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The Subscription Economy: 5 Reasons to Create Subscribers Out of Your Customers

By Ted Skinner

    Fri, Aug 9, 2019 @ 12:00 PM Strategy Execution

    At Rhythm Systems, one of our core values is to Keep Smart. In order to do that, we set aside an hour every week to come together virtually and learn something new. We call this time CABQ because we Communicate content, Ask questions, Bounce ideas off each other, and Question assumptions. A few weeks ago, I lead a review of John Warrillow’s The Automatic Customer: Creating a Subscription Model in Any Business.

    I was very interested in reading this book because it seems like everything is available as a subscription nowadays. You can get everything from dog treats to razor blades conveniently delivered to your door every month. When my ten year old daughter, Lilly, talked Grandma and Papa into buying her a subscription to Surprise Ride for her birthday, I knew that I was going to learn about the subscription model firsthand. Surprise Ride delivers a themed box each month complete with all materials needed, instructions, fun facts, snacks and more. Lilly now waits for the delivery man hoping for a new surprise after France and dinosaurs themed boxes came the first two months.  

    I was skeptical in thinking that everything that could be turned into a subscription already was. I mean, we can already get everything from Japanese candy to dive bar t-shirts delivered on a monthly basis - what else was left to explore? Even if a specific service doesn’t exist one could be achieved by creating a “Subscribe and Save” subscription to millions of Amazon’s products. However, I was thinking about subscriptions in the more traditional model, of which we have all been made aware with popular programs like Netflix and Dollar Shave Club, and my thinking needed to expand to new horizons. In the book, Warrillow points out nine different subscription models including membership web sites, consumables delivery, the front of the line service model and the surprise box model that my daughter loves so much.  

    There are five good reasons that you should explore whether a subscription model can help you turn some of your one-time customers into a long-term subscriber. 

    • It increases the lifetime value of the customer.
      • The longer you can keep your customer subscriber, the more valuable they become.
    • Locked in subscribers help smooth out demand.
    • Free market research.
      • Get continuous insight into customers and trends.
    • Get paid automatically.
      • Subscribers get invoiced as scheduled and typically pay in advance for the service, also creating a ripe market for add-on sales.
    • Subscriptions increase the value of your most valuable asset.

    Sharing this information with the entire Rhythm Systems team, we were able to think of lots of ways that our clients could use a subscription model to enhance their businesses. I encourage you to think hard about any potential areas that you can get your customers to subscribe and consider this when brainstorming potential business growth strategies. It might be something as simple as offering a dedicated customer support rep and improved response times for a monthly fee, or it might be a complete re-imagination of your business. It could also help you test ways to get into that new market that has eluded you in the past. There is a subscription model out there just waiting to be tested by your business.

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