Kowalkowski and Ulaga (2024)

Industrial Marketing Management 117 (2024) 440–456
Contents lists available at ScienceDirect
Industrial Marketing Management

journal homepage: www.elsevier.com/locate/indmarman
Subscription offers in business-to-business markets: Conceptualization,

taxonomy, and framework for growth
Christian Kowalkowski a, b, *, Wolfgang Ulaga c
a
CBMI—Centre for Business Model Innovation, Department of Management and Engineering, Linköping University, Linköping, Sweden
b
CERS—Centre for Relationship Marketing and Service Management, Department of Marketing, Hanken School of Economics, Helsinki, Finland
c
INSEAD, Middle East Campus, Marketing Area, Abu Dhabi, United Arab Emirates
A R T I C L E I N F O A B S T R A C T
Keywords: The global Subscription Economy has grown tremendously in recent years. Subscription offers are today
B2B subscriptions increasingly regarded as a strategic imperative in many consumer industries. While business-to-business (B2B)
Recurring revenue models service firms have also adopted subscription models, goods-centric B2B players struggle to implement such of
Digitalization
fers. Against this backdrop, we (1) delineate what characterizes subscription offers in B2B markets, (2) present a
Servitization
Business model innovation
classification framework for B2B subscriptions, and (3) discuss how companies can leverage the potential of
Customer success subscriptions for growth. Relying on in-depth interviews with 27 executives responsible for subscriptions, we
outline four key characteristics and distinctive features of subscriptions and provide a refined definition. Next,
we develop a taxonomy that classifies subscription offers into four distinct categories based on two dimensions:
service focus and resource integration. This classification framework is essential as it adds depth and precision to
the analysis of B2B subscriptions. Without it, the assessment would be overly simplified and lacking in detail. We
also demonstrate how subscriptions can help firms seize growth opportunities and enhance the customer
experience. From a managerial perspective, this study highlights the need for fundamental changes in marketing,
sales, and other functions when moving to subscription offers.
1. Introduction control), Caterpillar (earth-moving machines), Grundfos (pumps),

