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Part 0: Introduction
Part 1: The advantages of automatic customers
Part 2: The nine subscription business models
Biz Models 1 Membership website
Biz Models 2 All-you-can-eat library
Biz Models 3 Private club
Biz Models 4 Front-of-the-line
Biz Models 5 Consumables
Biz Models 6 Surprise box
Biz Models 7 Simplifier
Biz Models 8 Network
Biz Models 9 Peace-of-mind
Part 3: How to build your subscription business
Step 1 Know your maths
Step 2 Manage for cash flow
Step 3 Understand the psychology
Step 4 Scale up intelligently
Table of Contents
The more recurring revenue you can build into your business, the more your business is worth. If you can develop your business model so buying from you becomes automatic – so you bring in sales without having to resell the customer every month – you're in a much stronger position.
That's why Amazon (Amazon Prime and Kindle Unlimited), Apple (Joint Venture and iTunes) and pretty much every promising Silicon Valley startup which launches today is hard at work developing and offering subscription-based products and services. Subscribers are better than customers and when you have subscribers, you can project your future revenues with a reasonable degree of certainty.
If you're smart, you'll find a way to add a subscription offering to what you already offer your customers.
"The biggest factor in driving up the sellability of your company is the degree to which your company can run without you, the owner. That's a head scratcher for a lot of owners who are the best salespeople in their business. The secret is to build recurring revenue that brings in sales without having to resell the customer each month. Recurring revenue makes your business a lot more valuable and less stressful to run." — John Warrillow
Big companies like Amazon and Apple are busy transforming themselves into subscription businesses because they understand that subscribers are better than customers. Research shows quite definitively when people invest in a subscription, they're motivated to buy more to "get their money's worth." That's a great dynamic to have working in your favor.
Subscription based business models are currently undergoing a major renaissance thanks to four factors:
1The current generation of consumers value access more than assets. Thanks to their mobile, tech savvy lifestyles, they would rather rent than be burdened by ownership.
2The more reliable Internet access has become, the more jobs we have become willing to outsource to the Cloud. We do more online than ever before.
3More businesses sell direct to customers online than ever before which gives them more data about what customers really want. That data has become a valuable asset in and of itself.
4The cost of merchandising products digitally today is so low companies can carry products which appeal to only a small sliver of customers. That allows customers to express their individuality – which they do with a subscription.
"Virtually every business – from a start-up to a Fortune 500 company, from a home contractor to a manufacturer – can create at least some recurring revenue if it is willing to jettison the old way of doing things to pioneer a new business model." — John Warrillow