Gary Tubridy: Hello, Gary Tubridy, senior vice president at the Alexander Group at our upcoming Revenue Operations Forum to be held virtually on June eight and nine, we’re going to explore the role of the revenue operations function and preparing companies for the next chapter of the 24/7 customer experience. For our first keynote at this event, we’re going to have Christoph Schell, chief commercial officer of HP. His topic the subscription economy, the end of ownership and the beginning of personalization. This podcast is going to be a sneak preview of Christoph’s topic and an engaging one or news. Welcome, Christoph.
Christoph Schell: Hello, Gary, it’s great to be with you.
Gary Tubridy: Thank you for joining us, I love this title, the subscription economy, the end of ownership and the beginning of personalization. Give me a little more background on this and where that title came from.
Christoph Schell: Look, I mean, I think what we’ve been seeing over a couple of years now and it’s a trend that has really been accelerated by the pandemic, is that customers are not necessarily interested to own technology but to really use technology. And this is true and has been true for a while on the business to consumer side of the equation. But it’s starting to really influence also on the business-to-business side of what we’re offering. And so it has a profound impact on products that we design. Our products are becoming more software, more workflow centric, but then also on the go-to-markets that we that we invest in. These are go-to-markets that are more digital in nature, go-to-markets where we actually follow the customer journey from the first day onwards that they starting a search, to then also going beyond them deciding on a service. It’s when they actually sign up for the service that the opportunity really starts. That’s where we can bring a segment of one engagement with a customer truly to life. And so because of that change in how we engage with them, the daily opportunity, but also sometimes threat, having to prove the value back to the customer on a daily level, that puts different pressures on not just the infrastructure that we build in the company to and to bring these services to life. But actually, also on the talent, on the talent that we require inside HP, but also with our partners to bring it to life. So it’s a very comprehensive overall shift in how we go to market and how we design products and how we design services for our customers. And it’s also a very profound impact on how we engage with customers on a one-to-one basis.
Gary Tubridy: Yeah. Can you give me some examples, an example of where you see this happening?
Christoph Schell: Look, I mean, I can give you many, but the example that I think is probably very adequate to explain this with is a product that HP has that has been scaling nicely during the pandemic that was launched before. But it’s a product called Instant Ink. And so Instant Ink is a service that we give to customers that are opting in with us and are paying a monthly fee. They can pay between $2.99 to $4.99 to $9.99 a month and based on that, they actually buy pages that they can print every month. When they when their cartridge fill levels hit a certain percentage, twenty five percent, we are monitoring their printer in our cloud. And at that point, a twenty five percent level, we are creating a replenishment service without them having to leave their home, without them having to go shopping. You see why this was a hit product during the pandemic. And it becomes a hassle-free value proposition to our customers. The fear of running out of ink in the future, the fear of running out of the ability to print for them across technologies is going to be obsolete. And now the question becomes, so how can I now individualize this? Personalize it for a customer. So I’ll take you, Gary, I’ll make this up now. But let’s say you have a really large family and you like to opt in with HP and share with us that you need holiday cards every year. We can then give you a value proposition that sits on top of your monthly subscription, can talk to you about the holiday costs that you want to send. Whether you want to manufacture them at home on your HP printer, or if you want to go to an HP partner, that can help you with that. So the ability for us to offer services on top of that basic service is where the potential is here in the relationship and now the learning that we have from Instant Ink and using that for other parts of our business, for example, our PC business. This is, I think, where a lot of innovation will sit in the years to come.
Gary Tubridy: Fascinating. Let’s build on that for a second. In looking at your presentation content, you indicate a need to get closer to the customer and anticipate needs through the use of data and insights and that you just described such an instance. Can you go down one more level and comment on how you’re going to do that with companies and with customers?
Christoph Schell: Look, I mean, so far what is very important, we want to make sure that we’re very transparent with customers about how we use data. So we want our customers to opt in and allow us to use data. But what has happened over the over the years and again, particularly over the pandemic year now, is that a lot of the customer journey and the customer decision making cycle has gone online. Ok, so that obviously gives us an opportunity to engage with a customer when he or she is in the process of defining what it actually is that they want to buy. I can tell you that very few customers engage with us from day one with I want to buy Instant Ink. That’s not at all what they want to do. They want to buy printing as a service. They don’t necessarily think about a subscription model, but they just are interested in printing. And then it’s up to us to give them a value proposition that really resonates with them. Also giving them the option on whether they want us to be a transactional engagement or a contractual or subscription based engagement. So this is it. But being able to follow a custom of being able to touch a customer virtually and to define value propositions is very important. HP is a company that actually does most of its revenue going through partners. We are very partner centric. But the ability for us to bring partners into the fold to collaborate with partners in bringing this segment of one strategy to life has been really positive, has been really good, and many of our partners accepted this as well. But this is it’s actually fascinating how we’ve seen this accelerating in the last month.