Michelin (tires), NCR (point-of-sale terminals), Philips (medical de
Traditionally dominated by companies in the media, utilities, and vices), or Schneider Electric (energy and industrial automation), among
telecommunications industries, subscription offers have become a major many others. These firms are adding a host of adjacent, connected ser
growth engine for many B2B companies, too. Today, we see a wide range vices to their existing portfolio and introducing entirely new offers to
of firms venturing into subscriptions; that is, offers for which customers their markets. Second, many firms increasingly transition from trans
pay a recurring fee for access to a product or service (McCarthy, Fader, & actional sales to recurring revenue models, as illustrated by the demise
Hardie, 2017). In fact, both disruptors and incumbents in many con of perpetual software licensing in favor of Software-as-a-Service (SaaS)
sumer industries today increasingly rely on subscription offers, models. Third, product-based subscriptions enable customers to pay for
including music streaming provider Spotify, meal-kit expert HelloFresh equipment usage, including the support and services needed. All in all,
(food preparation), or insurtech Lemonade. Similarly, industry leader this is in line with a long-standing trend towards servitization in many
Sony offers gaming subscriptions above and beyond selling game con industries (Raddats, Kowalkowski, Benedettini, Burton, & Gebauer,
soles (PlayStation Plus), car manufacturer Volvo has ventured into 2019). In B2C, the emergence of the sharing economy has shown that
Mobility-as-a-Service (MaaS) with Care by Volvo, and Nespresso pushes consumers across the world seek access to and usage of products rather
its coffee subscriptions (Subscription+). than buying and owning products (Eckhardt et al., 2019). In business
In the B2B domain, we are witnessing a mirroring trend. First, fueled markets, too, customers increasingly move beyond investing in capital
by connectivity and the growing role of the Internet of Things (IoT), goods or buying services to access and use goods and services in their
traditionally goods-centric firms move into subscriptions. Consider ex operations to gain flexibility and pay for performance outcomes ach
amples such as Assa Abloy (locks, doors, and gates for building access ieved (Sjödin, Parida, Jovanovic, & Visnjic, 2020).
* Corresponding author.
E-mail addresses: christian.kowalkowski@liu.se (C. Kowalkowski), wolfgang.ulaga@insead.edu (W. Ulaga).
https://doi.org/10.1016/j.indmarman.2024.01.014
Received 15 May 2023; Received in revised form 19 December 2023; Accepted 19 January 2024
Available online 2 February 2024
0019-8501/© 2024 The Authors. Published by Elsevier Inc. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
C. Kowalkowski and W. Ulaga Industrial Marketing Management 117 (2024) 440–456
Despite subscription offers becoming a strategic imperative for a pricing and revenue models and how it engages customers and manages
growing number of B2B companies, extant research on subscriptions ongoing relationships.
mostly focuses on consumer markets (e.g., Danaher, 2002; Woo &
Ramkumar, 2018) or software companies (e.g., Cusumano, 2008; Guo & 2. Conceptual background
Dan, 2018). Against this backdrop, there is an important knowledge gap
concerning the nature and complexity of subscription offers in B2B subscription offers are situated at the intersection of three
manufacturing and other B2B industries. First, early generic definitions bodies of literature, which form the basis for our study: servitization,
of subscriptions (e.g., McCarthy et al., 2017) insufficiently reflect the customer value, and relationship marketing research. However, the
nature of such recurring revenue offers in business markets. In B2B, prevailing body of subscription research remains disconnected from
offers are generally more complex, involving supplier and customer these research streams. This divergence primarily stems from the
resources integrated throughout a collaborative process (Aarikka-Sten research’s deep-rooted association with B2C environments, where sub
roos & Jaakkola, 2012; Tuli, Kohli, & Bharadwaj, 2007). Second, scriptions are often regarded merely as a backdrop, and the primary
scholars have repeatedly called for recognizing the heterogeneity of focus is directed towards other areas of interest. For example, using
services in B2B research designs (e.g., Eggert, Hogreve, Ulaga, & various subscription contexts (media streaming, software, telecommu
Muenkhoff, 2014; Mathieu, 2001; Nordin & Kowalkowski, 2010; Ulaga nications, online dating, etc.), B2C research has assessed the impact of
& Reinartz, 2011). Along these lines, one would expect to see a sub advertising-based and subscription-based services (Prasad, Mahajan, &
stantial level of heterogeneity among subscription offers in B2B settings. Bronnenberg, 2003; Punj, 2015; Wlömert & Papies, 2016), optimal
Third, one may infer that the varying characteristics of subscription contract plan prices (Danaher, 2002), price menus for duration dis
offers also impact companies’ operations and functions, especially counts (Tian & Feinberg, 2020), effect on firm value (McCarthy et al.,
marketing and sales activities, such as offer development, pricing, or 2017), efficacy of free-trial promotions (Foubert & Gijsbrechts, 2016),
customer engagement (Danaher, 2002; Iyengar, Park, & Yu, 2020; the role of family plans (Desai, Purohit, & Zhou, 2018), and automatic
Pauwels & Weiss, 2008). Prior studies have shown that service growth software upgrades (Brecko, 2023). While McCarthy et al. (2017, p. 17)
initiatives have a substantial effect on such activities (Fischer, Gebauer, define subscription-based firms as “businesses whose customers pay a
& Fleisch, 2012; Ulaga & Reinartz, 2011). Therefore, there is a need to periodically recurring fee for access to a product or service,” we still lack
explore how different types of B2B subscriptions resonate with mar a comprehensive conceptualization and classification to account for the
keting and sales decisions. heterogeneity of subscription offers and build theory. To understand
Overall, B2B marketing research offers little to no insights into the their nature, we therefore draw on studies on servitization, customer
nature and heterogeneity of subscription offers. The lack of conceptual value, and relationship marketing.
clarity for characterizing subscriptions, along with the absence of dis
cussion on how companies can pursue subscription growth, represents a 2.1. Literature on servitization
significant knowledge gap. Against this backdrop, we seek to explore the
nature of subscription offers and shed light on their implications for First, in line with servitization literature, subscriptions entail a shift
management. More specifically, we investigate three research questions: in a company’s value proposition and market offer by which it becomes
increasingly service-centric (Raddats et al., 2019). While the emergence
1. How can B2B subscriptions be characterized to capture their breadth of the current subscription economy has been enabled by digital trans
and depth? formation, servitization has been prevalent in B2B markets for decades.
2. How can B2B subscriptions be classified to capture the heterogeneity Traditionally, companies have primarily focused on adding product-
of such offers? related services like maintenance, repair, and spare parts sales to their
3. How can B2B companies leverage the potential of subscriptions for portfolio (Ulaga & Reinartz, 2011). More recently, digital technologies
growth? have enabled more wide-ranging transitions to more advanced services,
connecting ecosystem actors (Dalenogare, Le Dain, Ayala, Pezzotta, &
We address these research questions by drawing on depth interviews Frank, 2023; Kohtamäki, Parida, Oghazi, Gebauer, & Baines, 2019) and
with 27 managers and discussions with 23 managers in two workshops focusing on achieving better business outcomes (Macdonald, Klei
to make several contributions. To the best of our knowledge, this study is naltenkamp, & Wilson, 2016; Sjödin, Parida, Jovanovic, & Visnjic,
the first to investigate how B2B firms can grow through subscription 2020). The shift to subscriptions can be seen as part of this fundamental
offers. We define subscriptions as market offers where customers and trend in which customers shift from paying upfront capital investments
providers mutually engage at various levels to provide access and usage (CAPEX) to operational expenditure (OPEX) in recurring payments.
or achieve outcomes in return for a periodically recurring fee. We Tracking its progression, Vandermerwe & Erixon (2023) argue that
identify four common characteristics of subscriptions and differentiate servitization today means moving customers from products to sub
them from other offers with recurring revenue models. Collectively, scription offers. Facilitated by cloud technologies, firms can provide a
these characteristics open the door to attractive avenues for suppliers to wide array of “anything-as-a-service” subscriptions, which also has a
empower customers and create value in business markets. We also major impact on traditional product-centric B2B industries.
develop a classification framework that categorizes subscriptions into The rapidly growing body of servitization research (e.g., Guedes,
four types based on their service focus (access or outcome) and resource Patel, Kowalkowski, & Oghazi, 2022; Heirati, Leischnig, & Henneberg,
integration (one-sided or mutual). Such frameworks play an important 2023; Yang & Leposky, 2022) has provided several taxonomies and
role in theory building (Doty & Glick, 1994), and we hence close the other frameworks to provide granular insights into this complex and
abovementioned knowledge gap with our taxonomy. Our research heterogeneous phenomenon. Oliva and Kallenberg (2003) service space
shows how subscription offers can help companies drive growth by taxonomy is potentially the most influential, distinguishing between
testing innovations, accelerating monetization opportunities, and product-oriented and end-user process-oriented services on one hand
enhancing customer experience by transforming from a linear, trans and transaction-based and relationship-based services on the other.
actional model to a dynamic relationship centered around the customer. Many other generic frameworks also draw a difference between product
To be successful in the subscription economy, managers must recognize and process-oriented services (e.g., Eggert et al., 2014; Raddats & Eas
that this effort extends well beyond portfolio management and may have ingwood, 2010; Ulaga & Reinartz, 2011), a categorization originally
far-reaching effects on the company’s capabilities, processes, and proposed by Mathieu (2001). Similarly, several studies suggest that
structure. Seizing this growth opportunity not only necessitates novel servitization involves a shift from transactional to relational marketing
approaches and strategies for innovation but also affects the firm’s (e.g., Neely, 2008; Penttinen & Palmer, 2007). Other dimensions to
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differentiate among servitization offers and strategies include input- the way from flat recurring fees to outright pay-per-use pricing (e.g.,
based versus output-based services (e.g., Neely, 2008; Raddats, 2011; consumables, billable hours, etc.). Interestingly, in line with this shift,
Ulaga & Reinartz, 2011), standardized versus customized offers (e.g., such new subscription pricing metrics also deeply resonate with cus
Matthyssens & Vandenbempt, 2010; Stremersch, Wuyts, & Frambach, tomers’ willingness-to-pay, opening new avenues for providers to cap
2001), and the multi-vendor orientation of services (Davies, Brady, & ture more value from their offers (Zuora, 2022). Such a perspective also
Hobday, 2006; Raddats & Easingwood, 2010). Furthermore, some has greater potential for achieving long-term competitive advantage due
studies have specifically delved into particular service offers or strate to closer alignment with customers (Chesbrough, Lettl, & Ritter, 2018).
gies, such as Windahl and Lakemond (2010) solutions framework or
Coreynen, Matthyssens, and Van Bockhaven (2017) taxonomy of servi 2.3. Literature on relationship marketing
tization pathways through digitization.
Overall, these classifications have helped to advance servitization Finally, subscriptions imply a further shift from transactions to
research, and the same needs to be done for subscriptions. While cloud- embedded relations as companies derive revenue from creating and
based subscriptions are increasingly at the core of servitization today sustaining long-term customer relationships (Vandermerwe and Erixon,
(Vandermerwe and Erixon, 2023), existing research does not provide 2023). The importance of relationship marketing was acknowledged
sufficient insights on how to understand these digitized offers. already in the early servitization literature (e.g., Gebauer, Fleisch, &
Friedli, 2005; Matthyssens & Vandenbempt, 1998; Oliva & Kallenberg,
2.2. Literature on customer value 2003; Vandermerwe, 1994). Drawing on the emerging relationship
marketing literature (e.g., Christopher, Payne, & Ballantyne, 1991;
Second, subscriptions profoundly impact managers’ perspectives on Grönroos, 1990), servitization took on a more strategic dimension, with
customer value and pricing strategies and tactics. With respect to a pronounced emphasis on placing customers at the core of the business.
customer value, Eggert, Ulaga, Payne, and Frowne (2018) recall that our Several customer-centric concepts are relevant to understanding
understanding of customer value has undergone a fundamental change what subscriptions mean for companies. As information technology (IT)
in recent years, shifting from a focus on resource exchange and value in advanced, the term customer relationship management (CRM) emerged
exchange to an emphasis on resource integration and value in use. in the IT vendor and practitioner communities in the mid-1990s. CRM
Within the exchange view of marketing, a supplier manufactures and was considered a strategic approach focusing on the development of
distributes goods and services that are embedded with value. From this appropriate relationships with key customers and stakeholders. It le
perspective, a supplier creates and determines value. This value can then verages the synergy between relationship marketing strategies and IT
be exchanged. Therefore, B2B marketers must understand, communi and provides enhanced opportunities to use data and information to
cate, and deliver value to their customers (Anderson & Narus, 1998). understand customers and create value with them (Payne & Frow,
From this perspective, value in use can only occur after the exchange 2005).
process, and it materializes within the customer’s sphere (Grönroos & While CRM has been criticized for sometimes being too internally
Voima, 2013) by integrating the customer’s own resources with the oriented, with “dark side” practices including financial exploitation,
resources acquired through exchange. From a value-in-exchange view, a information misuse, and customer lock-in (Frow, Payne, Wilkinson, &
business customer captures value created in its own use situation. Young, 2011; Saarijärvi, Grönroos, & Kuusela, 2014), it served as a
Over time, the service-dominant (S-D) logic of marketing (Vargo & springboard for customer experience (CX) management. Drawing on
Lusch, 2004, 2008, 2016) challenged this traditional view of marketing, data from customer touchpoints across various market channels along
arguing that value cannot be delivered to a customer. Instead, according the customer journey, CX management serves to give a single view of the
to S-D logic, value is “determined by the customer on the basis of value provider for the customer, measure customers’ reactions, improve of
in use” (Vargo & Lusch, 2004, p. 7). At its core, S-D logic thus empha fers, and, ultimately, strengthen the relationship (Frow et al., 2011;
sizes the subjective value in use and resource integration rather than Hilton, Hajihashemi, Henderson, & Palmatier, 2020). Increasingly, in
resource exchange. Hence, from an S-D logic angle, it is important to teractions between customers and suppliers take place through various
note that it is the customer who perceives and determines value. Further, digital and mobile touchpoints like apps, which are also integrated with
value is co-created through mutual resource integration. Finally, from ecosystem partners, exemplified by Salesforce’s SaaS offers (Vander
this perspective, business marketers’ role is to unleash opportunities for merwe and Erixon, 2023). CX research increasingly acknowledges that
value co-creation in a customer’s use situation. Thus, the resource interactions in B2B contexts are also “experienced” and that companies
integration process shifts from the customer’s to the joint sphere. That is, can design these experiences to influence the customer at different,
the customer and the provider jointly create value in use, and both increasingly digital touchpoints (Witell et al., 2020).
parties share value co-created together in the customer’s use situation. Similarly, the concept of customer engagement arose mainly in
The fundamental distinction between value in exchange and value in response to the rise of social media and other digital technologies and
use is important in the subscription economy. Such offers deeply reso platforms, which enabled companies to measure ancillary behaviors
nate with a value-in-use perspective. Subscriptions are firmly grounded more easily (Hilton et al., 2020). In B2B, customer engagement refers to
in ongoing value creation throughout all stages of a subscriber’s journey. customers’ connectedness and disposition to invest in interactions with
As customers’ value perceptions and willingness-to-pay evolve over the provider (Ekman et al., 2021). It arises through interactive and co-
time, their providers’ subscription offer configurations evolve to align creative experiences between customer and provider beyond purchase,
with their clients’ shifting expectations (Vandermerwe and Erixon, resulting from motivational drivers (Brodie, Hollebeek, Jurić, & Ilić,
2023). Clearly, in a subscription world, customers and providers co- 2011; Van Doorn et al., 2010).
create value in the customer’s use situation, and resource integration Overall, Hilton et al. (2020) view CRM, CX, and customer engage
processes occur in the joint customer-provider sphere (cf., Grönroos & ment as evolutions in relationship marketing practice in response to
Voima, 2013). shifts in technology and the business environment. Driven further by
Grounding subscriptions in a value-in-use perspective has important technological changes that reduce customer dependence on providers
implications for pricing strategies and tactics. As companies move from (e.g., zero-cost distribution and utilization-based billing), customer
a conventional value-in-exchange perspective to a value-in-use view, success management (CSM) not only builds upon these customer-centric
they also transition from a transactional pricing perspective to a recur practices but also takes a step further to better align the interests of both
ring revenue perspective (Kowalkowski & Ulaga, 2017). Rather than parties by proactively prioritizing customers’ experience and engage
relying on the pricing of individual transactions, the focal interest shifts ment. The aim is to ensure that customers realize the full value potential
to the customer’s value in use captured in novel pricing approaches all of the offer (Hilton et al., 2020; Hochstein, Rangarajan, Mehta, &
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Kocher, 2020). CSM emerged in the SaaS industry and has quickly half of firms were at the early stages of experimentation and deploy
gained traction in traditional B2B industries as they move towards ment. These firms reported on recurring revenues of either less than two
digital services and recurring revenue models (Hochstein et al., 2023). years or no revenues at all.
From a strategic standpoint, these offers heavily rely on effectively Participants held various functions, from business development and
reducing customer churn. Therefore, CSM becomes pivotal in supporting product management to services and customer solutions, among others.
customers throughout the subscription usage process (Hochstein, This diversity reflected the lack of well-established roles and re
Chaker, Rangarajan, Nagel, & Hartmann, 2021; Ulaga & Kowalkowski, sponsibilities for managers in charge of subscription offer development,
2022). marketing, and sales in many firms. Further, early on, it became
apparent that subscription offers simultaneously touch on different
3. Research method and data collection organizational functions, and those leading development, marketing,
and sales of subscription offers greatly varied across firms in our sample.
3.1. Stage 1 Hence, when selecting participants at this stage of our research, we
probed into the extent to which they were knowledgeable and involved
In the present research, we opted for a two-stage research design. In in subscription offer development and commercialization. In several
the first phase of our study, we conducted two immersive workshops cases, we asked initial informants to refer us to colleagues elsewhere in
over twelve months with managers in charge of launching and managing the organization to establish high knowledge and involvement levels. To
new subscription offers in their respective firms. Our main goal at this this end, we specifically asked which roles and responsibilities they held
stage was to familiarize ourselves with the phenomenon investigated, and which concrete actions they performed with respect to subscription
gain first ideas about potential dimensions of our taxonomy, and identify offers.
those managerial issues that matter most when designing, launching, Workshops lasted two days and a half each and were led by one
and managing subscription offers in business markets. Ultimately, dur member of our research team and an outside facilitator. At the end of
ing this phase, we aimed to ensure that our interview guide’s structure each workshop day, both facilitators wrote up memos to capture key
and questions resonated well with respondents during subsequent depth insights gained throughout the day. Immediately following the work
interviews in the second stage of our research. Working with attendees shops, facilitators compared their respective memos and summarized
through all subscription offer aspects—from ideating concepts, config outcomes. Collectively, workshops facilitated in this first stage of our
uring, pricing, and launching offers to monitoring deployment based on research aimed at gaining initial insights for answering our three
tailored subscription metrics and dashboards—these workshops pro research questions, that is, (a) explore key subscription characteristics
vided us with insights into the breadth and depth of subscription offers that capture the breadth and depth of such offerings, (b) identify early
and managerial practices. on potential dimensions that might serve as a basis for classifying sub
At this exploratory stage of our research, we relied on a purposive scriptions and capture their heterogeneity, and (c) investigate how firms
sample. Overall, twenty-three professionals from twelve companies can rely on subscription offerings for unleashing recurring revenue
attended the workshops: eleven in one workshop and twelve in the growth in their respective firms. Workshops further served as a foun
other. In all, companies ranged from a variety of manufacturing in dation for crafting our interview guide used in depth interviews in Stage
dustries, such as aerospace, defense and security systems, elevators, 2.
industrial automation, oil and gas drilling equipment, packaging mate
rials, and video projectors, among others. Our workshops also included 3.2. Stage 2
pure B2B service firms (i.e., equipment distribution and leasing). We
ensured that all firms shared several commonalities. Companies were all In the second stage of our research, we gathered data via semi-
involved in B2B markets. All firms were experienced in developing and structured, in-depth interviews with executives responsible for sub
selling B2B subscription offers. At the same time, we also ensured that scription initiatives (Appendix A). We carefully elaborated our purpo
managers reported on various degrees of expertise with subscriptions, sive sample using the following theoretical sampling criteria: (1) market
from early experimentation in cooperation with lead customers to leaders with a proven track record of service innovation; (2) firms with
established subscription offers for experienced clients. Approximately different levels of subscription maturity to gain a richer picture of the
half of the firms had already successfully launched and managed sub phenomenon; (3) access to key respondents with first-hand experience
scription offers in their organizations, documented by a proven track of (and accountability for) subscription initiatives; and (4) companies
record of recurring revenue streams over two or more years. The other representing a wide range of industries to increase confidence in the
Table 1
Characteristics of companies and participants in Stage 2.
Firm industry Informant position Subscription maturity
level
Climate control President Global Service Early

