I’m a big fan of subscription models. As anyone who is a client of Acumenica knows, we have a subscription model for fees in place, and we have done for decades. (That’s nothing unusual by the way, most modern firms will have this). Subscription models are great for the supplier and the customer:
Appeals for the supplier:
- Predictable cash flow
- Reduced churn
- Reduced admin
- Improved communication and insight
For me, the biggest appeal is customer retention. Subscription models create environments where retention, rather than defection, is the default. And cash flow. Imagine, on the first of each month, at least 75% (and up to 100%) of your month’s revenue landing in your bank account.
Appeals for the customer:
- Predictable costs
- Convenience
- “Set and forget”
Customers seem to love the fact that they don’t need to remember to order or organise whatever it is. Your accounts are safe, your razor blades are here, your dog isn’t going to run out of food.
We know all about the businesses and industries that are already killing the subscription model: we’ve already mentioned accounting, razor blades and dog food. And then of course there’s software, meal prep, gym memberships, streaming services. So far, so predictable, but there are others coming on, such as car ownership, wellness, air travel, education. All of these are big business but you can implement the principles in your small business too. Recently we’ve helped our clients implement subscription models in the following businesses: hair and beauty – customer selects from a range of monthly treatments; vape shop – customer calculates their monthly requirements and these are posted out; handyman services – pay a monthly fee and then when you need a handyman, you call them and they come out (not sure how this one will pan out if I’m honest.
Basically, if you have a recurring customer base, you can convert this to a subscription model. Some are easier than others, but with a bit of effort you can get there. And even if you’re in a business that isn’t naturally recurring, you can probably change that: think make-up subscription boxes, fashion boxes, cupcake(?) boxes. I even heard about a Bacon of The Month of the month box recently.
