The conventional wisdom that every business needs a good “moat,” or a competitive barrier that sets them apart from the pack and keeps predators at bay, is fine, as long as that chasm you’re counting on is not based on technology alone.
In our latest ConnectedEconomy series conversation, sticky.io CEO Brian Bogosian told PYMNTS’ Karen Webster that as much as tech is a powerful enabler that facilitates creative commerce, tech in and of itself, will not keep protect you from hungry competitors.
“Technology is not the moat. It’s the product that’s the moat,” Bogosian said, pointing to the rapid development of competitive ideas that emerge in the shadows of every successful launch or idea.
“If somebody is getting traction out there in the market with a certain product or service, you can be sure there are going to be others looking to emulate that and improve upon it,” he said, “so I think moats are kind of an ancient term to use and I think they’re harder and harder to sustain in this environment.”
But even if the idea of moats is becoming outdated, firms certainly can — and do — leverage technology to build a competitive advantage and persuade consumers to take the plunge and sign on to a subscription.
Of course, the underlying product still has to be good and speak to a consumer’s needs, but sticky.io has seen “tremendous creativity” from merchants in how to leverage subscription technology to build an ongoing and continually strengthening relationship with customers.
Creativity, he noted, is enabled entirely by the data that smart merchants can harvest from their subscription services and leverage to expand and perfect their offerings to consumers.
“Data is everything. Understanding your customers, understanding what their buying habits are, is absolutely critical,” he said. “So the transaction happens and you have the payment history. But you have more than that — you have everything about what types of things they’re buying and the things that they click deeper into to understand better. That provides you with tremendous insights into the habits and desires of those consumers.”
That insight into customer habits and wants is being used by the most sophisticated subscription players, he said, plugged back right back into the subscription offering to make it stickier and more useful for the consumer. That heads off churn, the bane of every subscription merchant’s existence. But perhaps more critically, he said, it allows the merchant to continually build and rebuild their offering for the subscription customer, making sure it stays and becomes increasingly relevant to their wants and needs going forward.
The Competition Factor
Merchants, he noted, are going to need to continue to evolve their offerings over time, and anyone who builds a successful offering will invariably find a competitor who will come along to try to provide what they believe is a better variation. That is ultimately good news for consumers, he said, as they will be the beneficiaries of a continual stream of value being driven their way in the form of subscription services that are more varied, more affordable and more convenient over time.
But it also means the pressure is on merchants to build flexible subscription offerings that are designed to evolve alongside their customers’ needs in inventive and unexpected ways. The smarter merchants playing in the space, Bogosian said, are always looking for better ways to package and bundle longer-term commitments with their consumers.
But ultimately, he said, it all comes down to the data — and how merchants leverage it to truly understand their customers and build the offering that will keep them engaged with their product or service over the long term.
“I think data that can enable understanding your consumers is probably the most essential part of this entire chain of events,” Bogosian said. “Understanding what people want, what their preferences are, the frequency with which they could use something — it means everything. And I think platforms that provide sophisticated analytics, analytics that are highly flexible and tailored to provide you with the insights into your business and insights into your customers, is a tremendous value.”