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The Automatic Customer: Creating a Subscription Business in Any Industry
The lifeblood of your business is repeat customers. But customers can be fickle, markets shift, and competitors are ruthless. So how do you ensure a steady flow of repeat business? The secret—no matter what industry you’re in—is finding and keeping automatic customers.These days virtually anything you need can be purchased through a subscription, with more convenience than ever before. Far beyond Spotify, Netflix, and New York Times subscriptions, you can sign up for weekly or monthly supplies of everything from groceries (AmazonFresh) to cosmetics (Birchbox) to razor blades (Dollar Shave Club).According to John Warrillow, this emerging subscription economy offers huge opportunities to companies that know how to turn customers into subscribers. Automatic customers are the key to increasing cash flow, igniting growth, and boosting the value of your company.Consider Whatsapp, the internet-based messaging service that was purchased by Facebook for $19 billion. While other services bombarded users with invasive ads in order to fund a free messaging platform, Whatsapp offered a refreshingly private tool on a subscription platform, charging just $1 per year. Their business model enabled the kind of service that customers wanted and ensured automatic customers for years to come.As Warrillow shows, subscriptions aren’t limited to technology or media businesses. Companies in nearly any industry, from start-ups to the Fortune 500, from home contractors to florists, can build subscriptions into their business.Warrillow provides the essential blueprint for winning automatic customers with one of the nine subscription business models, • The Membership Website Model: Companies like The Wood Whisperer Guild, ContractorSelling, and DanceStudioOwner offer access to highly specialized, high quality information, recognizing that people will pay for good content. This model can work for any business with a tightly defined niche market and insider information. • The Simplifier Model: Companies like Mosquito Squad (pest control) and Hassle Free Homes (home maintenance) take a recurring task off your to-do list. Any business serving busy consumers can adopt this model not only to create a recurring revenue stream, but also to take advantage of the opportunity to cross-sell or bundle their services. • The Surprise Box Model: Companies like BarkBox (dog treats) and Standard Cocoa (craft chocolate) send their subscribers curated packages of goodies each month. If you can handle the logistics of shipping, giving customers joy in something new can translate to sales on your larger e-commerce site.This book also shows you how to master the psychology of selling subscriptions and how to reduce churn and provides a road map for the essential statistics you need to measure the health of your subscription business.Whether you want to transform your entire business into a recurring revenue engine or just pick up an extra 5 percent of sales growth, The Automatic Customer will be your secret weapon.
226 pages, Kindle Edition
First published February 1, 2015
402 people are currently reading
3021 people want to read
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August 9, 2017
A helpful, well-organized and quick read about the many advantages (and a few challenges) of building a subscription based business. If, for instance, you are an Amazon Prime customer, that is a large scale and classic example of the subscription model. Netflix would be another.
I have a professional service business, some aspects of which I'm planning to move to a subscription based format. This book gave some helpful insight for me, and also has sections that deal with product-based businesses, and seven additional types. If you'd like a quick, broad overview of starting or growing a subscription based business, I would recommend Warrillow's book.
I have a professional service business, some aspects of which I'm planning to move to a subscription based format. This book gave some helpful insight for me, and also has sections that deal with product-based businesses, and seven additional types. If you'd like a quick, broad overview of starting or growing a subscription based business, I would recommend Warrillow's book.
March 25, 2020
دو فصل اول به شکل تعجب آوری شلخته و غیر سبز و حتی کمی قدیمی بود. با این حال خوندن این دو فصل بسیار برای من با بارش فکری همراه بود و ایده های مختلف رو به ذهنم میاورد هرچند که خب حس لذت بخشی از خوندنش نداشتم.
فصل سوم اما اون چیزی بود که شما به امید اون این کتاب رو برمیدارید. فوت های کوزه گری ساختن بیزنس های اشتراکی. فصل سه واقعا خوب بود و همین باعث میشه که این به کتاب واقعا معمولی چهار ستاره بدم:))
فصل سوم اما اون چیزی بود که شما به امید اون این کتاب رو برمیدارید. فوت های کوزه گری ساختن بیزنس های اشتراکی. فصل سه واقعا خوب بود و همین باعث میشه که این به کتاب واقعا معمولی چهار ستاره بدم:))
March 9, 2024
An excellent guide to creating a subscription business, packed with actionable insights backed by data and real-world examples. It has the right mix of theory and application.
The examples include software companies (e.g., HubSpot, Basecamp, FreshBooks), services companies (e.g., Mosquito Squad, Hassle Free Home Services), and product companies (e.g., BirchBox, Blacksocks).
Notes
Who Wins in the Subscription Economy?
The act of subscribing spurs members to buy more frequently and from a broader array of categories. When you pay for an Amazon Prime membership, you want to buy from Amazon to get your money's worth.
Why You Need Automatic Customers
A subscription offering creates customers who interact with your company each month, and every touch point is an opportunity to sell more.
A subscription service is more resilient to recession. In a recession, people may pause new purchases but remain subscribed (e.g., maintenance services).
Membership Website Model
People have realized that free info is often low quality, so they've become more willing to pay for membership sites containing quality info.
The most financially successful membership sites focus on helping biz owners master a specific industry or skill.
It can be difficult to make a good living from subscriptions alone, so offer adjacent products and services (e.g., events, coaching, courses).
Front-of-the-Line Model
Sell priority access to a subset of customers. E.g., Salesforce.com sells support plans with different response times.
Software like Zendesk or Desk.com lets you auto-prioritize tickets from customers you specify.
Simplifier Model
Take 1 or more recurring tasks off customers' to-do lists. E.g., home maintenance, lawn care, bookkeeping.
Interaction breeds familiarity, so when customer needs a big job that falls outside the typical service, they're more likely to ask you to do it rather than shopping around.
Peace-of-Mind Model
Offer insurance against something your customers hope they'll never need. E.g., home security, website uptime, online reputation management.
This is different than simplifier model, in which you preemptively service customers. Here, you help only if customer needs it (like insurance).
The New Math
According to GAAP, a subscription is recognized on the P&L in equal installments over life of subscription.
LTV (lifetime value) = MRR multiplied by # of months customer stays, minus cost of servicing them.
To be viable over long term, must have LTV:CAC (customer acquisition cost) ratio of 3:1 or better. The most successful have 8:1.
Churn = MRR at beginning of month divided by MRR lost in month, or # of customers lost in month divided by total customers at beginning of month.
Acceptable churn varies greatly based on kind of biz.