Commercial kitchen and Group Vice President, Service Early
laundry
Heat transfer Global Services Director Early
Network communications CTO Early
Power equipment a) Senior Director Global Service; b) Product Manager Fleet Services Early
Pulp and energy solutions a) Vice President, Pulp and Engineering; b) Director Performance Agreements; c) Senior Manager Life Cycle Solutions Early
Construction equipment a) Service Director EMEA Region; b) Managing Director, Sales Company; c, d) Product Manager Telematics Intermediate
Maritime Head of Business Development, Global Service Intermediate
Mining Senior Manager, Digital Service Solutions Intermediate
Materials handling Manager Connectivity Intermediate
Queue management systems Product Manager Cloud Solutions Intermediate
Commercial vehicles Strategic Product Planning Advanced
Medical imaging Vice President, Managed Services Advanced
Packaging solutions a) Senior Capability Development Manager; b) Global Training Manager; c) Senior Product Manager Digital Advanced
Robotics a) Global Product Manager, Connected Services; b) Global Product Manager, Digital Services; c) Business Development Advanced
Customer Service
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transferability of findings. Our sample size (n = 15) is consistent with the research that did not follow this three-stage process. Building on
McCracken (1988) sizes recommended for exploratory qualitative insights from Stage 1, we compared respondents’ views on subscriptions
research, and our sampling process ceased at theoretical saturation. and their unique attributes. Throughout this analysis, we engaged in
Interviews lasted, on average, 77 min (ranging from 52 to 110 min), ongoing discussions, made revisions, and refined the labeling of these
and we recorded and transcribed them verbatim. First, respondents characteristics. Follow-up discussions with selected respondents served
described their business and market environment. Next, we asked them as member checking.
about the key characteristics of their subscription business model, The study participants were offered a presentation of our findings
including overarching strategic issues. The key sample characteristics in and a summary report that included the definition, conceptualization,
Table 1 show the informants representing companies operating in framework, and key areas for subscription growth. While several par
various markets. Overall, we conducted 25 interviews with 27 execu ticipants had changed positions or companies, we could present our
tives from 15 European and Asian firms, ranging from approximately research for managers from five of the 15 firms, either during online
250 employees to almost 100,000 employees. If access to more than one one-to-one meetings or as part of regular management meetings with
decision-maker involved in the subscription business was possible and multiple participants. As these meetings took place more than a year
deemed relevant, interviews were either conducted with each respon after the original interviews, they also proved an opportunity to verify
dent or one interview was conducted with all of them participating. the accuracy of their original comments, probe our framework and
Similar to Stage 1, several initial informants referred us to colleagues classification of subscriptions, and receive an update on the progress of
who were either more knowledgeable or had relevant complementary the subscription business. While the managers agreed with the defini
expertise. Most decision-makers had extensive international experience, tion, conceptualization, and overall structure of our framework, we
and the subscription initiatives discussed were operational in markets adjusted the maturity level of one of the firms and the classification of its
across Western and Eastern Europe, North and South America, Asia, the main subscription offer based on additional insights and progress. In
Middle East, and North Africa. As a result, during the selection of key summary, the procedure gave us the confidence that our findings rep
informants for our research, we assessed their expertise and participa resented the essential elements of B2B subscription business models.
tion in subscription offer development and commercialization. In some
instances, we also requested initial informants to introduce us to col 4. Study findings
leagues in other parts of the organization to ensure a comprehensive
understanding of their knowledge and involvement levels. For each In this section, we present our findings in three parts, each corre
company, we assessed the level of subscription maturity: (1) Ear sponding to one of the research questions. As we delve into the char
ly—focus on experimentation, collecting the first experience; (2) Inter acteristics and various categories of subscriptions, it becomes evident
mediate—selected, recently started commercialization, iterating and that there are several motives for firms to move into these offers. First,
launching new/revised subscriptions, and focusing on growth; and (3) decision-makers typically highlight economic, competitive, and
Advanced—several years of proven track record like recurring revenue customer-related arguments also found in other servitization initiatives
flowing and subscriptions being a profitable and growing part of the (e.g., Oliva & Kallenberg, 2003; Raddats et al., 2019). Subscriptions
business. enable new recurring revenue streams and help companies fight com
Following a discovery-oriented approach, we used NVivo software to moditization and build a longer-term relationship-based business. Sec
perform open coding to identify key issues and themes. Employing the ond, there is also subscription-specific rationale, such as the ability to
criteria suggested by Tuli et al. (2007) and Ulaga and Reinartz (2011), conduct real-life experimenting with pricing and service features (new
we leaned on three main indicators for deriving categories from our information, analytics, plugins, etc.) and new digital touchpoints that
initial codes: (1) whether an insight can be relevant beyond a very allow more frequent interaction and customer stickiness. As many cus
specific context; (2) whether several informants provided an insight; and tomers seek convenience and expect all equipment to be connected,
(3) whether an insight provided interesting and useful conclusions subscriptions are seen as means through which the firms in our sample
beyond the obvious. We conducted a thorough examination of raw data, can provide new forms of data-driven offers by extracting more data
primarily consisting of interview transcripts. Our approach involved points and harnessing more powerful analytical tools. Finally, while
multiple readings of each interview, during which we identified phrases these motivations are the same across the board, others are more
and passages relevant to our research inquiry. Through this process, we industry-specific, including a focus on cybersecurity, compliance, and
discerned first-order categories of codes that captured the respondents’ the provision of standard operating procedures. Overall, subscription
perspectives in their own verbiage. For instance, statements made by initiatives typically originate from the companies’ service or digital
participants such as, “In this case, we have decided not to develop business units. These initiatives align with their overall market strategy,
anything ourselves, but to team up with a partner to obtain the platform which emphasizes service-led growth and the cultivation of closer
value and provide our experience instead,” were coded under the label customer relationships, even if some ventures were more bottom-up or a
“New partnerships with software firms.” response to specific customer requirements.
We then moved to axial coding, searching for relationships among
and between the categories, allowing us to assemble them into higher-
4.1. Characterizing subscription offers
order themes (Gioia, Corley, & Hamilton, 2013). Our analysis revealed
seven second-order themes that underwent further refinement through
In contrast to more established service portfolios, which are gener
the incorporation of insights from the literature and additional sources,
ally well-integrated into product companies and structured accordingly,
including online materials and internal documents. Finally, selective
the subscription offers in our sample display far more heterogeneity. The
coding led to the development of aggregate dimensions, which operated
diversity in informant positions shows that subscription initiatives can
at the most abstract level within our coding framework. In this phase, we
be managed at very different parts of an organization and at different
drew upon insights into prior literature and engaged in discussions with
hierarchical levels, which can depend on its market offer portfolio,
and presentations for colleagues to inform the creation of theoretically
structure, size, servitization strategy, and subscription maturity. Over
sound dimensions. As a result, these dimensions extended the founda
all, however, our data reveals several common denominators regarding
tion laid by the first-order categories and second-order themes. They
the nature of subscription offers. First and foremost, subscriptions are
provided a theoretically grounded and practically applicable categori
based on a recurring revenue logic. As a senior manager declared,
zation that aligns with the taxonomy and introduction of B2B sub
scription offerings (see Appendix B). “My main driver is to find a model with recurring revenues, rather
The identification of subscription characteristics was the only part of than having to persuade customers and make single sales every time.
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Trying to explain the value to a customer and let the money flow, customers, thus resulting in heightened levels of willingness-to-pay. As a
even as we sleep.” manager explained, this changes the conversation with customers:
Most respondents explained that subscriptions in this regard are not “If you sell trucks, the customer can easily say ”Yes, but if I buy from
fundamentally different from other services with recurring revenues like them, I’ll get a truck that lifts the same weight, and it’s 10%
service level agreements (SLAs), leasing, and rental, which also provide cheaper,” and you don’t have much to play with there. Now, as a
increased stability and enable customers to free up investments. None seller, you can say, “Yes, but let’s put the truck price aside for a
theless, leasing and rental are means through which customers pay moment and consider the significant efficiency gains we can offer
specifically for the use of equipment and other tangible assets over a you.” So, it’s clear that you’ll have a different discussion with the
specified period of time. In the case of such offers, customers mostly customer.
value the flexibility of access and use of goods without investing
Before moving to subscriptions, many companies in our sample had
themselves (Ambroise, Prim-Allaz, & Teyssier, 2018). Value-creating
not developed a clear roadmap for crafting their offers and choosing
activities above and beyond providing these core benefits are very
among different pricing approaches. For example, recognizing that most
limited in scope. Similarly, conventional service agreements, just like
customers did not use all available features in its offers, the materials
warranties, are generally sold like a ‘service product’ for a well-defined
handling provider we interviewed shifted from one “monolith” digital
period, such as one or three years. In contrast, subscriptions reveal
service package to several smaller fleet management subscription bun
several interesting differences. For example, subscription offers natu
dles. Interestingly, the two main brands of the commercial vehicle
rally evolve on a continuous basis. In the case of subscriptions with a
manufacturer in our sample had different approaches to subscription
digital offer component, new attributes and features are constantly
configuration. One brand offered a complex menu with numerous op
added. Today’s subscriptions further provide customers with the flexi
tions, while the other had opted for a heavy package front-loaded with
bility to cancel, upgrade, or downgrade offers at any time (Desai et al.,
many features and only a few options. Over time, their approaches
2018; Vandermerwe and Erixon, 2023). Such offers typically allow for
became more similar. The complexity of a diverse option menu smor
high levels of customization. In short, as one of the managers pointed
gasbord approach confused customers, while the one-size-fits-all
out, subscriptions equate to “business made easy.” In short, subscription
approach made customers reluctant to pay for a comprehensive offer.
offers remove customer effort and open new value-creation
Focusing on a few subscriptions, based on a clear value proposition and
opportunities.
easy-to-understand pricing, made it more straightforward for customers
Beyond sharing similarities with other recurring revenue services
to understand the offers and for salespeople to sell them.
and benefiting from several unique characteristics, subscriptions also
Against this backdrop, we define subscriptions as market offers where
open new avenues for both customers and service providers in terms of
customers and providers mutually engage at various levels to provide access
joint value creation and engagement throughout the end-to-end
and usage or achieve outcomes in return for a periodically recurring fee. Our
customer journey (Hochstein et al., 2021). Beyond continuous revenue
interviews reveal the extent to which subscriptions allow companies to
streams, subscriptions trigger an ongoing flow of data and enable con
create and deliver value for business customers above and beyond other
stant communication throughout all touchpoints, thereby substantially
recurring revenue models. Overall, we identify four key characteristics
enhancing the customer experience (CX):
of subscription offers that open the door to attractive avenues for sup
“The value proposition is suddenly being enhanced, the time to react pliers to create and deliver value in business markets (see Table 2). First,
is much faster, and the relation with the customer stronger… There subscriptions establish a direct link to customers. Consider the example
are much more frequent touchpoints, I would say, whether through of the material handling provider in our sample. By equipping forklifts
physical visits by a technician, phone interactions, or other means. with sensors and collecting usage data on forklift usage, the firm can
This places the business top of mind for the customer.” now offer a host of value-adding services wrapped around their capital
goods. Yet, the supplier also now tracks who owns the forklift, where the
At the same time, the continuous value-creation imperative puts
equipment is, and how it is being used. This Direct-to-Customer (D2C)
increased pressure on the provider to educate customers, respond to and
link greatly enhances suppliers’ customer intimacy, especially in mar
shape their ever-growing expectations, and steer them to the right out
kets where manufacturers rely on intermediaries for product sales and
comes for jointly unleashing value-creation opportunities. Respondents
where third parties provide field services on behalf of suppliers (cf.,
highlighted that subscriptions allow customers always to have the most
