Subscribers to Adobe’s Creative Cloud, Web-based software were left without access to Adobe’s many software products last Friday when the company had a database software failure.While software glitches were commonplace a few years ago, they can now be disastrous for software companies providing access on a subscription basis, mainly because any site or service outage threatens immediate and long-term revenues.Outages threaten immediate revenues most often because companies seek to appease frustrated members with refunds, or in Adobe’s case, “compensation” determined on a case-by-case basis. (Subscribers have to apply to be considered, which shows how complicated maintaining a SaaS subscription model can be.) Adobe’s 1.84 million subscribers pay anywhere from $30 to $75 a month for Creative Cloud, and a company with less sophisticated resources might be forced to offer a refund for a month’s subscription if their site experiences such an outage.Outages are also detrimental in the long-run, as they threaten retention rates and lifetime revenue rates because subscribers are going to be less likely to renew with each successive outage.This also shows the high-stakes service providers have over information providers when it comes to subscription models. If a site providing information goes down, it’s an annoyance; when a service site goes down, it becomes a major business impediment, so repercussions (and cost both financially and PR-wise) are greater.However, on the flip side, providing an invaluable service makes it easier to convert subscribers. So the moral might be, make sure you have an emergency plan in place now, and that your subscription price and bottom-line profits makes it possible to offer sufficient compensation in case you are forced to deal with an outage.Check out this previous post for tips on dealing with outages.
| 5 Ways Subscription Businesses Can Thrive in Uncertain Times
Taking strategic actions is the key to growing recurring revenue during uncertain times. This session reveals the few vital actions subscription business leaders should take immediately to focus their team and themselves on growth over the next few months.
This free webinar is April 15, 2 PM Eastern.