Cost of serving each new subscriber includes costs of your staff to onboard and serve customer over time, and is considered COGS.
Margin = MRR - cost of serving.
LTV:CAC = (MRR * margin) / churn.
The Cash Suck vs. the Cash Spigot
CAC is almost always higher than MRR, so it takes months to profit from a new subscriber.
CAC payback period = total sales and marketing costs for month / new MRR added for month, or
CAC payback period = (total sales and marketing costs for month) / (new MRR added for month * gross margin).
Acceptable CAC payback period depends on how sticky customers are and how much they spend. Under 6 months is excellent; over 36 months is concerning.
To get more cash up front, charge for the year in advance, or charge a setup or initiation fee. HubSpot disguises its setup fee as a "success training package."
Charging up front can lengthen sales cycle and increase CAC.
The Psychology of Selling a Subscription
Give a big ROI. Think 10x the value of the alternative, not a 10% savings.
Make a rational case for the convenience or reliability of your offering.
You may want to make subscriptions the only option for buying what you sell, since most customers prefer to buy a la carte. This is especially important if you want to sell subscriptions to those already buying a la carte. If you offer both options, customers may feel you're not committed to the subscription offering, and may not take it seriously enough to try it.
If your offering is hard to describe and customers have to use before they understand benefits, consider offering free or discounted trial.
Scaling
The more a subscriber uses your services, the less likely they are to churn. Insert your service into the daily life of the subscriber so they need to interact with it to perform their daily tasks, and can't ignore it.
Onboarding must get subscriber to break old habits and insert your service into their daily lives. This must be done in 1st weeks (up to 90 days) after signing up.
Give new subscriber a quick win or "wow" within 1st 90 days that's fun or motivational.
Charging for a year up front locks in a year of renewals, gets cash up front, and prompts customer to make a bigger commitment to adopting your subscription into their daily lives, making them more likely to renew.
Most subscription companies have found that charging for the year up front reduces churn.
Over-communicate in 1st 90 days, then settle down.
Sprinkle in spontaneous gifts. Use data gathered on subscriber to tailor gifts.
Larger businesses churn less than smaller ones, because they're generally more stable and less price-sensitive. But larger businesses are harder to win, and the longer, more complex sales cycle increases CAC.
Net churn = gross churn - upgrade revenue (getting existing customers to upgrade).
Reduce logo churn (total loss of subscriber's company) by offering multiple subscriptions to same company.
The examples include software companies (e.g., HubSpot, Basecamp, FreshBooks), services companies (e.g., Mosquito Squad, Hassle Free Home Services), and product companies (e.g., BirchBox, Blacksocks).
Notes
Who Wins in the Subscription Economy?
The act of subscribing spurs members to buy more frequently and from a broader array of categories. When you pay for an Amazon Prime membership, you want to buy from Amazon to get your money's worth.
Why You Need Automatic Customers
A subscription offering creates customers who interact with your company each month, and every touch point is an opportunity to sell more.
A subscription service is more resilient to recession. In a recession, people may pause new purchases but remain subscribed (e.g., maintenance services).
Membership Website Model
People have realized that free info is often low quality, so they've become more willing to pay for membership sites containing quality info.
The most financially successful membership sites focus on helping biz owners master a specific industry or skill.
It can be difficult to make a good living from subscriptions alone, so offer adjacent products and services (e.g., events, coaching, courses).
Front-of-the-Line Model
Sell priority access to a subset of customers. E.g., Salesforce.com sells support plans with different response times.
Software like Zendesk or Desk.com lets you auto-prioritize tickets from customers you specify.
Simplifier Model
Take 1 or more recurring tasks off customers' to-do lists. E.g., home maintenance, lawn care, bookkeeping.
Interaction breeds familiarity, so when customer needs a big job that falls outside the typical service, they're more likely to ask you to do it rather than shopping around.
Peace-of-Mind Model
Offer insurance against something your customers hope they'll never need. E.g., home security, website uptime, online reputation management.
This is different than simplifier model, in which you preemptively service customers. Here, you help only if customer needs it (like insurance).
The New Math
According to GAAP, a subscription is recognized on the P&L in equal installments over life of subscription.
LTV (lifetime value) = MRR multiplied by # of months customer stays, minus cost of servicing them.
To be viable over long term, must have LTV:CAC (customer acquisition cost) ratio of 3:1 or better. The most successful have 8:1.
Churn = MRR at beginning of month divided by MRR lost in month, or # of customers lost in month divided by total customers at beginning of month.
Acceptable churn varies greatly based on kind of biz.
Cost of serving each new subscriber includes costs of your staff to onboard and serve customer over time, and is considered COGS.
Margin = MRR - cost of serving.
LTV:CAC = (MRR * margin) / churn.
The Cash Suck vs. the Cash Spigot
CAC is almost always higher than MRR, so it takes months to profit from a new subscriber.
CAC payback period = total sales and marketing costs for month / new MRR added for month, or
CAC payback period = (total sales and marketing costs for month) / (new MRR added for month * gross margin).
Acceptable CAC payback period depends on how sticky customers are and how much they spend. Under 6 months is excellent; over 36 months is concerning.
To get more cash up front, charge for the year in advance, or charge a setup or initiation fee. HubSpot disguises its setup fee as a "success training package."
Charging up front can lengthen sales cycle and increase CAC.
The Psychology of Selling a Subscription
Give a big ROI. Think 10x the value of the alternative, not a 10% savings.
Make a rational case for the convenience or reliability of your offering.
You may want to make subscriptions the only option for buying what you sell, since most customers prefer to buy a la carte. This is especially important if you want to sell subscriptions to those already buying a la carte. If you offer both options, customers may feel you're not committed to the subscription offering, and may not take it seriously enough to try it.
If your offering is hard to describe and customers have to use before they understand benefits, consider offering free or discounted trial.
Scaling
The more a subscriber uses your services, the less likely they are to churn. Insert your service into the daily life of the subscriber so they need to interact with it to perform their daily tasks, and can't ignore it.
Onboarding must get subscriber to break old habits and insert your service into their daily lives. This must be done in 1st weeks (up to 90 days) after signing up.
Give new subscriber a quick win or "wow" within 1st 90 days that's fun or motivational.
Charging for a year up front locks in a year of renewals, gets cash up front, and prompts customer to make a bigger commitment to adopting your subscription into their daily lives, making them more likely to renew.
Most subscription companies have found that charging for the year up front reduces churn.
Over-communicate in 1st 90 days, then settle down.
Sprinkle in spontaneous gifts. Use data gathered on subscriber to tailor gifts.
