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

by Tien Tzuo

People increasingly view the prospect of buying something as unnecessary baggage.

Sadly, lots of companies still depend on customer neglect in order to sustain their zombie business models.

So what’s changed about the monthly subscription services today? Well, the smart ones realize that if they really want to retain their subscribers, they need to focus on building a great service, without relying on lame tricks like hiding the cancel button.

Tesla dealerships aren’t huge lots of cars swarming with salespeople working on commission. The point is to inform and answer questions. If you like the car, you can take care of the transactional stuff online.

It’s actually a commercial tool library. Husqvarna subscribers in Stockholm can take advantage of the Battery Box to access all kinds of heavy, battery-powered equipment like hedge trimmers, chainsaws, and leaf blowers. The tools are serviced daily to ensure that they are always in good condition and fully charged before customers take them home. Subscribers pay a flat monthly fee and simply return stuff when they’re done—no storage, no maintenance, no hassle.

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

“Simply flip between vehicles via the app as your needs change,” says Porsche on its website. You’re signing up with the company, not the car.

usership instead of ownership,

As Jessica Lessin of The Information says: “I still believe it’s much safer to build a business that doesn’t need any advertising to survive. Doing so forces you to focus 100% on your value to your readers. It’s the only way to make sure that what the news publishers deliver to readers in the future is smarter, more informed and more relevant than in the past

The core of The Wall Street Journal is not its physical newspaper, but rather its journalists, its brand, its culture, its reach, its values. Its real value (and requisite expense) is in its content, not its format. That is something that people will pay for.

Borrowing from the retail sector, they score every one of their readers on the multiple of three factors: recency (when did they last visit?), frequency (how often do they visit?), and volume (how many articles have they read?). Low scores indicate churn risks that their promotions group can approach with discount offers.

most of your profits are going to come from a minority of core users.

tease out the service-level agreement that sits behind the product.

So instead of a refrigerator, it’s the guarantee of fresh, cold food. Instead of a roof, maybe it’s a guaranteed source of solar energy.

But lots of them are missing a foundational thesis. A bigger reason to exist. They don’t have a why (much less a why now). And that’s the story you should really be starting with.

Room One really isn’t about your company at all—it’s about the context of your company. It’s about what you see going on in the broader commercial world that makes you relevant. Once you’ve established the context, only then do you head into Room Two and articulate the value—the objective benefits based on roles and industries. That’s when you start drilling a little deeper in order to provide specific role-based advice, industry trends, and relevant case studies. And finally, Room Three is the product itself, like the golden idol at the end of the tunnel in Raiders of the Lost Ark. In other words, what your service really does—its features and mechanics.

If you have more than 70 percent of your subscribers in your basic package, then you may have a perfectly respectable entry-level service that will ultimately kill you.

In today’s world, you have three new imperatives: acquire more customers, increase the value of those customers, and hold on to those customers longer.

Hustling add-ons and locking people into onerous terms is a drag and serves only to get people upset.

If you chase after anything with a pulse, chances are your initial customers will wind up being terrible. They’ll drag your service off in all sorts of unintended directions. Or worse yet, they won’t be able to pay much, and your business sinks.

The key is to realize that if you are selling in an English-speaking country, you are selling to all English-speaking countries.