Fischer et al., 2012). In such contexts, subscriptions create and enhance
recent offer and updated tools and software, which is in stark contrast to
direct touchpoints with customers. Intermediaries often consider ser
traditional services sales:
vices as their home turf and a critical revenue source for themselves,
“If you go to those sites after three, four, five years, in many cases, thus often jealously protecting the customer relationship (Kowalkowski
the software is actually not used anymore. So, from our perspective, & Ulaga, 2017). Subscriptions can hence provide companies with unique
we cannot really have a kind of continuity of the business; we are not opportunities for gaining critical data on their installed base and
communicating with the customer; it is not really of benefit after the customer operations.
one-time sale. And from the customer perspective, they’ve bought
something, installed it, invested time and money, and after three or
four years typically, they are no longer getting the benefits from it.” Table 2
Subscription characteristics and value creation avenues.
Another benefit of subscriptions is dynamic offer configuration,
Subscription Value creation avenues
which in many cases can be done by the customer. Subscriptions can
characteristics
adopt multiple configurations of offerings, such as a ‘good-better-best’
design or a baseline offer complemented by distinct packages adapted to Direct Customer Direct-to-Customer (D2C) approach enables knowledge of
Access suppliers’ installed bases and customer operations.
industry verticals (Vandermerwe and Erixon, 2023). Likewise, managers
Digital Data Combination of analog and digital data provides deep
may choose from diverse price formats (e.g., ‘all-you-can-eat’ or ‘pay- Generation customer insights.
per-use,’ among others) and individual pricing metrics, allowing them to Offer Digitization Digital content enhances personalization and continuous
better explore and understand customers’ willingness-to-pay through offer improvement for maximizing customer value and
capturing willingness-to-pay.
iterative pricing experiments. This flexibility was seen as further
Cloud-Based Offer Ubiquitous access reduces customer investments, increases
enabling vendors to tailor pricing approaches to customers’ specific Access flexibility and unlocks cost savings and productivity gains.
contexts and select pricing metrics that are truly meaningful to è Customer empowerment and success
445
Second, the above-mentioned direct link enables vendors to remotely amount, you will still be charged for the full amount. If you exceed
generate, access, and use real-time data that complements and enriches the allocated quantity, additional costs will apply.”
traditional data sources, such as service field technicians or sales engi
In contrast, outcome-based offers like asset productivity optimiza
neers. This provides the foundations for gaining more fine-grained
tion, robotics-as-a-service, and medical imaging all have pricing models
customer insights and accelerates a continuous value-creation
tied to the customer’s realized value in use, such as pay per downtime
flywheel (Ulaga & Reinartz, 2011). Third, this process, in turn, fosters
avoided, cyber secure equipment, or output produced. Overall, the
a growing digitization of offers. In business markets, suppliers increas
managers in our study emphasized that B2B subscriptions build on and
ingly integrate hardware and software, data and analytics, into a
extend other recurring revenue services (e.g., SLAs, leasing/rental).
blended offer (Paiola & Gebauer, 2020). Consider the example of the
Many subscriptions not only provide access and usage of a capital good,
construction equipment supplier in our sample. The manufacturer’s
software, and so forth; they also often heavily focus on outcomes ach
heavy machines show an increasing software content, they are equipped
ieved. In the words of a senior digital solutions manager,
with multiple sensors, and the company actively pursues the growth of
predictive analytics services built around its machines. This trend fa “In this kind of subscription model, we are talking about mainte
cilitates the development of a host of fluid, dynamically evolving ser nance through software. So, for example, collecting the information
vices that can be constantly reconfigured and scaled either up or down. of the equipment and analyzing it in the cloud, offering customers
Here, we see that the customer is also an active co-creator of value, able predictive measurements of what they should be doing to keep the
to customize offers to individual use situations actively. Fourth, moving equipment and process up and running. So, in a way, their avail
data and processes to the cloud provides customers with ubiquitous ability; when do they need to change something? If something hap
access without having to own content or infrastructure. On-demand pens, what then? Doing the job or solving with the data they’ve
availability of services enables customers to free up investments and already got there, making corrections, or solving problems faster.”
achieve cost savings and productivity gains hitherto difficult to unlock
Our interviews further reveal a second dimension for classifying
(Vandermerwe and Erixon, 2023). Collectively, these four characteris
subscriptions: the resource integration between provider and customer,
tics and value creation avenues empower customer roles in the value
which refers to “the extent to which the processes of supplier-customer
creation and delivery process. Subscriptions can hence automate certain
interaction act to integrate resources for the customer’s benefit” (Mac
aspects of the process, reducing customers’ workload and enabling them
donald et al., 2016, p. 106). This resource integration may be largely
to focus on higher value-added tasks. In addition, they provide cus
one-sided, in case one of the parties is responsible for the process, or
tomers with real-time insights, allowing them to make more informed
mutual, which means that the process shifts from one of the actors’
decisions about their operations. The subscriptions in our sample all
domains to the joint sphere, which means that both parties actively
share these characteristics and value-creation avenues, although in
engage throughout the subscription process. Many B2B subscriptions
different combinations and to different extents.
rely on extensive interactions between customers, service providers, and
technology interfaces across multiple touchpoints. Here, supplier and
4.2. Taxonomy of B2B subscription offers
customer combine their activities and resources through a joint resource
integration process to create value. A wide range of subscription offers
Having identified common characteristics among subscription offers,
requires mutual resource integration throughout the customer journey
we next move to developing a taxonomy. Managers also acknowledged
to ensure customer success. Examples include cyber-resilient vessels,
that subscriptions could take different shapes. Several companies in our
condition-based maintenance based on online performance monitoring
sample provide a narrow range of different subscription offers, often
and control of corrective actions, remote support through augmented
based on a similar ‘good-better-best’ portfolio logic, as it is common
reality technology, and on-the-job training:
place for many industrial service SLAs (e.g., lite, pro, and max or bronze,
silver, and gold levels). In some cases, companies provide a wide range “The customer subscribes to our content, and we assist them in
of services, as in the case of the medical imaging firm, which offers integrating it into their platform. We need to maintain an ongoing
subscriptions ranging from speech recognition to advanced enterprise dialogue and follow-up with the customer. What’s the next step?
imaging solutions. What should we do now? What opportunities are available? … We
To understand the heterogeneity of subscription offers, we specif can also see error codes and how customers are operating our
ically probed into dimensions that allow for meaningful differentiation equipment. This way, even if the customer claims they are trained,
among offers. Our content analysis clearly identifies two distinct yet we can see that: okay, they are trained, but they are still not doing it
complementary dimensions along which executives clearly distinguish correctly. The operator—third shift every odd week—is making a
subscription offers. The first dimension refers to whether the provider’s mistake.”
value proposition is grounded in the promise to provide access to a
Most managers highlighted that subscriptions provide their firms
service or achieve an outcome. Subscriptions like simulation software for
with a unique opportunity to engage with their customers. Interestingly,
mining operations, speech recognition reporting systems, truck moni
many of them also consider one-sided resource integration as valuable in
toring and data, and geofencing for vehicle tracking are all based on the
this regard. In these cases, most activities are fully automated (e.g.,
premise that customers will have continuous access to the service,
software access) or reliant on interaction with technology rather than
whether it is pay per period, pay per use, or pay as you go or grow.
humans (e.g., telematics dashboards). This implies that a mutual
Pricing models are hence volume-based, focusing on charging for access
resource integration effort may not be needed to provide real-time
to a specified capacity or quantity, such as the number of connected
customer data and deeper customer insights. It gives vendors the op
devices, number of users, number of service activities, or cloud storage
portunity to continuously refine and reconfigure their subscription
space:
portfolios, identify opportunities for additional product and service
“We have decided to charge for appointments, which are booked needs, and strengthen the overall relationship:
meetings that may not always take place, and visits, which are en
“We have this learning platform for video, and here we expect cus
counters with someone. Both visits and appointments can be physical
tomers to have an on/off behavior. It’s actually not something we’re
meetings or video meetings. These are organized into bucket tiers,
trying to prevent in this case. It’s completely natural that ‘now I’m
where you purchase, for example, 10,000 visits and 5,000 appoint
training a team, now I’m satisfied and don’t need any more, and so
ments every month at a fixed fee. If you use fewer than the allotted
on.’ However, we still believe that we have a closer relationship with
those customers than we do today with instructor-led training.”
446
Increasingly, advances in artificial intelligence (AI) can help com send information between different departments in hospitals and
panies automate service processes and personalize offers and in between hospitals…Larger services that contain a lot of data often
teractions (Huang & Rust, 2021). This enables one-sided resource become so much more complex because the information that is being
integration, either the supplier performing activities on behalf of its handled is so much more complex as well.”
customers or customers doing more things for themselves. Nonetheless,
Stepping Stones are often the foundational elements in the devel
despite cloud-based offer access, managers pointed out that mutual
opment of a subscription offer portfolio. Customers typically subscribe
resource integration with ‘high-touch’ interactions is often needed to
to a predetermined volume—be it connected units, employees, or acti
integrate tailored offers and ensure continuous value creation. Offers
vities—without surpassing the agreed limit. Owing to the manageable
that at first glance may seem similar, such as video surveillance and
complexity and advanced digitization, vendors have the agility to adjust
robot subscriptions in our sample, which are both outcome-based
the portfolio, altering price tiers and features with ease. As illustrated in
product-as-a-service business models, in fact, differ when it comes to
the speech recognition example, customers gain considerable advan
resource integration. For example, customers can plug in new surveil
tages in speed and automation, allowing for the servicing of an increased
lance devices on their secure networks themselves, and the subscription
patient count. Additionally, the subscription might integrate into a
itself relies primarily on digital touchpoints and automatic software and
broader imaging package, optimizing the entire radiology process. In
certificate updates. Robots-as-a-service, on the other hand, relies on
essence, these subscriptions are characterized by their high automation,
much more extensive support and adaptation, including robot cell
minimal required interaction, and a focus on providing uninterrupted
integration, regular service, and potential replacement.
customer access.
In combining these two dimensions, we derive four distinct cate
As we progress along the resource integration dimension, the second
gories that differ fundamentally in terms of subscription offer configu
category, termed “Interactive Scripts,” grants access to services char
ration, pricing model, and joint resource integration. To capture the
acterized by reciprocal resource integration. Typically, our respondents
nature of each type, we labeled them as follows: Stepping Stones, Inter
highlighted that while these services benefit from high levels of digiti
active Scripts, Intelligent Automation, and Intertwined Journeys, as pre
zation, they concurrently necessitate substantial high-touch interaction
sented in Fig. 1. The various subscriptions that firms in our study provide
throughout the entirety of the customer journey. Consequently, these
are presented in Appendix C.
subscriptions are inherently more resource-demanding, posing chal
“Stepping Stones” are subscription offers focusing on providing
lenges to scalability. An exemplar of this category is the bespoke online
customers with access and use of a service, while resource integration is
training subscription tailored for clients within the food industry:
one-sided. For example, one of our informants referred to a speech
recognition subscription offer for radiologists at medical imaging cen “We don’t tell customers that they subscribe to videos or skill ma
ters. Facing growing demand for complicated examinations, which trixes but to trained operators. Many customers have high staff
involve longer reports, hospitals are seeking to reduce lead times in turnover, and we don’t want to sell the videos but the knowledge… It
radiology. The subscription allows reports to be available on the intranet adds a lot of value for customers that they can follow up on their
as soon as they are dictated and signed: problems and make sure that solutions are in place and that they are
constantly learning from what is happening in the factory… We’ve
“These are services that are generally quite easy to set up; the amount
seen that when we haven’t been able to update the tailored content
of data doesn’t become as large since it’s audio files. So, they are very
properly, customers started to ask: ‘Wasn’t there more than this?’
simple compared to other subscriptions. Just consider the extreme
And that’s dangerous… We have global customers who have a stated
amount of data in x-ray images that need to be linked to patient
records, they need to be stored, etc., and you also need to be able to
Intelligent Automation Intertwined Journeys

