A featured contribution from Leadership Perspectives: a curated forum reserved for leaders nominated by our subscribers and vetted by the Construction Tech Review Advisory Board.

Vestel

New Customer Experience Journey: SUBSCRIPTION

We manage our business in a hyper-competitive landscape. Consumers are digitally empowered and feel forever time-starved. They have endless choices but limited time and budget. They encounter brands anytime and anywhere with their smart devices and screens. In such a landscape as a business owner or brand manager, you have to ask yourself how you catch the attention of the customer and stand out from the competition. Customer experience is the key answer if you want to disrupt the market or gain market share.

Customers have unchanging human needs. Basic human needs of today’s customer don’t differ from the ones of their ancestors who lived thousands of years ago. However, expectations never stay the same. Customers want greater convenience, better value, excitement, social connection, and meaning. They want to fulfill these needs in today’s retail arena.

In the old business model, companies aimed to “sell products”, the more you sell the more successful you were. But now greater sales numbers is not enough for being successful. Consumers demand meaningful experiences from brands. They don’t want to “buy” but experience that product. So the products evolve into services that have a continuous relationship with the customer. Simply put, the world is moving from products to services. So there is a huge opportunity for companies to shift their business models to something new, altogether– subscription models. With subscription models, you can convert your customers into subscribers who continue to succeed with your service over time, and you can turn your sales into ongoing value and revenue.

VHepyeni: New Subscription Model of Vestel

The 'V Hepyeni' model is similar to the subscription structure in the telecom sector where we offer our customers the choice to be technology subscribers.

Firstly, our subscription model was started for TV products to enable our customers to subscribe to cutting-edge TV they want. After 24 months of subscribing, our customers call the service desk and inform us they want to replace their existing TV with a newer model. Our service will take the new TV to customers, and will also take back the old TV. After TV products, we include cell phones in V Hepyeni portfolio with 18 months of subscribing. In this respect, our customers always enjoy using the latest technology.

Before starting the V Hepyeni project, we collected installment contracts signed between our stores and customers throughout two years. To create our own scoring algorithm for subscription, we analyzed these contracts and profiled our customers. The fundamental criteria are work and salary information, graduation level and property holding. According to our contracts, blue-collar customers pay back more than white collars, high school graduated customers pay back more than university graduates and similarly married clients spend a lot more than bachelors. We see that criteria scores are different from banks credit scoring system in Turkey. Banks give more score to people who have graduated from university, white collars and singles.

In addition to the scoring system, we use the data from past purchases and current data while applying the subscription model. By this way we can identify our customers in detail, we analyze their payment cycle, socio-demographic attributes, and current products. Using this total insight we could anticipate our customer needs and satisfy them with brand partnerships, new products, and campaign offerings.

In Vestel, we differentiate V Hepyeni customers as a premium segment. We give them specific privileges such as reaching a call center in the first order, 7/24 set up service, concert tickets, welcome calls and emails from an assigned customer service agent.

In the future, we will develop the V Hepyeni system with various additional benefits. We aim to provide different needs of the customer with a single subscription. For example, if the customer who subscribes to the washing machine sees that detergent is running out, the machine will automatically order the detergent, so our customer will be subscribed to the detergent.

Apart from the unique experience for customers’ side, the subscription model provides a sustainable revenue source for companies. For instance, when customers sign for 18/24-month subscription contracts, we can guarantee forward revenues. Also at the end of each contract, when customers start a new subscription, we take the old product from their house, renew them in our production plant, and sell them in our outlet stores. So this creates an important impact on the circular economy too.

In order to create long-term relationships with customers and turn them into loyal subscribers, every company should rethink about their standard processes, and transition their traditionally product-based company to a subscription-based revenue model. Subscriptions are exploding because billions of digital consumers are demanding access over ownership. If you don’t change your business model now, in a few years you might not have any business left to change.

The articles from these contributors are based on their personal expertise and viewpoints, and do not necessarily reflect the opinions of their employers or affiliated organizations.

Weekly Brief