Data-Driven Subscriptions is the Future of Business

Posted by Jon Kelly on 2021-04-15

Data-Driven Subscription is the Future of Business

There’s a fundamental shift occurring in marketing these days. Have you noticed?

Savvy consumers are looking for outcomes, not tools. They don’t want a car; they want to get where they’re going. They don’t want a CD or a DVD; they want to stream live entertainment whenever and wherever.

Retailers like Sears, Claire’s, and Toys R Us made their name selling products. Since 2017, all three have filed for bankruptcy. Today, businesses such as Netflix, Spotify, Lyft, and Amazon Prime are the names recognized in American households. Evaluating the go-to-market strategies of these industry leaders points to a common idea.

These companies achieved rapid and sustained growth because they use technology-enabled, data-driven business models powered by subscriptions. They know that in a customer-driven marketplace, offerings results equals success.

Predictive Data Drives Sales

As technology and data analytics improve, businesses can track consumer patterns and answer important questions such as:

  • • What are my customers doing?
  • • Are my customers satisfied? Why or why not?
  • • Where do my customers need help?
  • • How do my customers define success?
  • • What outcomes do my customers want?

Armed with powerful data, businesses have a head start. They’re able to predict market needs and opportunities before their customers can.

For instance, how did Netflix know that "House of Cards" would be a hit before it was released? The company looked at its user data. Here’s the formula:

  • • Identify one of the most popular categories by view count: political thriller
  • • Identify one of the most popular actors at the time by search history count: Kevin Spacey
  • • Identify one of the most popular formats by viewing patterns: binge watching

With all the ingredients for success, all Netflix had to do was execute. Since the show launched in 2013:

  • • "House of Cards" received 5 consecutive Emmy nominations for Best Drama
  • • Netflix grew from 33M subscribers in 2013 to 100M subscribers in 2018
  • • Netflix’s stock price increased by 633% between 2013 and 2018.

How Data Drives Industrial Sales

If you’re a PEI distributor or service contractor reading this article, you might wonder how data analytics and subscription services apply to you. These subscription ideas only apply to those pesky millennials everyone is trying to understand, right?


More and more industrial businesses are capitalizing on this effective strategy. Established industry leaders like Caterpillar and Michelin are evaluating user data to understand and effectively deliver the outcomes customers demand.

Instead of selling excavators, Caterpillar offers excavation subscription services based on tons of dirt moved. Instead of selling tires, Michelin offers tires as a subscription service for truckers based on miles driven. Business customers are getting the outcomes they want, not a product they have to maintain and that will depreciate.

This shift from product focus to service focus makes customers happier, more successful, and more loyal. Suppliers enjoy more predictable revenues, increased focus, and improved efficiencies.

The list of businesses shifting from products to subscription-based services goes on, but the trend is the same. Thanks to improved data capture and analytics, industrial businesses are leveraging data-driven technology to effectively implement subscription models.

A Data-Driven Future for Service Contractors

Business is booming for many service contractors in the petroleum equipment industry because major hardware replacement programs, such as EMV and point-of-sale upgrades, will occur during the next several years. Strategic service contractors, however, recognize that hardware sales might not continue at the current rate and acknowledge that the futures of their business will revolve around service.

The president of one of the nation’s largest service contractors recently said to me, "Yesterday’s service technicians cannot solve tomorrow’s service challenges.”

The same applies for service companies. Yesterday’s service contractors cannot solve tomorrow’s service challenges. It’s survival of the fittest out there. Adapt or go extinct.

Subscription businesses are beating their competitors largely because of their intimate understanding of customers’ needs. From this standpoint, top service contractors are way ahead already.

Relationships between service contractors and their customers often stretch back decades. As a result, some service contractors intuitively know more about their customers’ businesses than their customers know about themselves.

Long-term, service-oriented relationships like the ones in our industry naturally lead to mutual understanding between customers and suppliers. Despite high levels of customer trust and familiarity, however, questions remain.

First, how accurate and up-to-date is a contractor’s intuition? If contractors are unwilling to test their intuition and validate it based on data, how can they be sure it's still relevant and accurate in a fast-changing business environment? As the old saying goes, “Trust (your gut), but verify.”

Second, how is that intuitive, intimate customer understanding being used to achieve sustainable, scalable business growth? Is your deep customer understanding being converted into profitable opportunities and monetized effectively in the form of new, value-added service offers?

Modern technology gives our industry unprecedented access to unprecedented volumes of data. This raises new challenges for service contractors trying to capitalize on a goldmine of customer insight:

  • • How do we capture this data?
  • • How do we measure and understand this data?
  • • How do we use this data to make our customers happier?
  • • How do we use this data to grow our business?

Service contractors that address those questions and begin to internalize data will find ways to supplement (better yet, turbocharge) their technical and professional expertise. Better service performance leads to better business outcomes for customers and contractors.

Data-Driven Service Calls

With a tech shortage, service contractors cannot respond to every alarm. Merely silencing alarms leads to risk, cost, and horror stories of undetected leaks. Efficient dispatch management means fewer tank gauges will be silenced.

A 2018 study of 700 sites by Canary Compliance showed 30,000 unique automatic tank gauge alarms occurred over the course of two months. After filtering out alarms unrelated to compliance (e.g. low product, paper out, etc.), we found 17,000 compliance-related alarms remained - sensor alarms, continuous statistical leak detection (CSLD) alarms, etc.

That volume of data contains too much noise for any retailer or service contractor to process manually.

Modern algorithms and software analytics, however, used contextual data like alarm history and weather data to group the 17,000 unique compliance alarms into 2,000 actionable issues. That led to 350 data-driven service dispatches from 30,000 alarms.

Data-driven analytics can streamline dispatches, reduce repeat visits, and increase visibility to field service performance. Outcome-based field service is achievable.

Take Your Tech Pulse

Ask yourself:

  • • Are we leveraging data to understand (and predict) our customers’ problems, to track and measure their (and our) performance, and to help deliver the outcomes customers want profitably?
  • • Are we leveraging technology to implement outcome-based service models to achieve our goals and our customers’ goals profitably?
  • • Are we leveraging data to continuously demonstrate proven value to our customers?

If you answered "no" to those questions, these suggestions can help you get to "yes":

  • • Reimagine your customer service department as a "customer success" department. Focus on understanding the outcomes your customers want.
  • • Implement reliable data capture solutions and analytical tools that improve service efficiency and monitor performance of customer equipment, customer behavior, and service technician activities.
  • • Design and market outcome-based subscription offerings that bundle your professional services with enabling technology that captures and processes customer data.

These types of changes to the service contractor business model don’t happen overnight, and they don’t happen easily. Sustainable change requires a thoughtful, disciplined approach that respects existing practices, employees, and customers. The best time to plan is when business is booming.

As Rick Long, Executive VP of PEI, said in his State of the Industry address during the 2018 PEI Convention in Las Vegas, “It’s a good time to be a service contractor.”

Let’s keep it that way.

Jon Kelly is the founder and CEO of Canary Compliance, a remote underground storage tank (UST) monitoring software company. While working for ExxonMobil, Jon heard customers complain about a lack of simple, reliable, data-driven, and cost-effective remote UST monitoring solutions, so he started Canary Compliance to address their problems. Reach him at

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