Outcome: Examples Examples
Value Device lifecycle management Robots-as-a-service
Condition monitoring Cyber security
Based Asset productivity optimization Condition-based maintenance
Pricing Surveillance-as-a-service Medical imaging archive and
communication system
Service
Focus
Stepping Stones Interactive Scripts
Access: Examples Examples

Simulation software On-the-job learning
Volume Hosted services Augmented-reality remote support
Based Speech recognition Advisory service with 24/7 technical
Geofencing for vehicle tracking support
Pricing Telematics dashboard
Automatic refill of replenishment items
One-sided Mutual
Resource Integration
Fig. 1. Taxonomy of B2B subscription offers.
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strategy to be independent, and they will not change that strategy 4.3. Subscription growth: Impact on organizational structures and
because we don’t train them; they will choose another supplier.” processes
As this quote shows, these subscriptions require mutual resource
Our analyses revealed that firms’ investment in subscription-based
integration and in-depth knowledge of evolving customer needs in order
recurring revenue growth led managers to substantially overhaul orga
to create value. Unlike Stepping Stones, our Interactive Scripts had
nizational structures and processes. In our workshops and interviews,
individually negotiated prices for customers, whether they were plants
executives emphasized three key areas of change: (1) subscription offer
with multiple packaging machines or logistics providers with hundreds
development, (2) recurring revenue model and pricing decisions, and
of trucks. As a result, this requires another approach to pricing and
(3) customer engagement.
selling while ensuring customer success through continuous interaction.
The third category identified in our study, “Intelligent Automation,”
4.3.1. Subscription offer development
relies heavily on various AI tools to perform advanced tasks, enabling
First, managers underlined that the move to subscriptions required
outcome-based services with limited need for customer-supplier inter
changes in R&D structures and offer development processes. New ap
action. Due to their highly standardized nature and well-defined scope,
proaches to offer innovation and design, as well as accompanying
these subscriptions are much more scalable than access-oriented Inter
methods and tools were needed. Even those companies that had suc
active Scripts, despite their outcome orientation:
cessfully pursued servitization and developed a wide range of digitized
“We have global standard services that apply to all our models, so the services struggled with the ideation, design, packaging, pricing, and
scalability is huge. Just to give you an idea, currently, only around industrialization of subscription offers. What held most companies back
7% of the total installed base is connected. This means the potential was a prevailing ‘must-have-feature’ mindset:
for scalability is enormous. However, with our old platform, scal
“Do we really need new functionality? It has been very difficult to
ability could be an issue since it’s outdated. But with the new plat
even measure user experience. There is no understanding of how to
form, we’ve designed it in a way that makes it easily scalable in terms
do it. As a product manager, I would like to work on questions like
of infrastructure, software, and more.”
‘How is the support experienced here?’ But it has been very difficult
While the sales process may be extensive, especially in cases where to get such initiatives up and running. Instead, we have been
the subscription covers a wide range of customer equipment or sites, measuring how many features we can include in the release.”
established value metrics are often in place (e.g., based on industry
Adopting agile frameworks, methodologies, and tools commonly
standards). This reduces the need for interacting with customers to
deployed in the information technology and software industries was
establish performance indicators that would serve as the basis for
often experienced as a culture shock for goods-centric, engineering-
pricing.
focused, and production-driven companies in our sample. These ap
Finally, “Intertwined Journeys” is the most complex and compre
proaches, which acknowledge the inherent unpredictability of software
hensive type of subscription, with high levels of mutual resource inte
development, mitigate risks by breaking down deliverables into short,
gration throughout the customer journey to ensure value outcomes.
well-defined iterations, and foster mutual resource integration with
While they rely to a large extent on AI applications, they are often highly
partners (Beck et al., 2001), are increasingly seen as pivotal for suc
customized, given the uniqueness of customers’ assets and operations.
cessful service innovation (Sjödin, Parida, Kohtamäki, & Wincent,
As a global manager with decades of experience in the industry pointed
2020). In many cases, informants highlighted the importance of care
out:
fully selecting pilot customers, especially in those situations where
“The primary objective of a project engineering company is to en subscription offer development required experimentation and multiple
gineer durable and customized production plants. This means that rounds of iterative testing in collaboration with customers. Having
we have plants that are 40-50 years old, as well as new plants, where implemented agile methodologies for several years in its company, one
no two plants are the same. Each plant consists of 2,000 to 5,000 team interviewed in our study underscored the importance of defining a
machines or pieces of equipment, which are driven by motors or specific, limited number of use cases and making available the right
other energy sources. Therefore, our division’s business base is organizational “sandbox” for providing design and innovation teams
inherently customized and will not change before you retire, even if with space for real-life experimenting with new subscription offers. This
we were to standardize our engineering to one plant version today.” also included developing new metrics and dashboards that were
different from those of traditional product and service innovation teams
Examples such as this one point to the need for high-touch interac
when evaluating outcomes achieved.
tion through all stages of the customer journey. It also illustrates the
A related issue referred to offer launches. Most Stepping Stones,
difficulties many companies face when it comes to the scalability of their
Interactive Scripts, and Intelligent Automation subscriptions in our
subscription offers. Unlike less complex cloud-based subscriptions,
sample were ancillary services that complemented the core product or
customers cannot configure and set up Intertwined Journeys on their
service. Here, managers surfaced a key challenge related to bundling:
own.
deciding whether to sell subscriptions separately or as a package (Stre
According to several managers, when introducing a new subscription
mersch & Tellis, 2002). In general, companies offered tiered subscrip
to the market, their companies had to collaborate with customers to
tion packages. For instance, the robotics firm in our sample provided
develop new sets of key performance indicators. These indicators served
three configurations in a ‘good-better-best’ format. The basic subscrip
as the basis for determining pricing. An exception in our sample pertains
tion included core elements such as condition monitoring, while the
to medical imaging subscription offers. In markets with public health
enhanced and ‘all-inclusive’ offers allowed clients to subscribe to addi
care systems, public procurement procedures may require specific
tional features based on their specific needs and usage situations, such as
metrics. Therefore, the supplier had to adapt its sales approach based on
backup management and benchmarking. Traditionally, many com
whether the customer was a public or private hospital. Regardless of
panies in our sample viewed subscriptions as a complement to existing
market, however, respondents agreed that Intertwined Journeys are the
service level agreements (SLAs). However, several managers highlighted
most resource-intensive subscription offers in terms of data sources,
the need to shift this perspective to give subscriptions the attention
stakeholders, and diverse touchpoints for customer success.
required to thrive as a standalone revenue and profit source. Given the
characteristics of subscription offers, such as cloud-based accessibility
and digital data generation through platforms, issues like automation
and scalability became prominent in the firms in our study.
448
To succeed, several companies in our study either acquired new models, pricing strategies, and tactics. Informants mentioned that their
experts or formed partnerships in the fields of subscription or data firms had to fundamentally overhaul all aspects of their order-to-cash
management software. This helped them develop the necessary soft management cycles, underscoring the magnitude of the organizational
ware, platforms, and processes. For instance, the packaging solutions change involved. Several managers used the ‘swallowing the fish’ met
company launched its first e-learning subscription offer over a decade aphor, a concept developed by TSIA, to describe a situation where top-
ago, primarily relying on established practices and in-house technolo line revenues temporarily shrink as transactional sales are replaced by
gies. However, this initiative backfired, leading to resistance towards subscription-based recurring revenues. Concurrently, a firm’s costs
developing further subscription offers and causing delays. In response to initially increase due to investments in new organizational structures,
this setback, the company adopted a fundamentally different approach processes, resources, and capabilities. This scenario is particularly
when it successful introduced its new online training subscription relevant when transitioning from a transactional sales approach for
package. It appointed a new development team and entered into a goods, services, or even perpetual software licenses to a subscription-
collaboration with a leading subscription management specialist. The based recurring revenue approach. Examples include enterprise imag
power equipment company had a similar experience. It struggled for ing or robots-as-a-service, where product ownership gives way to
over a decade to onboard dealers and customers with its internally product access and use. The sheer number of connected assets, the
developed connectivity-based services. Ultimately, the company amount of data generated, and the cost of managing such data lakes
decided on a fundamentally different approach when offering sub proved challenging for several firms in our sample. One firm even
scriptions. It established a separate organizational unit for its new refrained from moving towards ‘product-as-a-service’ offers in fear of
business and partnered with a start-up responsible for the subscription excessive upfront investment and financial burdens to address alone or
platform and its various components. These components included in partnership with a financial institution. Instead, the company
financial, legal, and compliance management services, as well as tools launched a comprehensive software-based Stepping Stone subscription
for dealers and sales. Finally, several companies resorted to acquiring offer, excluding the hardware. However, management was taken by
specialized players as a way to incorporate these unique resources and surprise when customers expected to pay monthly or quarterly for the
distinctive competencies needed to expedite their own transformation subscription, rather than annually as initially assumed, leading to
processes. tedious manual administrative work.
To accelerate their organizational transformation, these companies The challenges associated with organizing a digital supply chain
also leveraged environmental factors that favored change, such as the capable of handling complex invoicing and payment processes, as dis
Covid-19 pandemic: cussed by managers in our study, align with data publicly reported
elsewhere. Take Caterpillar, for example. The company reported on its
“Once we cracked the nut, it was really good. And I think we’ve done
website that it doubled the number of connected assets from 600,000 to
that with this remote support platform. But how? Covid created a
1.2 million between 2016 and 2022 (Caterpillar, 2022). If the company
burning need for it, and cultural resistance to the technology fell
covered half of these assets with a connectivity subscription service, one
apart: ‘Well, we want to stay safe; we don’t want to go to the
can easily imagine the avalanche of monthly, quarterly, or annual in
customer.’ So suddenly, remote support became more acceptable.
voices issued. Even for companies with a much smaller installed base,
That was a complete game-changer. The barrier to adopting the
the demands on accounting systems and IT infrastructure can run into a
technology was no longer ideological.”
real hurdle that holds back subscription initiatives. This challenge is
Overall, while managers recognized significant potential in devel particularly pronounced when companies aim for growth through high-
oping new subscriptions, many also emphasized the need for careful volume Stepping Stones and Intelligent Automation subscriptions,
selection of initiatives to focus on and deliberate decisions on what not which require easy scalability and extensive automation. However, even
to offer. A key concern related to resource constraints, such as the need when subscriptions depend on mutual resource integration, companies
for software engineers and other specialists to implement, scale up, and still require efficient, digital supply chain processes. As managers from
update the companies’ subscription offers. While this was not seen as a two different companies, focusing on Interactive Scripts and Stepping
problem for automated subscriptions, resource constraints hindered Stones respectively, explained:
some Intertwined Journeys and other resource-intensive subscriptions
“In some cases, we are well ahead, but when it comes to issues such
that relied on mutual resource integration with continuous customer-
as internal invoicing—systems, manual handling, etc.—it feels as if
supplier interaction. Moreover, similar to many other outcome-based
we are still in the stone age. What made our first subscriptions too
offers (e.g., Kowalkowski, Windahl, Kindström, & Gebauer, 2015), a
heavy was the administrative burden. We needed a lot of back-office
challenge in developing comprehensive Intertwined Journeys was the
processes to handle transactions and move money. Essentially, we
difficulty in distinguishing performance outcomes related to the sub
were not ready to go.”
scription from those influenced by other factors. This complexity is
particularly prevalent in complex B2B settings, such as the mining in “I don’t think we have a full understanding of what it really is yet.
dustry. Consider the example of a senior manager discussing his com Instead, there’s still the idea that it’s just a technical change and not
pany’s reluctance to develop such subscriptions: an organization-wide change. But after seven years, I think the penny
has finally dropped.”
“We don’t want to take too much risk, and our customers share the
same sentiment—they prefer not to take the risk of overpaying us. Knowing how to find the right pricing model based on customer
The primary challenge lies in the complexity of the processes. Any success metrics was another key issue raised by managers. Here again,
thing outside our system, such as changes in mineral composition, the traditional engineering culture often appeared as an impediment. As
alterations in mining operations, or shifts in the broader environ one senior manager noted:
ment or equipment, can have a substantial impact on the KPIs we
“We tend to jump into those technical details too easily rather than
measure. So, really, defining these KPIs accurately to reflect only the
have a good business case to think or talk through, talking more
specific aspects of the process becomes an exceptionally intricate
about the business numbers.”
task.”
Managers in our study explained that B2B subscriptions often relied
on mutual resource integration, allowing for the customization of pric
4.3.2. Recurring revenue models and pricing
ing approaches and individual price points to align with customer-
A second area of change, discussed by managers in our study, per
specific usage contexts. Beyond the traditional expectation of large-
tains to the impact of subscriptions on companies’ recurring revenue
449
scale customers engaging in price negotiations to secure discounts, approaches to managing customer relationships on an ongoing basis.
several managers mentioned that adapting pricing metrics to align with These changes had consequences for both marketing and sales organi
customers’ value perceptions allowed their firms to better resonate with zations, as well as organizational selling centers. Managers discussed
clients’ willingness-to- pay, thereby achieving better prices. For that ongoing 24/7 resource integration became the “new normal,” as
instance, the commercial vehicle manufacturer employed this approach data points from products, customer interaction, and service activities
for its fleet advisory subscription offer. Therefore, such subscription continuously fed into companies’ digital ecosystems. Managers who had
offers exhibited what Wirtz, Fritze, Jaakkola, Gelbrich, and Hartley successfully expanded their subscription offer portfolios over time
(2021) refer to as a low degree of productization. Given the entrenched underlined how customer relationships simultaneously grew broader
nature of traditional sales approaches in many product-centric firms and deeper. This enabled a tailored CX that would not have been
(Mustak, Ulaga, Grohmann, & von Wangenheim, 2021; Ulaga & Rein possible to offer otherwise.
artz, 2011), companies like the commercial vehicle manufacturer Several participants in one company discussed their firm’s initiative
preferred to retain these practices to facilitate the sale and growth of to become what was framed as “A Netflix for machine parts.” However,
their subscription offer portfolio. as pointed out by a manager responsible for online training subscriptions
Several managers highlighted the challenges their companies and echoed by many others, “In our industry, what customers want is
encountered in selecting pricing approaches and setting specific price not to get access to a product; what they want is performance.” Impor