Larger businesses churn less than smaller ones, because they're generally more stable and less price-sensitive. But larger businesses are harder to win, and the longer, more complex sales cycle increases CAC.
Net churn = gross churn - upgrade revenue (getting existing customers to upgrade).
Reduce logo churn (total loss of subscriber's company) by offering multiple subscriptions to same company.
November 23, 2017
An interesting book on building a business selling through a subscription. As we have seen for a long time, the main giants are trying to sell not single products but services with a subscription, keeping buyers as long as possible. The book gives different examples for different industries and types of business. It was very interesting to read it, I recommend.
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Интересная книжка по построению бизнеса продавая через подписку. Как мы давно уже видим основные гиганты стараются продавать не одиночные продукты а сервисы с подпиской удерживая покупателей как можно на длительное время. В книжке приводятся разные примеры для разных отраслей и видов бизнеса. Было очень интересно читать ее, рекомендую.
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Интересная книжка по построению бизнеса продавая через подписку. Как мы давно уже видим основные гиганты стараются продавать не одиночные продукты а сервисы с подпиской удерживая покупателей как можно на длительное время. В книжке приводятся разные примеры для разных отраслей и видов бизнеса. Было очень интересно читать ее, рекомендую.
I read books on Scribd or Google Books by
Readlax Chrome Extension
August 23, 2019
اگر بپذیریم فراروند اقتصاد از مالکیت به اشتراک در حال حرکت است، بلافاصله باید قبول کنیم که مدلهای کسبوکار اشتراکی تاثیرگذارترین الگوی اقتصادی در آینده خواهند بود. روندی که نه در آینده بلکه سالهاست شروع شده است.
با وجود چالشهای زیادی که برای چنین کسبوکارهایی در ایران وجود دارد، سالهاست کسبوکارهای آنلاین بزرگی با این مدل شروع به کار کردهاند و به زودی شاهد رشد بیشتر این نوع مدل خواهیم بود.
همه اینها به این معناست که اگر میخواهید سهمی از آینده اقتصاد ایران داشته باشید باید با این نوع مدل کسبوکار آشنا شوید و این کتاب مرجع بسیار خوب و جامعی برای آن است. من سالهاست با چندین کسبوکار اشتراکی کار کردهام و تایید میکنم این کتاب به خوبی مزایا و چالشهای این نوع کسبوکارها را تبیین کرده است.
با وجود چالشهای زیادی که برای چنین کسبوکارهایی در ایران وجود دارد، سالهاست کسبوکارهای آنلاین بزرگی با این مدل شروع به کار کردهاند و به زودی شاهد رشد بیشتر این نوع مدل خواهیم بود.
همه اینها به این معناست که اگر میخواهید سهمی از آینده اقتصاد ایران داشته باشید باید با این نوع مدل کسبوکار آشنا شوید و این کتاب مرجع بسیار خوب و جامعی برای آن است. من سالهاست با چندین کسبوکار اشتراکی کار کردهام و تایید میکنم این کتاب به خوبی مزایا و چالشهای این نوع کسبوکارها را تبیین کرده است.
October 22, 2017
Подробнейшее руководство о том, как построить (или трансформировать/монетизировать существующий) бизнес по подписке. Понятно, что модель больше всего востребована в IT и стартапах, но в книге множество кейсов из самых разных отраслей. Рассматривается несколько моделей "бизнеса по подписке"; способы продажи подписки; финансовая сторона такого бизнеса (планирование, риски, привлечение инвестиций и т.п.). Очень хорошо расписан жизненный цикл "клиента по подписке", предлагается 10 решений для удержания клиентов.
PS Лично мне читать было особенно интересно, т.к. автор работает в консалтинговой компании, и приводит в тексте очень много примеров из опыта своей компании, как именно они внедряли продажу консалтинговых услуг по подписке. Нашёл несколько интересных фишек, буду тестировать ;)
PS Лично мне читать было особенно интересно, т.к. автор работает в консалтинговой компании, и приводит в тексте очень много примеров из опыта своей компании, как именно они внедряли продажу консалтинговых услуг по подписке. Нашёл несколько интересных фишек, буду тестировать ;)
November 17, 2019
Сейчас каждый бизнес может стать бизнесом по подписке. Даже если вы думаете, что это не про вашу компанию, вы работаете в классической и старой экономике, то это не так. Джон Уориллоу на примере большого количества компаний из разных отраслей доказывает, что подписную бизнес-модель можно создать везде. В результате вы получаете предсказуемые продажи, стабильный, ежемесячный поток денег в компанию и более высокую оценку бизнеса, по сравнению с классической моделью. На момент выхода "Автоматического покупателя" моя компания "Флориста" уже несколько лет использовала подписную модель. Но с помощью работы Джона Уориллоу нам удалось улучшить несколько процессов �� повысить прибыльность бизнеса. Рекомендую прочитать книгу всем предпринимателям и маркетологам и сделать упражнение на поиск подписных моделей на товары или услуги вашей компании.
February 7, 2017
Since Rich20 is actively developing a subscription-based monthly product, we want to pack as much value as possible. This book gets right to the point and delivers on the promise. Very good insights on the development of recurring business models over the last 10 years, what types of models work and how to keep people happy long-term. Quick read, too. Legit!
April 22, 2015
Basically a list of subscription business models and a few metrics. Possibly just outdated in that we have so many examples now, the references are common and not needing as much explanation.
July 10, 2017
This book talks about subscription based business model. Author gives so many examples on subscription based business companies and he is suggesting this is the good approach to run a business in current situation.
WhatsApp, apple, amazon, Microsoft and many big companies already following this approach to maximise their profit. Amazon prime is a kind of subscription which makes the customers to buy more products in amazon and it stopping the customers to buy from other competitors.
Author says companies have to give more preference to recurring customers than the one time customers. In recurring based business first allow the customers to trial the product for a month. Also in this business model customers will get more value over a period of time.
With in 90 days make the customers to onboard in to your product. Other wise they will leave.
Also this book gives suggestions on how to create a subscription based business for any kind of business and how to approach your customers.
It's a good book to read
WhatsApp, apple, amazon, Microsoft and many big companies already following this approach to maximise their profit. Amazon prime is a kind of subscription which makes the customers to buy more products in amazon and it stopping the customers to buy from other competitors.
Author says companies have to give more preference to recurring customers than the one time customers. In recurring based business first allow the customers to trial the product for a month. Also in this business model customers will get more value over a period of time.
