Subscribed: Why the Subscription Model Will Be Your Company's Future - and What to Do About It

by Tien Tzuo

Customers have new expectations (and yes, those expectations have certainly been driven by millennials, but at this point, almost everyone shares them). They want the ride, not the car. The milk, not the cow. The new Kanye music, not the new Kanye record.

Amazon now has more than 90 million Prime members, or roughly half of all American households. Those customers pay almost $9 billion in membership fees alone and spend an average of $117 billion a year.

three big ideas at Amazon that we’ve stuck with over the years,” said Jeff Bezos. “Put the customer first. Invent. And be patient.”

“Make it easy for customers to leave if they want to. You can certainly ask them why they’re leaving, or try to win them back, but don’t get in their way—the

moving the customer identity and the shipping and packaging logistics online lets you design your physical stores as showrooms, not warehouses.

The new winners are using their physical stores as extensions of their online experiences, not the other way around. They’re flipping the script.

in the technology industry we would call The Life of Pablo a minimum viable product. That may sound like a pejorative term, but a minimum viable product is actually incredibly important. Only after it gets something out in the market can a business gather customer feedback and use this data to iterate and improve in a continuous deployment cycle.

You can subscribe to a Volvo XC40 (their compact SUV) for $600 a month, and that includes concierge services like packages delivered straight to your vehicle. Everything is covered except the gas: insurance, maintenance, wear-and-tear replacements, 24/7 customer care.

As lithium batteries replace combustion engines, automobile hardware will become commodified, and the new growth market will be in information services.

Henry Ford had a famous quote: “If I had asked people what they wanted, they would have said a faster horse.”

But the whole “print versus digital” argument assumed that the physical delivery of the content is more important than the content itself.

According to various predictions, by 2020 we’re expected

Room One really isn’t about your company at all—it’s

only then do you head into Room Two and articulate the value—the objective benefits based on roles and industries.

finally, Room Three is the product

Today, IT is where you compete. It’s where you spin up new services, new experiences. It’s where you set up test beds and experiments. It’s where you iterate and scale. It’s where you find the freedom to grow. And more and more business systems are enabling this kind of freedom because they’re based on subscribers, not SKUs.

We start with Pipeline,

Then we have the Acquire subsystem,

Deploy. How do we get our customers up and running

Run. As a subscription company, you succeed or fail based on how well and how long your subscribers take advantage of your service.

Expand. You want three things out of your subscribers: retention, growth, and advocacy.