Digital transformation is opening doors to new revenue streams for manufacturers and distributors, such as online subscriptions to services that maintain an industrial motor or electronic appliance equipped with internet sensors that alert the supplier when it’s time to schedule product maintenance or replacement.

While the customer can save up-front costs by paying a relatively low monthly fee instead of purchasing a costly product outright, the supplier gets a steady stream of revenue over an extended period.

The trouble is, however, that many commerce technology systems that online companies use to manage transactions —e-commerce, configure-price-quote and customer relationship management applications, for example—were not designed to support digital subscriptions, Forrester Research Inc. says in a new report, “The Definitive Technology Guide to Recurring Revenue Models,” by Lily Varon, John Bruno and other Forrester analysts.

Although many vendors of e-commerce, CPQ, CRM and other business software applications are modifying their technology to support recurring revenue businesses, consistency is lacking, Forrester says. “The result is a cluttered and confusing technology landscape,” the report says.

Suppliers of both traditional installed products and maintenance services sold through online subscriptions, for example, need to be able to compile information about customer satisfaction in order to improve future products and services. They also need to use that and other information to provide flexible pricing and discounting for each customer or customer segments, Forrester says.

But not all commerce software systems are designed to gather such information and provide such flexible pricing features for both online subscriptions and traditional product sales, Forrester says. “Solutions that do not reveal deeper customer insights leave firms unable to create richer, more relevant experiences for their customers,” the report says. “This is especially important in renewal-based customer relationships. Renewal decisions are based on the actual value delivered over the life of the subscription.”

Forrester suggests that companies selling through recurring revenue models consider upgrading or replacing their e-commerce technology if it doesn’t support flexible pricing, discounting and related features for all of their recurring and traditional sales transactions. The report also makes similar suggestions for CPQ, CRM and other business applications.

Sign up for a complimentary subscription to B2BecNews, a twice-weekly newsletter that covers technology and business trends in the growing B2B e-commerce industry. B2BecNews is published by Vertical Web Media LLC, which also publishes DigitalCommerce360.com, Internet Retailer and Internet Health Management. Follow B2BecNews editor Paul Demery on Twitter @pdemery.

Follow us on LinkedIn and be the first to know when new B2BecNews content is published.