With in 90 days make the customers to onboard in to your product. Other wise they will leave.
Also this book gives suggestions on how to create a subscription based business for any kind of business and how to approach your customers.
It's a good book to read
April 7, 2020
Abonelik iş modeli iştah kabartan bir iş modeli olduğu için yer yer gaza gelebilirsiniz. Dili oldukça sade. İlk başları çok akıcı ama sona doğru formüller işin içine girdiğinden tempo biraz düşüyor.
Nakit akış denge formülleri, abonelikleri uzun süre sistemde tutma ve yeni abonelik oluşturma gibi tavsiyeler barındırıyor. Yazar aboneliği kendi içerisinde kategorize edip güzel bir şekilde anlatmış. Abonelik konusunda bilgisi olmayan bir kişi bu kitabı okuduktan sonra aboneliğe hakim olacağını düşünüyorum.
Kitap tamamen Amerikan rüyasından ibaret. Örnekleri ve modelleri tamamen Amerika pazarının yansımaları. Burada yazılanlarla kesinlikle Türkiye’de şirket kurmayın. Türkiye pazarı tamamen kurtlar sofrası. Onun için dikkat etmenizi tavsiye ediyorum.
Nakit akış denge formülleri, abonelikleri uzun süre sistemde tutma ve yeni abonelik oluşturma gibi tavsiyeler barındırıyor. Yazar aboneliği kendi içerisinde kategorize edip güzel bir şekilde anlatmış. Abonelik konusunda bilgisi olmayan bir kişi bu kitabı okuduktan sonra aboneliğe hakim olacağını düşünüyorum.
Kitap tamamen Amerikan rüyasından ibaret. Örnekleri ve modelleri tamamen Amerika pazarının yansımaları. Burada yazılanlarla kesinlikle Türkiye’de şirket kurmayın. Türkiye pazarı tamamen kurtlar sofrası. Onun için dikkat etmenizi tavsiye ediyorum.
September 9, 2020
I wasn't completely new to the benefits of subscription model businesses, but there were definitely good takeaways:
- Explains 9 TYPES of subscription model businesses with examples
- Explains how to adjust your metrics in order to accurately monitor your business performance. E.g measuring your business using the traditional P&L (profit and loss) statement is not a good indication of performance for subscription businesses; it is more appropriate to take your MRR (monthly recurring revenue) and perform a LTV:CAC (lifetime value of a customer: customer acquisition) cost calculation and ensure it is above 3:1
Overall a good read!
- Explains 9 TYPES of subscription model businesses with examples
- Explains how to adjust your metrics in order to accurately monitor your business performance. E.g measuring your business using the traditional P&L (profit and loss) statement is not a good indication of performance for subscription businesses; it is more appropriate to take your MRR (monthly recurring revenue) and perform a LTV:CAC (lifetime value of a customer: customer acquisition) cost calculation and ensure it is above 3:1
Overall a good read!
August 19, 2020
کتاب مفیدی بود. ایده های خوبی به ادم میده. از نکاتی که میتونم درباره این کتاب بگم، مثال های فراوانی هستش که نویسنده میاره. این کتاب درباره کسب و کار اشتراکی بود که نویسنده کلی کسب و کار رو پشت سر گذاشته بود و به قولی از چم و خم بازار سر در میاره. اما کاش بتونم کتابی پیدا کنم که همین بررسی ها رو درباره انواع کسب و کار ها انجام بده. ایده خوبی نیست؟ بررسی کسب و کار های موفق از دید کسی که سال ها تو این کاره
June 14, 2021
نکات آموزنده ای بود ولی برای ایران هنوز یه سری این نکات قابل استفاده نیست. ولی امید هست بشه
October 16, 2023
(The English review is placed beneath the Russian one)
Думаю, я понимаю, почему так много людей поставили этой книге положительный рейтинг. Подумайте сами, что выгоднее для бизнеса: получать оплату за товар/услугу каждый месяц или только один раз? Именно об этом подумали умельцы в Microsoft и стали продавать Microsoft Office по подписке. К счастью я успел купить Microsoft Office 2010, заплатив один раз. Теперь на официальном сайте Microsoft уже и не найти такого продукта. Теперь нам предлагают платить за то же самое каждый месяц. Ну разве это не замечательный бизнес-модель? Вот если бы можно все товары и услуги продавать по подписке и получать деньги не раз и не два, а каждый месяц. К примеру, вы покупаете видеокарту и платите, условно говоря, 20,000 рублей и живёте с этой видеокартой лет 5-10, как это произошло в моём случае, когда я купил видеокарту Radeon 7770 HD больше 11 лет назад и всё это время я не испытывал никаких проблем ни с играми ни со всем остальным. Но разве это выгодный бизнес по сравнению с тем, если бы я за неё платил 1,000 рублей, но каждый месяц? Разумеется, такая модель намного притягательный для бизнеса, чем «один раз и навсегда», при которой нужно вкладывать дополнительные средства в инновации, с целью выпуска новинок. А новинки эти могут и не окупиться. Так что же делать? Предложить покупателю платить за товар/услугу каждый месяц, а если он попытается соскользнуть с этого крюка, обложить его дополнительными издержками, чтобы исключить такой негативный поворот событий. Хорошим примером являются компьютерные игры по подписке. В тот период моей жизни, когда я был увлечён одной такой игрой, я тратил по 200 рублей в месяц на подписку. Много ли это? Очень много, если учитывать что игра, купленная «один раз и навсегда» стоит в среднем 500 рублей. Но давайте посмотрим на этот бизнес и с другой стороны. Компания Озон, российский аналог американского Amazon, предлагает подписку, благодаря которой покупатели будут платить меньше за товар. Выгодно ли это? Ну, если честно, то не особо, ведь цены там не всегда самые низкие даже с учётом клубной карты (за которую человек и платит ежемесячно), а с другой стороны, человек не может уйти к другому продавцу, ибо тогда теряется весь смысл нахождения в членском клубе. Другими словами, бизнес по подписке приковывает покупателя к продавцу финансовыми цепями, и ему становится довольно трудно не покупать. В итоге у бизнеса нет особой потребности к осуществлению инноваций. Зачем это делать, если клиент и так ежемесячно тебе платит?