points. When probing further into this topic, respondents explained that tantly, more is not always better; it may, in fact, be the opposite. Unlike
understanding the value created by a subscription offer, assessing cus Netflix, where consumers seek a wide variety of regularly updated
tomers’ willingness-to-pay, and identifying approaches, subscription content, the manager highlighted that their subscription customers
metrics, and specific price points deemed fair by customers posed sig preferred fewer short videos to ensure that operators actually “use”
nificant hurdles. Consequently, managers admitted that their lack of them.
expertise and tools sometimes led them to deliberately set low prices to To gain such insights and understand each customer’s specific needs,
boost sales and meet top-line revenue growth targets. This scenario was new organizational roles and responsibilities, structures and processes,
particularly evident when the subscription relied on an underlying such as Customer Success Management (CSM) were considered pivotal
product or served as a complement to the SLA portfolio. These practices to long-term competitive advantage. For example, one company in our
resonate well with extant literature, which shows that customers’ sample had implemented a Key Account Management (KAM) program
willingness-to-pay is significantly lower when a service is not sold for more than 20 years as a means to initiate and grow strategic
separately from a product (Meyer, Shankar, & Berry, 2018). customer relationships, cross-sell and upsell, and proactively meet
These behaviors were further fueled by the frequent lack of aware changing customer demands. However, when moving to subscriptions,
ness or willingness among internal staff to change their mindset and managers realized that their existing customer-facing units and pro
start invoicing properly for subscriptions. In several instances, firms’ cesses, such as KAM, were still relevant but insufficient. Companies in
sales organizations were empowered to decide on their own pricing, and our sample needed to complement established roles and responsibilities
some even gave away new subscription offers for free. Although man in their selling centers with new ones. Consider the following illustration
agers responsible for the subscription initiatives often opposed such from one of the managers in our study:
practices, which aligns with extant servitization literature on free B2B
“It is about being there with the customer and seeing: What is the
services (Mustak et al., 2021), these practices were commonplace in
next step? What should we do now? What possibilities do you have?
several of the companies in our sample. In one of the firms we inter
Having a follow-up and dialogue. We have a customer in South
viewed, an Interactive Script became commercially successful and
America who was honestly against digitalization altogether. But
financially profitable over time. However, the team in charge of this
today, they have this [subscription offer] on all five sites. Our CSM
subscription offer had to fight hard to set up its pricing model, tools,
works with them all the time; she simply enters a factory and looks at
terms, and conditions. In this case, managers believed the price could
what paper forms they have, etc. Then she asks: “Should you not
have been set even higher given the actual customer value in use. This
digitize?” “Oh yes, that would be great.” “Ok, let’s do it!” So, she is
sentiment was echoed by an executive in another industry in charge of
active, she works with the customer proactively, and then the
connected services:
customer becomes engaged and asks back: “Can’t we do this as
“This is really difficult. We say we have a global standard portfolio, well?” And this is how it happens. Many KAMs, on the other hand,
but the value we are providing may vary depending on the type of are rather “peddlers,” good at selling nuts and bolts but less good at
customer, type of market segment, customer size, and so on. For selling zeroes and ones. So, yes, this is also a change management
example, I was in a meeting with some systems integrators in the US journey internally.”
last year. At the end of my speech, I asked, ‘Guys, what do you think
For subscriptions requiring mutual resource integration, as seen in
is the price for all this?’ and told them what it was. And a guy said,
solutions selling (e.g., Tuli et al., 2007; Ulaga & Reinartz, 2011), man
‘Woah, that’s extremely cheap!’ because he was working in the food
agers explained that their firms needed to engage with a broader
and beverage segment where downtime can cost more than 100,000
network of stakeholders and establish ties and touchpoints higher up in
euros. So, the question is how to set prices when operating in so
the customer organization. One manager at the packaging solutions
many markets. Once we go to the application level, where our ma
company told us that customers should not only be digitally mature, but
chines handle different things, like a spot welding gun, it’s not easy.”
there should also be top sponsors within the customer organization if
they have not previously purchased such subscriptions. Echoing this
4.3.3. Customer engagement sentiment, the digital solutions manager at the mining equipment
Finally, managers identified a third major area of change in orga manufacturer concluded:
nizational structures and processes. Reflecting on the shifts in the
“Often, our business is with the production line management level,
technological and business landscapes (Hilton et al., 2020), participants
which is kind of a traditional level, when you talk about the
emphasized that their firms had to fundamentally rethink their
450
performance agreements, but now within these modern tools and characteristics, which all subscription offers share to various extents.
technologies, at least with larger corporations, they have their Importantly, as a further extension of the literature on servitization,
headquarters’ digitalization team or similar, so they come into play, our taxonomy opens the black box of subscription offers and illustrates
and there’s a gatekeeper there who wants to access and understand their heterogeneous nature; these offers differ in terms of their value
what kind of technology, what kind of application their mill is orientation and resource integration. Taxonomies and other classifica
negotiating. So, it’s always a combination of middle- and corporate- tion frameworks have helped to advance servitization research (e.g.,
level decision-making.” Kowalkowski et al., 2015; Matthyssens & Vandenbempt, 2008; Oliva &
Kallenberg, 2003; Ulaga & Reinartz, 2011), as well as marketing and
The manager further underscored the need to understand the buying
service research in general (e.g., Huber & Kleinaltenkamp, 2020;
center and identify potentially contradictory customer targets:
Jaworski, Kohli, & Sarin, 2020; Lovelock, 1983). Such frameworks
“Let’s say, on a middle-manager, production-line level, they are provide granular insights into complex phenomena, guide managerial
really interested in having their tools application and services for actions, and contribute to theory building (Doty & Glick, 1994). Until
their line… Let’s say they are not that interested in what happens now, however, there has been no classification framework for sub
next, as long as their efficiency gets better, and as long as they get the scription offers, which Vandermerwe and Erixon (2023, p. 485) hail
targets they are expecting. But then on a corporate headquarters as”the new servitization model.” By presenting the taxonomy and
digitalization level, they would probably like to get some longer- unpacking each quadrant, we have advanced knowledge of specific
term targets that, okay, ‘this mill is a pilot, and then we want to combinations of organizational challenges and actions for service busi
learn more,’… so the continuous communication with the customer nesses. Without the taxonomy, understanding B2B subscriptions and the
is a great way for us to see what the opportunities are for the growth opportunities firms have at hand would be too simplistic and
customer.” overly general.
Our detailed analyses also offer important implications for the
Overall, managers consistently emphasized that subscriptions offer
literature on customer-centricity and relationship marketing by
unique opportunities for differentiation by delivering a more compre
providing a more nuanced understanding of how companies engage
hensive and ideally seamless customer experience. This held true across
with customers and manage ongoing relationships. Extant literature on
industries in our sample. Managers mentioned that even subscriptions
CX, customer engagement, and more recently CSM (e.g., Hilton et al.,
with limited levels of interaction (i.e., one-sided resource integration)
2020; Hochstein et al., 2020) and prior studies on servitization
still contributed to fostering customer engagement. However, since
demonstrate how more advanced offers foster (and call for) closer
subscriptions enabled substantial value creation through data genera
customer relationships. Whereas extant research distinguishes between
tion and analytics, increased flexibility and personalization, and pro
transaction-based versus relationship-based services (e.g., Neely, 2008;
vided ubiquitous access, managers explained that suppliers were now
Oliva & Kallenberg, 2003; Penttinen & Palmer, 2007), our research
expected to ensure customer success in a much more proactive manner
shows that subscriptions are a means to strengthen the customer rela
than before.
tionship regardless of whether the resource integration is mutual or one-
sided and whether the focus is on access or outcome. Importantly, our
5. Discussion and implications
findings reveal that subscriptions permit relationships to grow broader
and deeper, enabling a tailored CX that would otherwise not have been
To the best of our knowledge, this study is the first to investigate how
possible to offer—even in cases where subscriptions do not require
B2B firms can grow through subscription offers. We delineate common
mutual resource integration nor have a clear outcome orientation. As
characteristics and unique features and develop an updated fine-grained
product and service data feed companies’ digital ecosystems, ongoing
definition of subscriptions as market offers where customers and pro
engagement 24/7 becomes possible. Specifically for more extensive
viders mutually engage at various levels to provide access or achieve
types of subscriptions, CSM becomes an integral part of the marketing
outcomes in return for a recurring fee. Our findings outline what dis
strategy. This, in turn, has consequences for both marketing and sales
tinguishes subscriptions from other offers, including other services with
organizations as well as the organizational selling center.
recurring revenue models, and specify four shared characteristics, which
In conclusion, our fine-grained definition reflects the heterogeneous
all subscription offers share to various extents. Accounting for the het
nature of B2B subscription offers, thereby complementing more limited
erogeneity of subscription offers, we develop a taxonomy classifying
definitions and views rooted in consumer settings. Servitization re
them into four distinct categories along two distinct dimensions: service
searchers can draw on our conceptualization and classification for
focus (access or outcome) and resource integration (one-sided or
further empirical inquiry into how subscriptions entail ongoing value
mutual). We show how subscriptions can help companies drive growth
creation. Conceptual literature states that value emerges from resource
and facilitate mutual engagement but also point at hurdles that firms
integration (Grönroos & Voima, 2013; Vargo & Lusch, 2008). As one of
typically have to overcome.
few empirical studies on research integration, we shed light on how
subscriptions vary regarding the extent to which supplier-customer in
5.1. Theoretical implications teractions generate customer benefits. As such, we also contribute to the
stream of service (dominant logic) research that explores the resource-
The aforementioned contributions generate several implications for integration role of firms and other economic entities. Similarly, we
marketing and servitization literature. In particular, we complement identify two distinct value-creation logics for subscriptions, which
existing literature on B2B service growth that mainly investigates either emphasize value in use: access and outcome. Researchers can investigate
the whole range of industrial services and growth options (e.g., Oliva & and compare these value-creation logics with those associated with
Kallenberg, 2003; Raddats & Easingwood, 2010; Ulaga & Reinartz, customer solutions and other innovative offerings. Lastly, although
2011) or only the most complex solution offers (e.g., Bond III et al., customer orientation is a central aspect of the marketing concept, many
2020; Macdonald et al., 2016; Storbacka, 2011). Our findings outline B2B firms still struggle to become more customer-centric (Ulaga, 2018).
what distinguishes subscriptions from other offers, including other ser Hence, for researchers in the domains of customer engagement and
vices with recurring revenue models, and specify four shared
451
CSM, our categorization of subscriptions into four distinct categories exert heightened pressure on suppliers to demonstrate the value created.
offers a framework to delve into customer relationship-specific prac As a consequence, managers must explore new ways of continuously
tices, tactics, and strategies. managing and shaping customer expectations. Third, in this area, too,
our findings point to a heavy dose of new competencies and culture
change needed. With respect to new skills, managers in our study’s
5.2. Managerial implications manufacturing companies explained that they created new boundary-
spanning positions in their organizations, such as Customer Success
Beyond generating new insights for scholars, our research findings Managers, much like In software companies. From a culture perspective,
also provide interesting managerial implications. Our results demon this shift also implies that managers accompany their teams to
strate that managers interested in accelerating subscription-based increasingly adopt new customer metrics and dashboards, translating
recurring revenue growth often find themselves confronted with the customer lifetime and customer equity.
need to entirely rethink their go-to-market approaches at three different
levels, i.e., subscription offer innovation, customer engagement, and 5.2.3. Ecosystem partners
ecosystem partners. In this section, we briefly discuss key implications Finally, our research also underlined the need for managing funda
flowing from our research in all three areas. mental changes in how manufacturers work with channel intermediaries
and ecosystem partners. First, the possibility to directly reach out to
5.2.1. Subscription offer innovation customers, i.e., Direct-to-Customer (D2C), bears an inherent potential
Our research identifies three interesting managerial avenues in this for triggering conflict in traditional channel relationships. Conse
area. First, many B2B firms are still in the early stages of experimenting quently, executives must design a proactive strategy vis-à-vis their
with subscription offering design. Against this backdrop, the four channel partners for mitigating conflict and supporting existing dis
distinct types identified in our study provide guidance for how to sys tributors in their role of contributing to subscription-based business
tematically structure future subscription portfolios. Our matrix helps growth. Second, our findings emphasize the need for assessing the re
managers think through questions, such as, ‘how to prioritize our sub sources, competencies, and skills of a manufacturer’s extant portfolio of
scription offer development?’ or ‘how to develop an offer portfolio channel intermediaries and seeking to evolve channel relationships
roadmap over time?’ among others. Second, our findings point to the accordingly over time. Finally, a third implication in this area relates to
need for managers to revisit offer design structures and processes. Ex the imperative for manufacturers to assess how their ambition to grow a
ecutives must decide where to embed subscription offer innovation and portfolio of subscription offers affects their current position in the
design in the organization. As respondents in our study emphasized the broader ecosystem surrounding them. For example, managers must
need to provide an ‘organizational sandbox;’ i.e., a space in the orga decide how to best develop the above-mentioned new resources and
nization where one can ideate, craft, test, and launch subscription offers skills. For example, is the company better off hiring and training new
outside established structures, managers must think through ways for data scientists on its own for ideating and launching new subscription
implementing this imperative in their own organizations. The same offers? Alternatively, should managers favor partnering with a start-up
holds true for innovation processes. With a heightened interest in to access such unique skills? Finally, should the company acquire
subscription-based growth, many B2B companies also realize that they selected players altogether to secure access and speed in the process?
must increasingly rely on agile methods and tools, which typically did Collectively, the managerial implications discussed in the three areas
not resonate with our sample companies’ organizational culture. Third, above demonstrate that executives in B2B companies must not only
our results underscore a strong need for developing new competencies chart a path for subscription-based business growth; they also must be
and bringing new people to the organization, such as data scientists, cognizant of the challenges of driving change throughout their organi
software engineers, or cloud-based business experts. A supplier’s ability zations. To succeed in the subscription economy, managers should
to integrate and coordinate these resources and skills becomes para acknowledge that such initiative goes far beyond portfolio management;
mount. This is especially important, as subscription offer innovation it may have extensive consequences for the firm’s capabilities, pro
relies on a heavy dose of cross-functional collaboration. In short, our cesses, and structure. Not only does the move to subscriptions require
findings highlight many substantive changes required in B2B firms’ offer new methods and approaches to innovation, but it also impacts the
innovation and design structures and processes. firm’s revenue models and order-to-cash cycle management.
5.2.2. Customer engagement 6. Limitations and future directions