Gary Tubridy: So you use a term in your discussion descriptive term called hyper targeting. So this kind of builds on your recent comments. How would you define hyper targeting and any examples that you might have of unique value propositions that are being supplied to these singular customers?
Christoph Schell: Hyper-targeting is understanding what a customer wants, one customer. And so the ability from a technology point of view to have a platform that is building on a common value proposition that can then be targeted or customized to an individual customer is super important. At the beginning of all of this is that you actually understand what the customer wants. And so there are certain there are certain groups subgroups that we try to organize these customers in. That’s hyper targeting, OK. There are obviously the type of customers that are more interesting to us than others. Some simply don’t want to print, so they’re obviously not that interesting in our printing business or some of them really don’t want to operate on a personal systems product. So again, they’re not that interesting for us. But I tell you, for example, that gaming customers in our in our industry and our customer pool are very interesting to us because they like to engage with us as a brand. They go way beyond just buying our product. They are asking us for feedback on how they can optimize their performance playing a certain game. They’re very interested in social interaction, not just with HP, but actually with other customers that are playing the same game. So, you’re creating these social groups almost that have a common interest. We are bringing them together and we see a lot of value in doing that. So that’s where hyper targeting comes in. And these are just two examples.
Gary Tubridy: Yeah. So how are you building loyalty with customers by helping them get the return on investment of the solutions that they’re subscribing to?
Christoph Schell: I think a couple of things is number one, you need to understand what pain points are trying to solve and so that having an appropriate and relevant solution in doing so is important. The other thing that we are we are learning is that tying customers into long term subscription contracts doesn’t really work. Instant Ink is a product that you can cancel any month. So there’s no minimum contractual period. We want to keep this flexible. That’s important. We have a lot of customers that are actually open for us to suggest additional value propositions that sit on top of the original engagement. But so I think staying, staying alert, making sure that our that our value propositions are flexible, that they’re not stale, that they can scale up and down with the needs of our customers is very important. And also listening to our customers is super important. Again, that is something where a digital engagement actually helps because a lot of the interaction is not just triggered by us, it’s triggered by our customers. And they actually give us a lot of feedback that helps us in defining our go-to-market. But it also helps us in defining new value propositions and actually defines our R&D strategy, how we spend our R&D dollars.
Gary Tubridy: It’s almost accepting a certain amount of risk. The flexibility makes for a stronger relationship because you’ve got to earn that relationship almost every day.
Christoph Schell: You actually have to earn it every day, so you should never take it for granted. This is where the overall brand image is super important as well. That’s why we also, for example, investing so heavily into sustainability into diversity and inclusion topics. These are all topics that are kind of horizontal topics that are important for many, many of our customers, and they are helping us to attract them to our value propositions to our brand.
Gary Tubridy: Last question, Christoph, in your opinion, the biggest challenge in transforming to a subscription business is.
Christoph Schell: The single biggest one? There are so many. Actually, I actually think the single biggest is talent. I would really say that it’s talent across the value chain of a company. How do you define how do you first they understand what a customer really wants. How do you then translate that into a product? So how do you get your R&D investments going and how do you operate with integrity when it comes to engaging with these customers, when it comes to managing the data that they have allowed us to touch? How do we do that? Ok, so a lot of new skills that we need to learn and we needed to learn and are still learning every day how to do this globally in different markets with different contexts and different systems. That’s another challenge. So talent, the ability to have talent that is willing to learn new tricks every day that is willing to spend time in training, that is also willing to spend time in in new activities such as social media, social selling. This has all become very important for us over the last couple of years.
Gary Tubridy: Christoph, thank you so much for spending time with us today. The subscription economy, the end of ownership and beginning of personalization. Look forward to your keynote coming up in June at the Sales Operations Forum. And thank you so much, Christoph, for your time.
Christoph Schell: Thank you for having me.