Я всё это написал к тому, что желание многих бизнесменов поймать на крючок покупателей, очень велико и именно поэтому книга настолько популярна, точнее, имеет настолько высокий рейтинг. Однако если уйти от теории и вернуться к реальности, окажется, что желать подобной модели ценообразование – одно, а вот воплотить в реальность, совсем другое. Другими словами, подобную модель очень тяжело имплементировать, т.е. чтобы бизнес на этой модели работал и приносил прибыль. Да, автор книги просто сыпет различными примерами, как тот или иной предприниматель применил данную модель, однако мы не знаем (автор ничего не сообщат нам) как обстояли дела с чистой прибылью в соотношении с конкурентами, т.е. насколько хорошо, по сравнению с конкурентами, такой бизнес работал. Да, предложить можно любую цену и любые условия, но кто из клиентов на это согласится? Этот вопрос преследовал меня на протяжении всей книги, ибо уж очень всё красиво выходит на бумаге. Да, некоторые типы бизнес (те, что работают в Интернете) могут попробовать использовать такую модель ценообразования, но вот если вы продаёте компьютерное железо, продукты питания, книги (физические) и даже компьютерные игры (в интернете), то применить такую форму ценообразования очень и очень сложно, ибо люди должны видеть, в чём лично для них будет заключаться прибыль от такой формы ценообразования. Многим людям проще один раз заплатить, чем каждый раз думать «ну вот очередная оплата» или «а хватает ли денег на моём счету?», т.е. выгоды должны быть очень существенны, чтобы покупатель пошёл на такие жертвы. Мне, чтобы работать с текстом, достаточно старой версии Microsoft Office 2010 года выпуска. Какой мне смысл не просто покупать новую версию Microsoft Office, но ещё и платить каждый месяц? То же самое касается всех товаров, какие я могу вспомнить, за исключением фильмов и музыки. В этом случаи подписка оправдана, но только если покупатель является большим любителем музыки или фильмов, т.е. потребление осуществляется в больших количествах. Много ли таких потребителей? Фильмы – одно из самых популярных развлекательных вещей, да и конкурентов у Netflix не так и много. Однако всё оста��ьные бизнесы должны очень хорошо всё продумать, чтобы не оказалось, что 90% всех клиентов этой фирмы просто не хотят вносить ежемесячные платежи. Да, автор пишет, как этого избежать, т.е. мол, нужно предложить только такой способ получения товаров/услуг и больше никакой. Собственно что-то подобное сделало и Microsoft, ибо мы теперь не можем купить старую версию «один раз и навсегда». И такой способ мог бы гарантировать успех, если бы не конкуренты. Конкуренция ставит серьёзные барьеры на пути введения такой формы ценообразования, ибо если услуги по подписке не приносят заметной разнице в цене, то зачем она вообще нужна?
Как итог: автор написал книгу по одному способу ценообразования, которому обычно посвящают одну главу в книгах по маркетингу и книгах по ценообразованию. За это нужно дать награду автору, ибо растянуть такую тему на целую книгу, для этого нужно обладать талантом. В остальном же книга ничего не добавляет к тому, о чём пишут в своих книгах по ценообразованию в маркетинге другие авторы. Примеры, которыми и наполнена книга, являются лишь примерами того, как это происходит в других фирмах и в других странах. Проблема в том, что если такой способ ценообразования получилось у них в США, это вовсе не гарантирует, что это получится у вас в России или Индии или в Германии. Вот поэтому книга довольно бессмысленная.
Кстати, если кто-то думает что книга Subscribed: Why the Subscription Model Will Be Your Company's Future - and What to Do About It, лучше, то я должен предупредить, что по сути, они идентичны. Всё что пишет автор одной книги можно найти у автора другой. Абсолютно одно и то же.
I think I understand why so many people gave this book a positive rating. Think about it, what is more profitable for a business: to get paid for a product/service every month or only once? That's exactly what the clever folks at Microsoft thought of and started selling Microsoft Office on a subscription basis. Fortunately, I managed to buy Microsoft Office 2010, paying once. Now, on the official Microsoft website, you can no longer find such a product. Now we are offered to pay for the same thing every month. Isn't this a great business model? If only it were possible to sell all goods and services on a subscription basis and receive money not once or twice but every month. For example, you buy a video card and pay, let's say, 20,000 rubles and live with this video card for 5-10 years, as happened in my case when I bought a video card Radeon 7770 HD more than 11 years ago, and all this time I had no problems with games or anything else. But is this a profitable business compared to 1,000 roubles every month? Of course, such a model is much more attractive for business than the "once and for all" model, where you have to invest additional funds in innovation in order to release new products. And these novelties may not pay off. So what to do? Offer the customer to pay for the product/service every month, and if he tries to slip off the hook, charge him additional costs to exclude such a negative turn of events. A good example is subscription-based computer games. At a time in my life when I was fascinated by one such game I spent 200 roubles a month on a subscription. Is it a lot? Very much, if you consider that a game bought "once and for all" costs an average of 500 roubles. But let us also look at this business from the other side. The company Ozon, the Russian analog of the American Amazon, offers a subscription, thanks to which buyers will pay less for goods. Is it profitable? Well, to be honest, not really, because the prices there are not always the lowest, even taking into account the club card (for which a person pays monthly), and on the other hand, a person can not go to another seller, because then the whole point of being in the membership club is lost. In other words, the subscription business chains the buyer to the seller financially, and it becomes quite difficult for the buyer not to buy. As a result, the business has little need to innovate. Why do it if the customer is already paying you monthly?
I wrote all this to the fact that the desire of many businessmen to hook buyers is very great, and that is why the book is so popular, or rather, has such a high rating. However, if you get away from theory and return to reality, it turns out that to wish for such a pricing model is one thing, but to put it into reality is quite another. In other words, such a model is very difficult to implement, i.e., to make a business based on this model work and make a profit. Yes, the author of the book is just pouring over various examples of how this or that entrepreneur applied this model, but we do not know (the author does not tell us) how the net profit was in relation to competitors, i.e., how well such a business worked in comparison with competitors. Yes, you can offer any price and any conditions, but which clients will agree (to that)? This question haunted me throughout the book because everything looked so beautiful (on paper). Yes, some types of businesses (those that operate on the Internet) can try to use this pricing model, but if you sell computer hardware, food, books (physical), and even computer games (on the Internet), it is very, very difficult to apply this form of pricing, because people need to see what the profit from this form of pricing will be for them. Many people find it easier to pay once than to think every time "Here's another payment" or "Is there enough money in my account?" i.e., the benefits must be very substantial for the buyer to make such sacrifices. For me, an old version of Microsoft Office 2010 edition is enough to do word processing. What is the point of me not only buying a new version of Microsoft Office but also paying every month? The same goes for all products I can think of, except for films and music. In this case, a subscription is justified, but only if the customer is a big fan of music or films, i.e., consumes in large quantities. Are there many such consumers? Films are one of the most popular entertainment things, and Netflix doesn't have many competitors. However, all other businesses should think it through very well, so that it does not turn out that 90% of all clients of this firm simply do not want to make monthly payments. Yes, the author writes how to avoid this, i.e., you should offer only this way of receiving goods/services and no more. Actually, Microsoft did something similar because now we cannot buy the old version "once and for all." And such a method could guarantee success if it were not for competition. Competition poses a serious barrier to the implementation of this form of pricing because if subscription-based pricing doesn't make a noticeable difference in price, why would it be needed at all?