Here, too, our research identifies three important managerial im
plications. First, managers must understand and make the best use of Our purposive sample represents a wide range of industries and
subscription offers’ potential for directly reaching out to customers and companies displaying different degrees of subscription maturity, yet we
gaining deeper insights into their operations. From a strategic perspec investigated only supplier firms. Therefore, we missed out on the
tive, subscriptions represent entirely new avenues for suppliers to perspective of customers, who are an integral part of the value co-
engage customers and build lasting relationships, especially in in creation processes that characterize subscription offers. Going for
dustries where intermediaries traditionally keep manufacturers at bay to ward, a natural next step would be to consider both customers’ and
protect their privileged customer relationships. Second, our findings dyadic perspectives to deepen our understanding of this increasingly
reveal that the imperative for ongoing value creation, triggered by the important research domain. As the companies in our sample were all
very nature of subscription offers, often represents both ‘a blessing and a industry leaders, investigating and comparing with new ventures born
curse.’ On the one hand, such offers allow suppliers to multiply customer as subscription businesses should also provide valuable complementary
touchpoints, deepen engagement, and optimize end-to-end customer insights. Furthermore, large-scale quantitative research would allow for
experiences that ultimately create more value throughout the relation empirical validation and measuring the effectiveness of different
ship. On the other hand, customers also become more demanding and
452
subscriptions and the fit with firms’ other (product and/or service) of represent a fertile area with many promising research opportunities.
fers. Our findings also suggest that subscriptions might encompass
multiple routes to success. Therefore, methods like fuzzy set qualitative CRediT authorship contribution statement
comparative analysis might be employed on larger qualitative or
quantitative datasets to show how different combinations of organiza Christian Kowalkowski: Conceptualization, Data curation, Formal
tional conditions (e.g., capabilities, customer touchpoints, pricing analysis, Methodology, Validation, Writing – original draft, Writing –
model, engagement approach, digitization, scalability) explain favor review & editing. Wolfgang Ulaga: Conceptualization, Data curation,
able outcomes. Finally, as subscriptions—unlike many other Formal analysis, Methodology, Writing – original draft, Writing – review
offers—allow firms to conduct experimentation through rapid proto & editing.
typing, the data-rich environment of subscriptions and the potential
they offer for conducting simple natural experiments with relative ease Data availability
provide a favorable test environment for researchers to explore bundling
and pricing options. Overall, we are convinced that B2B subscriptions The data that has been used is confidential.
Appendix A. Interview protocol
Interviewee’s background information
What is your role and responsibility in the organization?

