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

How many of you have a digital or physical monthly subscription to goods or services? Haven’t subscriptions been around for decades or even centuries? Newspapers and other physical subscriptions of the 20th Century seem to now be dying a slow death and some may argue that they have become a business model that loses money. In the 21st Century, new companies have emerged to help us to rethink how subscriptions services and models can still work.

In a world where we now have Software as a Service (SaaS), Infrastructure as a Service (IaaS), Pandora, Black Rifle Coffee Company, Amazon Prime, Beauty Box, Stitch Fix, etc. a subscription models fulfill business and personal needs in a whole new way. Companies like have led the charge into new business model thinking, revenue streams, financial forecasting. As a culture, individuals are also rethinking priorities on how their money is spent.

Perhaps you live in a large metropolis and do not have an every-day need for a vehicle. However, once or twice a month you want to spend the weekend at the beach or visiting family in the mountains; you can subscribe to a service where you can schedule the use of a car for just such an occasion. While we are on the subject of the automotive industry, some car manufacturers are working through a subscription means to drive vehicles from a fleet that is maintained and managed by the manufacturer or an automobile dealership. A subscriber can simply take the car they are driving and turn it in when it needs maintenance, and switch out for another vehicle in the available subscription fleet.

Remember when Blockbuster and Hollywood Video were running an incredible, booming business? Then came Netflix and completely up-ended that business model. Now how many Blockbuster or Hollywood Video stores do you see in your town now?

Tien Tzuo, the author of Subscribed is clear to state that there are no indications that subscription services are going to force all “Brick and Mortar” business to go bankrupt or out of business. However, it has forced many to adjust their business model, accommodating a more customer-centric set of needs. Many of us live in an area where we can now go to the local grocer or department store’s website, provide a list of what we want to buy from their in-store stock, and have it brought out to your car when you arrive; or better yet have it delivered right to your front door.

Back to the subscription model for the 21st Century. How is it different than the Columbia House cassette or CD subscriptions of the 1970s, 80s, and 90s? Well, one major difference is that in today’s subscription model the consumer can cancel at almost any time they want. There is no long-term commitment. That means that the businesses have to be creative in how they appeal to their target audience. The savvy subscription business is constantly evaluating the effectiveness of the options they offer. It is critical that they keep an eye on “Churn”. Churn is the volume of subscribers that they loose over a given time. They also need to know the difference between churn and when a subscriber chooses one of their alternative subscription offerings. There are people who are now employed to understand the reasons for churn and/or changes to existing subscriptions, so that these companies can ensure they are truly reaching their target market with the greatest effectiveness.

Take the time to read this book. It is insightful, informative, and eye-opening. I want to thank John Bassett and the rest of the owners at GSI for encouraging me to read this book. It has brought a whole new way of thinking about business into my mindset.