As a result, the author has written a book on one method of pricing, which is usually devoted to one chapter in marketing and pricing books. The author should be given an award for this because it takes talent to stretch such a topic into a whole book. Otherwise, the book adds nothing to what other authors write about in their books on pricing in marketing. The examples in the book are just examples of how it works in other firms and other countries. The problem is that if this way of pricing worked for them in the US, it does not guarantee that it will work for you in Russia, India, or Germany. That is why the book is rather pointless.
By the way, if anyone thinks that the book "Subscribed: Why the Subscription Model Will Be Your Company's Future - and What to Do About It," is better, I should warn you that they are essentially identical. Everything the author of one book writes can be found in the author of the other.
Думаю, я понимаю, почему так много людей поставили этой книге положительный рейтинг. Подумайте сами, что выгоднее для бизнеса: получать оплату за товар/услугу каждый месяц или только один раз? Именно об этом подумали умельцы в Microsoft и стали продавать Microsoft Office по подписке. К счастью я успел купить Microsoft Office 2010, заплатив один раз. Теперь на официальном сайте Microsoft уже и не найти такого продукта. Теперь нам предлагают платить за то же самое каждый месяц. Ну разве это не замечательный бизнес-модель? Вот если бы можно все товары и услуги продавать по подписке и получать деньги не раз и не два, а каждый месяц. К примеру, вы покупаете видеокарту и платите, условно говоря, 20,000 рублей и живёте с этой видеокартой лет 5-10, как это произошло в моём случае, когда я купил видеокарту Radeon 7770 HD больше 11 лет назад и всё это время я не испытывал никаких проблем ни с играми ни со всем остальным. Но разве это выгодный бизнес по сравнению с тем, если бы я за неё платил 1,000 рублей, но каждый месяц? Разумеется, такая модель намного притягательный для бизнеса, чем «один раз и навсегда», при которой нужно вкладывать дополнительные средства в инновации, с целью выпуска новинок. А новинки эти могут и не окупиться. Так что же делать? Предложить покупателю платить за товар/услугу каждый месяц, а если он попытается соскользнуть с этого крюка, обложить его дополнительными издержками, чтобы исключить такой негативный поворот событий. Хорошим примером являются компьютерные игры по подписке. В тот период моей жизни, когда я был увлечён одной такой игрой, я тратил по 200 рублей в месяц на подписку. Много ли это? Очень много, если учитывать что игра, купленная «один раз и навсегда» стоит в среднем 500 рублей. Но давайте посмотрим на этот бизнес и с другой стороны. Компания Озон, российский аналог американского Amazon, предлагает подписку, благодаря которой покупатели будут платить меньше за товар. Выгодно ли это? Ну, если честно, то не особо, ведь цены там не всегда самые низкие даже с учётом клубной карты (за которую человек и платит ежемесячно), а с другой стороны, человек не может уйти к другому продавцу, ибо тогда теряется весь смысл нахождения в членском клубе. Другими словами, бизнес по подписке приковывает покупателя к продавцу финансовыми цепями, и ему становится довольно трудно не покупать. В итоге у бизнеса нет особой потребности к осуществлению инноваций. Зачем это делать, если клиент и так ежемесячно тебе платит?
Я всё это написал к тому, что желание многих бизнесменов поймать на крючок покупателей, очень велико и именно поэтому книга настолько популярна, точнее, имеет настолько высокий рейтинг. Однако если уйти от теории и вернуться к реальности, окажется, что желать подобной модели ценообразование – одно, а вот воплотить в реальность, совсем другое. Другими словами, подобную модель очень тяжело имплементировать, т.е. чтобы бизнес на этой модели работал и приносил прибыль. Да, автор книги просто сыпет различными примерами, как тот или иной предприниматель применил данную модель, однако мы не знаем (автор ничего не сообщат нам) как обстояли дела с чистой прибылью в соотношении с конкурентами, т.е. насколько хорошо, по сравнению с конкурентами, такой бизнес работал. Да, предложить можно любую цену и любые условия, но кто из клиентов на это согласится? Этот вопрос преследовал меня на протяжении всей книги, ибо уж очень всё красиво выходит на бумаге. Да, некоторые типы бизнес (те, что работают в Интернете) могут попробовать использовать такую модель ценообразования, но вот если вы продаёте компьютерное железо, продукты питания, книги (физические) и даже компьютерные игры (в интернете), то применить такую форму ценообразования очень и очень сложно, ибо люди должны видеть, в чём лично для них будет заключаться прибыль от такой формы ценообразования. Многим людям проще один раз заплатить, чем каждый раз думать «ну вот очередная оплата» или «а хватает ли денег на моём счету?», т.е. выгоды должны быть очень существенны, чтобы покупатель пошёл на такие жертвы. Мне, чтобы работать с текстом, достаточно старой версии Microsoft Office 2010 года выпуска. Какой мне смысл не просто покупать новую версию Microsoft Office, но ещё и платить каждый месяц? То же самое касается всех товаров, какие я могу вспомнить, за исключением фильмов и музыки. В этом случаи подписка оправдана, но только если покупатель является большим любителем музыки или фильмов, т.е. потребление осуществляется в больших количествах. Много ли таких потребителей? Фильмы – одно из самых популярных развлекательных вещей, да и конкурентов у Netflix не так и много. Однако всё оста��ьные бизнесы должны очень хорошо всё продумать, чтобы не оказалось, что 90% всех клиентов этой фирмы просто не хотят вносить ежемесячные платежи. Да, автор пишет, как этого избежать, т.е. мол, нужно предложить только такой способ получения товаров/услуг и больше никакой. Собственно что-то подобное сделало и Microsoft, ибо мы теперь не можем купить старую версию «один раз и навсегда». И такой способ мог бы гарантировать успех, если бы не конкуренты. Конкуренция ставит серьёзные барьеры на пути введения такой формы ценообразования, ибо если услуги по подписке не приносят заметной разнице в цене, то зачем она вообще нужна?