How long have you been in the current position and the organization?
How many years have you been in the industry / overall years of experience?
During what timespan have you been working with subscription offers or similar?
What roles and responsibilities have you held in the past?
What roles and responsibilities do you have now with respect to subscription offers?
Subscription offer
Please describe what a subscription offer is to you.
• How does it differ from other recurring revenue models, such as service contracts?
• Is it better? If so, why?
What does your subscription business look like?
• What types of subscription offers do you have?

• What type of offers have you already developed? Why did you start with these? How does your development roadmap look like? Next offers?
• What is unique as compared to your other services/solutions?
o What’s different?
o Does it allow something new? What / How?
How do customer relationships and engagement change—from both your and the customer’s side?
• How about the individual versus organizational (structure) level?
Are there some types of subscription offers that you do not offer? Why?
Subscription strategy
How do subscription offers connect to your overall market strategy?
• Servitization?
• Digital transformation?
What is your company’s current position: When did you start, and where are you today?
• How did you get here? Implementation and scaling up?

• Has something surprised you, or has everything gone as planned?
• What are the lessons learned?
What is your company’s target position: Where do you want to be? Why?
Who are the competitors?
• Are they any different from “traditional” product and service competition?
453
What are the implications for network relationships (dealers, service partners, etc.)?
If-Then propositions
What are the key drivers of subscription offers?
• What motivates your company?

• What motivates you?
What are the key barriers to subscription offers?
• How do the hurdles interact?
Pros and cons:
• What are the benefits of (moving into) subscription offers?

o Short vs. long term?
o Benefits to customers?
• What are the potential downsides of subscription offers?
Prerequisites – Under what conditions do subscription offers work best? Why?
• Resources and capabilities: internal and external?

• Ecosystem: Market channel and external relationships?
• Internal coordination and organization?
• Data privacy and ownership?
Are there different pros and cons with different subscription offers?
Do industry or market characteristics influence the interest in or success of subscription offers?
Additional information
Is there anything else you would like to add or clarify?

Do you have any supplementary information that could provide additional insights?
Appendix B. Coding structure
454
Appendix C. Subscriptions investigated in this study
Firms (pseudonyms) Stepping Stones Interactive Scripts Intelligent Automation Intertwined Journeys
Climate control firm Augmented-reality remote

support
Commercial kitchen and Automatic refill of consumables
laundry
Commercial vehicles firm Digital tachograph service, Telematics Advisory service
dashboard
Construction equipment Telematics services (operations and
firm performance data, vehicle tracking, etc.)
Heat transfer firm Rotating equipment uptime
Maritime firm Advisory service, Remote Condition monitoring Cyber security
support
Mining firm Simulation and calculation software Condition monitoring Condition-based
maintenance
Materials handling firm Fleet management system
Medical imaging firm Cloud storage, Speech recognition Enterprise imaging
Network Hosted services Surveillance-as-a-service, Device
communications firm lifecycle management
Packaging solutions firm Online learning On-the-job learning and
training
Power equipment firm Fleet service, Data subscription, Refill of
replenishment items
Pulp and energy Inventory agreement Remote support and analytics,
solutions firm Quality prediction
Queue management Customer flow management
systems firm
Robotics firm Backup management, Remote access Condition monitoring, Equipment Asset optimization,
benchmarking Robots-as-a-service
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Industrial Marketing Management 117 (2024) 440–456

Contents lists available at ScienceDirect

Industrial Marketing Management

Subscription offers in business-to-business markets: Conceptualization,

1. Introduction control), Caterpillar (earth-moving machines), Grundfos (pumps),

Climate control President Global Service Early

Intelligent Automation Intertwined Journeys

Access: Examples Examples

5.2.2. Customer engagement 6. Limitations and future directions

Appendix A. Interview protocol

Interviewee’s background information

What is your role and responsibility in the organization?

Please describe what a subscription offer is to you.

What does your subscription business look like?

• What types of subscription offers do you have?

• How about the individual versus organizational (structure) level?

How do subscription offers connect to your overall market strategy?

• How did you get here? Implementation and scaling up?

What are the key drivers of subscription offers?

• What motivates your company?

What are the key barriers to subscription offers?

• How do the hurdles interact?

Pros and cons:

• What are the benefits of (moving into) subscription offers?

Prerequisites – Under what conditions do subscription offers work best? Why?

• Resources and capabilities: internal and external?

Is there anything else you would like to add or clarify?

Appendix B. Coding structure

Appendix C. Subscriptions investigated in this study

Climate control firm Augmented-reality remote

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