Why You Need to Think About Monetizing Customer Relationships

Advances in technology, a growing number of customer touchpoints and the amount of options in the market is producing savvier customers who demand more of the companies they do business with.

As a result, cleverbridge co-founder Craig Vodnik points out, “The whole notion of ecommerce is going away.” The traditional, transaction oriented ecommerce model has to adapt to the reality of the empowered omnichannel shopper. And companies must now focus not only on getting customer transactions, but also on nurturing (and monetizing) customer relationships.

It’s the Relationship, Stupid

“Subscription management isn’t all about recurring subscription transactions — it’s about a relationship with the customer. And companies want a relationship with their customer.” Craig Vodnik

Historically, it was more difficult for your customers to connect with each other as well as your competitors. As a result, the first two decades of Internet shopping saw vendors fixate on transactions and conversion rates, often at the expense of providing an engaging and value-driven customer experience. Vendors cared about getting as much money from a customer as quickly as they could, and they only worried about the next payment when they released a new version of their product.

But only focusing on optimizing the sales funnel and tallying up paid conversions is myopic and causes companies to neglect other touchpoints important to their customers. Today, customers can easily compare your pricing with your competitors, share positive or negative views about your product with their circles of influence, and demand more diverse and personalized options for engaging with your brand.

This rise in customer expectations was accompanied by a rise in subscription billing models. And with good reason. Subscriptions are a natural fit for monetizing the customer relationship. Just as customers are demanding ongoing value from brands, so too are brands demanding ongoing value (read recurring revenue) from their customers. The result is that brands must continuously bring valuable experiences to customers, or risk them churning away.

Customer Experiences and Subscriptions

A subscription billing model forces companies to both improve the customer experience and to sharpen their marketing efforts. Those marketing efforts, instead of focusing on converting the sale, must now be targeted to improving the company’s relationship with their customers.

For example, HBO was once only available from resellers (i.e. the cable companies). The cable companies were the gatekeepers to a relationship with HBO, and access could only be purchased in a bloated package. Pricing, package configuration, customer support, uptime for the distribution network and quality of delivery were entirely in the hands of the cable company.

HBO now
Source: HBONOW.com

The growth of high speed Internet access and online video streaming capabilities, combined with subscription billing models, has allowed HBO to cut out the cable companies and offer direct access to customers via HBO NOW. They can manage their sign-ups and deliver the product directly over the Internet.

This is but one example of brands shifting their digital ecosystem to provide ongoing value directly to customers. The corollary of needing to create excellent customer experiences is that brands are highly interested in acquiring direct control over their relationship with end-users. But that is not so simple.

Where’s the Data?

Creating value-driven customer experiences and monetizing them through subscriptions relies on building an ecosystem of digital tools and platforms. Unless you have unlimited resources and are doing everything in-house, this means a lot of third-party integrations. Payments have to be connected to subscriber accounts which have to be tied to marketing messages. And all these data need to accurately display in CRMs, ERPs and reporting tools. Oh! And it all needs to be done securely and at cost. These different layers are crucial to your business goals of increasing revenue and customer satisfaction while decreasing costs and risks.

Relying on your own efforts exclusively is sure to cause broken customer experiences. These result in higher churn rates, lower customer lifetime values, and higher costs from assisting confused and irritated customers. Building the right ecosystem that ensures exceptional customer experiences while giving you full control over your business means more new customers, more recurring revenue, higher lifetime values and a leading reputation in your industry.

Here’s the challenge: All this third-party integration also means potentially losing control of valuable customer data. So you need to make sure that your partners work with you in an open manner so that you can own the right mix of customer data and experiences.

Who Wins, Who Loses?

The shift from a focus on transactions alone to a focus on customer relationships monetized via subscriptions is disrupting how business gets done online. As with any disruption, some businesses are winning while others are losing.

Customers win

An increased focus on customer experience means that companies are thinking about the value they deliver to their customers, rather than simply producing the next incremental product release.

Some companies win

That is, companies that make the investment in their customer relationships win. The subscription market will reward those companies that can move quickly to meet customer demand and foster a direct and positive relationship them.

Some companies lose

Companies with a channel focused model are struggling to make the leap to a customer obsessed approach. With their entire business model focused on nurturing relationships with channel partners, these companies will lose out on opportunities to connect directly with customers.

Resellers lose

Resellers are being disrupted by this model because unless they’re providing real value, companies will want to go direct.


In today’s climate, businesses must engage with customers on their terms. These changes are disrupting traditional online business and creating winners and losers. Be sure your business model allows you to deliver on customer expectations while effectively monetizing customer relationships.

Download Attracting & Acquiring New Subscribers to learn more about nurturing customer relationships. 


  1. Maria

    “Resellers are being disrupted by this model because unless they’re providing real value, companies will want to go direct.”

    And good riddance, I say. Provide value or die.

    1. Nick Liebman

      Maria, thanks for the spirited response!

      What does providing real value look like in your business?

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