Как итог: автор написал книгу по одному способу ценообразования, которому обычно посвящают одну главу в книгах по маркетингу и книгах по ценообразованию. За это нужно дать награду автору, ибо растянуть такую тему на целую книгу, для этого нужно обладать талантом. В остальном же книга ничего не добавляет к тому, о чём пишут в своих книгах по ценообразованию в маркетинге другие авторы. Примеры, которыми и наполнена книга, являются лишь примерами того, как это происходит в других фирмах и в других странах. Проблема в том, что если такой способ ценообразования получилось у них в США, это вовсе не гарантирует, что это получится у вас в России или Индии или в Германии. Вот поэтому книга довольно бессмысленная.
Кстати, если кто-то думает что книга Subscribed: Why the Subscription Model Will Be Your Company's Future - and What to Do About It, лучше, то я должен предупредить, что по сути, они идентичны. Всё что пишет автор одной книги можно найти у автора другой. Абсолютно одно и то же.
I think I understand why so many people gave this book a positive rating. Think about it, what is more profitable for a business: to get paid for a product/service every month or only once? That's exactly what the clever folks at Microsoft thought of and started selling Microsoft Office on a subscription basis. Fortunately, I managed to buy Microsoft Office 2010, paying once. Now, on the official Microsoft website, you can no longer find such a product. Now we are offered to pay for the same thing every month. Isn't this a great business model? If only it were possible to sell all goods and services on a subscription basis and receive money not once or twice but every month. For example, you buy a video card and pay, let's say, 20,000 rubles and live with this video card for 5-10 years, as happened in my case when I bought a video card Radeon 7770 HD more than 11 years ago, and all this time I had no problems with games or anything else. But is this a profitable business compared to 1,000 roubles every month? Of course, such a model is much more attractive for business than the "once and for all" model, where you have to invest additional funds in innovation in order to release new products. And these novelties may not pay off. So what to do? Offer the customer to pay for the product/service every month, and if he tries to slip off the hook, charge him additional costs to exclude such a negative turn of events. A good example is subscription-based computer games. At a time in my life when I was fascinated by one such game I spent 200 roubles a month on a subscription. Is it a lot? Very much, if you consider that a game bought "once and for all" costs an average of 500 roubles. But let us also look at this business from the other side. The company Ozon, the Russian analog of the American Amazon, offers a subscription, thanks to which buyers will pay less for goods. Is it profitable? Well, to be honest, not really, because the prices there are not always the lowest, even taking into account the club card (for which a person pays monthly), and on the other hand, a person can not go to another seller, because then the whole point of being in the membership club is lost. In other words, the subscription business chains the buyer to the seller financially, and it becomes quite difficult for the buyer not to buy. As a result, the business has little need to innovate. Why do it if the customer is already paying you monthly?
I wrote all this to the fact that the desire of many businessmen to hook buyers is very great, and that is why the book is so popular, or rather, has such a high rating. However, if you get away from theory and return to reality, it turns out that to wish for such a pricing model is one thing, but to put it into reality is quite another. In other words, such a model is very difficult to implement, i.e., to make a business based on this model work and make a profit. Yes, the author of the book is just pouring over various examples of how this or that entrepreneur applied this model, but we do not know (the author does not tell us) how the net profit was in relation to competitors, i.e., how well such a business worked in comparison with competitors. Yes, you can offer any price and any conditions, but which clients will agree (to that)? This question haunted me throughout the book because everything looked so beautiful (on paper). Yes, some types of businesses (those that operate on the Internet) can try to use this pricing model, but if you sell computer hardware, food, books (physical), and even computer games (on the Internet), it is very, very difficult to apply this form of pricing, because people need to see what the profit from this form of pricing will be for them. Many people find it easier to pay once than to think every time "Here's another payment" or "Is there enough money in my account?" i.e., the benefits must be very substantial for the buyer to make such sacrifices. For me, an old version of Microsoft Office 2010 edition is enough to do word processing. What is the point of me not only buying a new version of Microsoft Office but also paying every month? The same goes for all products I can think of, except for films and music. In this case, a subscription is justified, but only if the customer is a big fan of music or films, i.e., consumes in large quantities. Are there many such consumers? Films are one of the most popular entertainment things, and Netflix doesn't have many competitors. However, all other businesses should think it through very well, so that it does not turn out that 90% of all clients of this firm simply do not want to make monthly payments. Yes, the author writes how to avoid this, i.e., you should offer only this way of receiving goods/services and no more. Actually, Microsoft did something similar because now we cannot buy the old version "once and for all." And such a method could guarantee success if it were not for competition. Competition poses a serious barrier to the implementation of this form of pricing because if subscription-based pricing doesn't make a noticeable difference in price, why would it be needed at all?
As a result, the author has written a book on one method of pricing, which is usually devoted to one chapter in marketing and pricing books. The author should be given an award for this because it takes talent to stretch such a topic into a whole book. Otherwise, the book adds nothing to what other authors write about in their books on pricing in marketing. The examples in the book are just examples of how it works in other firms and other countries. The problem is that if this way of pricing worked for them in the US, it does not guarantee that it will work for you in Russia, India, or Germany. That is why the book is rather pointless.
By the way, if anyone thinks that the book "Subscribed: Why the Subscription Model Will Be Your Company's Future - and What to Do About It," is better, I should warn you that they are essentially identical. Everything the author of one book writes can be found in the author of the other.
June 12, 2021
Fast and easy book to read. I am a long time listener to the authors podcast “Built to Sell Radio” and found this book helpful and interesting to read.
It’s a must read for anybody who is running a business that is charging a monthly subscription fee.
It’s a must read for anybody who is running a business that is charging a monthly subscription fee.
February 6, 2020
I abandoned the book halfway in because I found it way too long-winded. I also didn't see much of a point of separating subscription models based on which need of the customers they satisfy. Some simplify their lives, others give them the chance to discover something they like, also others give exclusive access to a very scarce resource. Obviously different products / services serve the customers in different ways, and while it can be useful to learn ablut some common variations of subscription businesses, in the end there are as many different types of them as many different and creative entrepeneurs who manage to discover demand no one has served before. For me this was a way too long book containing way too few ideas, diluted with long anecdotes that illustrate simple and self-explaining categories. I liked Built to Sell from this author many times more, and hoped this book would be similarly well-written and insightful. It was not.
