The Automatic Customer summary

The financial perks aren’t the only reasons to shift into using subscriptions. Subscriptions actually make your life as an entrepreneur much easier.

First off, subscriptions significantly increase your company’s financial value. For potential investors, subscriptions are a predictable stream of cash flow.

If you sell goods online, there are two models you can follow to implement subscription services: the consumables model and the surprise box model.

In the consumables model, a company offers a subscription for a product that customers need to replenish regularly.

There are different models to follow if your goal is to build a community around your product or service.

In the private club model, a company offers a special service or experience to wealthier customers. The customers benefit from the network, goods or services it provides.

Some companies focus on helping their customers in times of need. You might be surprised, but such companies can offer subscription services too.

This is where the simplifier model comes in. The simplifier model aims to ease the lives of busy (and relatively affluent) customers by helping them with various ongoing tasks.

What if your company is based on offering something less concrete? If you sell content or information, the following models might be right for you.

If your customers come to you because of your expertise, you can use the membership website model. In this model, you make your expertise available behind a paywall.

Have you ever seen people go to the front of the line at airport security because they’re part of an elite group of flyers? They benefit from the front-of-the-line model of subscriptions. In front-of-the-line models, a company offers priority access to something for people who subscribe.

This sort of offer is particularly attractive to people who can’t solve certain problems on their own. Salesforce.com, for example, provides support to its customers, but prioritizes them by the kind of package they’ve bought. Customers who bought the most expensive package get a response within fifteen minutes.

If you’ve ever subscribed to something yourself, you’ll know that while there are plenty of benefits, subscriptions can be complicated. As a subscription provider, one of your biggest challenges is learning how to measure progress.

Traditional metrics don’t work with subscriptions. The profit-and-loss statement (P&L), which displays the amount of money a business retains after its expenses are paid, will become misleading. In a year, the clients’ payments will be a fraction of the original amount (1/12), while the expenses will stay the same.

So if you’ve assessed your situation and decided you want to incorporate a subscription model into your business plan, what’s the next step? How do you acquire new customers and limit their loss?

Subscribing to something is a serious commitment, but there are a number of tricks you can use to convince even the most reluctant potential customers.