or even more importantly why they stop using them.
Because IoT manufacturers offer solutions that are a unique hybrid of physical goods and digital services, and because the computing infrastructure & connectivity costs to enable those solutions are ongoing, companies need to plan for the fact that they are no longer selling just products, but rather they are selling platforms.
As we’ve mentioned before, IoT solutions fit well with subscription models, and due to their inherent complexity, it makes a lot of sense for OEMs to deliver these solutions to customers directly, allowing them to learn about their customers and improve their offerings over time. Without having these insights (as is the case in a direct carrier billing model), it would be difficult for manufacturers to make the necessary improvements to solutions and business models that are expected from IoT customers today.
To better ensure that your direct-to-customer subscriptions find success, it is imperative to streamline the initial onboarding process.
Some recommendations to follow would include:
To accomplish all of the above:
For usage-based IoT subscription plans, Zipit offers an easy way to establish recurring services and for users to manage their subscription tiers. Zipit provides a service that matches the needs and specifics of each OEM product.
Zipit makes it easy to create different featured bundles and subscription price-points. Unlike with DCB, you can customize portals to better suit your vertical market and make it so your subscription offerings are tailored to their needs.
Zipit provides automated notification capabilities so you can alert your customers and remind them to purchase additional data when they begin nearing the end of their current plan.
Managing taxes is one of the more complex aspects of OEM subscriptions. It’s one of the reasons many companies may decide to avoid the subscription path altogether. The Zipit platform has this covered and we work alongside customers to understand their tax liabilities ahead of time, based on what they’re offering and where they offer it.
Zipit helps you connect customers to a global array of carriers, depending on the geographies you need to support with your solutions.
Zipit is the leader in providing a platform for IoT subscription plans and billing methods that integrate directly with the leading mobile network operators (MNOs) around the world.
Learn more: What Is a Billing Solution and How It Can Grow Your Business?
Zipit is all about connecting your devices and services with customers in a simple, elegant way.
For over a decade, Zipit has worked with different carrier partners and device manufacturers to connect IoT devices and enable OEMs to offer subscriptions directly to their customers.
If you’re wondering how Zipit may be able to help you, talk to one of our highly experienced experts.
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