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Retail: Managing subscription models with the ERP

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Supporting subscription models with the ERP system

An example of success: Managing subscription systems with the ERP system

As we have already said, commerce is facing major challenges. All of them can only be overcome if companies make use of up to date solution strategies in the retail sector. These strategies can only be digital. To be more precise: It takes a modern ERP system to remain successful in the market in future as a retail company.

To take an actual concrete example: Subscription models are popular with many retailers because they bind in customers more strongly, stabilize business in the long term, and simplify procurement of the goods. It is therefore no wonder that subscriptions are once again the big thing of the moment in retailing.

However, such subscription models are not always easy to implement and operate. Here the important thing is to differentiate your own subscription model from all the others and the pull customers out of their subscription weariness. In particular, three subscription variants play a more important role for these reasons and with a view to increased customer satisfaction.

  • Exclusivity: Only subscribers can get certain products or services. Examples of this are Netflix or subscriber boxes with tea or sweets.
  • Refill service: Customers can be supplied with products and services on the basis of a plan, such as the savings with Amazon subscriptions.
  • Customized service: Customers get suggestions for products, for example, for fashion, food or media that precisely match their preferences.

Implementing subscription models with a modern ERP system

Current subscription models of this type can only be achieved with a modern ERP system. Today, ERP systems can be integrated by means of APIs and Middleware – access to the central product and customer data and inventory can be done in real time as a result. It is then important that the product master data and inventory data are maintained well and that the ERP includes the relevant business logic for subscription models.

In AP S/4HANA there now exists in the market an ERP Backend that is capable of working in real time and which can be connected with Middleware and interacts with a Headless Commerce system, thus allowing free room for frontend services. To put that in another way without the technical jargon: The display forms and channels can be changed, while the Backend remains stable.

More reasons why a modern ERP system is needed for subscription models

The technical challenges for subscription models concern more than just a Backend together with the billing logic for subscriptions and an attractive sales Frontend. Subscription models additionally make it necessary to prominently display the advantages and the differences in comparison with the subscriptions of competitors.

Another thing that is likewise necessary, is a low level of technical complexity and no dead ends in the process to reduce the entry threshold. The consumer must have the feeling that he or she can get in easily but also get out again at once (try for free, cancel at any time). Under no circumstances should it be a subscription trap.

Furthermore, subscriptions should not only be run, but also adjusted over time. Thus customers are always pleased if they are repeatedly offered new or better products and services. Upselling and Cross-Selling improve sales as well as binding in the customer further. The prerequisite for this is knowing what customers actually want. An ERP system with a 360 degree perspective of the customer supports you in this. The same applies in the event of non-payment. The associated communication can be implemented in a modern ERP system with a fully documented customer history.

What are the advantages of implementing a subscription model with SAP S/4HANA?

The advantages of subscription models for companies in the commerce sector are obvious. But there are also many forms of added value for the customer. Thus, for example, customers get exclusive items, such as offers of discounts. In addition, they profit from a personalized form of address and individually tailored offers and content. Last but not least, subscription models permit precise supplying with products and services at the best possible time in each case.

Subscription models are the thing of the future – but only with a modern ERP system

All in all, subscription models are not just a ghost from the past in retail, but are a viable concept for the future and brings benefits to sellers and customers alike. But today such models only make sense if subscription solutions are managed digitally on the company side, hence with an up to data ERP system. Only then is it possible to handle the presumed extra cost and effort in an efficient and success-oriented way and to provide more customer satisfaction through subscriptions. And this in turn is the prerequisite for greater customer loyalty and better acquisition of new customers.

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