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The Predictable Revenue Stream – Three Additional Subscription Models

By Ted Skinner

    Fri, Aug 21, 2015 @ 09:00 AM Strategies for Growth, Strategy Execution

    This is my final post based on John Warrillow’s The Automatic Customer: Creating a Subscription Business in Any Industry. We have already explored the five reasons you want subscribers and six different business models covered in Blog 1 and Blog 2 that you may also want to check out. Today we’ll examine Warrillow’s final three business models ripe for consideration of your new subscription business.

    1. The Simplifier Model takes one or more recurring tasks off your customers’ to-do lists.
    • This is the “set it and forget it” model.
    • Hassle Free Home Services charges a fixed monthly fee to completely service a homeowner’s to-do list with a 100-point inspection every month and fixes all of the issues (approximately $350/month for standard home). This removes the rampant boom and bust cycles of contractors having too little, or too much time, with 90% renewal rate.

    This Model is Best for:

    • A service that your customers need on an ongoing basis
    • Ability to sell to relatively affluent, busy consumers
    • A personal service like pet grooming, massage, tutoring, window cleaning, etc.
    1. The Network Model is one in which the utility of the subscription increases as more people subscribe.
    • WhatsApp allows customers unlimited messaging for $1 per year, eliminating per text fees from the cellular carrier. When purchased by Facebook, it was adding over 1 million users A DAY with a whopping $0 marketing budget.
    • ZipCar pioneered partial car ownership where members pay a monthly membership fee and a per-use charge

    This Model is Best for:

    • A product or service that’s utility improves as subscribers increase
    • When you offer a remarkable experience that people feel compelled to share
    • Tech savvy customers and prospects - the more connected your customers are the faster you can grow
    1. The Peace of Mind Model can produce a large amount of “float” as they collect premiums up front and have to hold it in reserve in order to potentially provide service in future.
    • Tagg is a pet tracking service that monitors your dog via GPS and cellular.
    • LoJack will keep an eye on your car or laptop.
    • Life Alert gives you peace of mind that your elderly parent hasn’t fallen and can’t get to the phone for medical attention.

    This Model is Best for:

    • Something that is difficult, expensive, or impossible to replace
    • A business that allows you to leverage existing assets to pay out a claim
    • A history of service calls to accurately predict the claim rates of customers

    If a model that makes sense for your company wasn’t mentioned in any of the nine that we covered in the blog posts, don’t worry. There still may be a multitude of subscriptions that can fit your business; you’ll just have to think a little bit harder. What are your clients willing to pay for on an ongoing basis that your staff can deliver and execute on? What are your customers currently putting up with that they would rather have taken care of? I wish you happy thinking as you explore if a subscription model is right for your business.

     

     

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