November 28, 2023
If you're running or thinking about running a subscription business, this worth your time to read. It was published in 2015, so it might not be as groundbreaking in 2023 when we all subscribe to about a million different services and products, and are very familiar with the subscription system, but it still gives insight into what it's like to run different types of subscription businesses. The book outlines nine subscription models and how they work, and encourages you to take inspiration from any of them that fit your business's model. My business is working on productizing a service, which is not covered in this book because it's a relatively new idea, but there were still takeaways to consider as we develop our own subscription model.
December 6, 2017
Perfect timing
I never thought that I would be interested in the subject but a few months ago we introduced 1Password Teams and 1Password Families service that helps businesses and families take control of their passwords. The reaction from our customers was all over the place, some of them loved the new service and some hated the idea of a subscription.
It was great to read about other companies, similar challenges, and learn about new ideas and what to expect in the future.
I never thought that I would be interested in the subject but a few months ago we introduced 1Password Teams and 1Password Families service that helps businesses and families take control of their passwords. The reaction from our customers was all over the place, some of them loved the new service and some hated the idea of a subscription.
It was great to read about other companies, similar challenges, and learn about new ideas and what to expect in the future.
June 17, 2018
Sometimes it does not make sense to write a 200-page book when you can concise the same learning in 15-20 min long read blog. Many business books try to provide a theory but they are nothing more than correlations carved out by studying some case studies. The problem with such correlations is that they don't apply universally as they don't delve into the core principles. This book was of that type.
A good blog could have been enough.
Nevertheless, the case made for subscription-based business against one-shot business is pretty strong.
A good blog could have been enough.
Nevertheless, the case made for subscription-based business against one-shot business is pretty strong.
January 12, 2016
An introduction to the subscription business model with plenty of great ideas and examples for businesses already working in the subscription model. Short and sweet.
June 26, 2017
I would cut the first 2/3 of the text. The third part is nice, but still way too generic. It's not something you expect from subscription business guru.
May 5, 2019
کتاب بسیار کاربردی بود، به خصوص فصل آخر کتاب که تجربیات جذابی را از کسبوکارهای اشتراکی مشهور گردآوری کرده بود.
برای بنده که درگیر چالشهای کسبوکار اشتراکی هستم مفید بود.
برای بنده که درگیر چالشهای کسبوکار اشتراکی هستم مفید بود.
May 28, 2021
I purchased this book after really enjoying Built To Sell, a phenomenal book by the same author.
While The Automatic Customer is worth the read, it pretty dry. The same boring companies are mentioned throughout the book over and over again.
The author’s 9 subscription models and the math towards the end of the book are of great value, especially for the novice businessperson.
I’ll keep reading this author’s books, should he release another, as I appreciate his friendly, yet informative tone, it’s just that The Automatic Customer, and most of the other business books I’ve read for that matter, don’t reach the heights of Built To Sell.
—
Most business owners want buyers to value their past achievements but acquirers are really only buying one thing when they purchase a company. A future stream of profits.
A service like Amazon Prime, with an annual fee, plus the transaction of each individual order, really turns customers on, as it makes them want to “get their money’s worth” of the annual fee.
Whether you like it or not you are now competing in the new subscriber economy. It is up to you to decide if you are playing defense or offense.
Assuming customers pay for your subscription by credit card, a subscription model means you get paid on the day you’re supposed to get paid on
Subscribers knowingly enter into an agreement in which the convenience of uninterrupted automatic service is exchanged for their future loyalty.
Email List Audiences: The best response rate will always come from customers who bought something similar less than three months prior. The next best list is those who have bought something from you more than three months ago. The next best list after that is people who have bought something recently from a similar company followed finally by your registered users or people who have opted into your email updates but never purchased.
Exclusive things are bought on emotion and justified with logic.
A company needs to have a Lifetime Value:Customer Acquisition Cost Ratio of 3:1.
You can calculate your monthly customer churn rate by taking the number of customers who leave you in a given month and dividing it by the total number of customers you had going into that month.
Margin : The other number you need to consider is the cost of serving each new subscriber which is considered part of your cost of goods sold.
Most winning companies take a proven model and make it better.
Think “10 times more value“ whenever there is an easy way for your customers to get your product or service without committing to a subscription.
Appeal to convenience.
Force customers to take a subscription model or nothing.
Focus on getting customers to use the product not necessarily to buy the product at first.
Free trials work best when you have a product or service that is better experienced than described.
The larger your business becomes the more corrosive effect churn has (nice breakdown on p.172).
Churn Is directly related to use. The more your subscribers use your service the less likely they are to churn out. The stickiest subscription businesses make it their mission to insert themselves into the daily lives of their customers. If your customers can get away with using your product or service and still get their jobs done, you’ll have a much higher churn rate than if they need to interact with your service to complete their daily tasks.
By the time the clock has ticked for 90 days - the standard customer onboarding period - The customer’s lifetime value and profitability will have been practically set in stone.
Part of getting people to adopt your subscription product or service in the first 90 days is to give them a quick win that provides the motivation for them to learn more.
When you cough up $5000 for a yearly subscription you’re a lot more committed to learning how to use it in the first 90 days then if you were paying $399 a month.
The more your customers pay upfront, the more motivated they are to make the behavioral change needed to get their money’s worth.
The need to over-communicate to new subscribers crosses all industries.
The fastest way to scale your subscription business is to patch the hole in your bucket of customers. The first place to focus is on the product or service itself and make sure it is something that customers value. Then strive to get your voluntary churn rate as low as practical.
While The Automatic Customer is worth the read, it pretty dry. The same boring companies are mentioned throughout the book over and over again.
The author’s 9 subscription models and the math towards the end of the book are of great value, especially for the novice businessperson.
I’ll keep reading this author’s books, should he release another, as I appreciate his friendly, yet informative tone, it’s just that The Automatic Customer, and most of the other business books I’ve read for that matter, don’t reach the heights of Built To Sell.
—
Most business owners want buyers to value their past achievements but acquirers are really only buying one thing when they purchase a company. A future stream of profits.
A service like Amazon Prime, with an annual fee, plus the transaction of each individual order, really turns customers on, as it makes them want to “get their money’s worth” of the annual fee.
Whether you like it or not you are now competing in the new subscriber economy. It is up to you to decide if you are playing defense or offense.
Assuming customers pay for your subscription by credit card, a subscription model means you get paid on the day you’re supposed to get paid on
Subscribers knowingly enter into an agreement in which the convenience of uninterrupted automatic service is exchanged for their future loyalty.
Email List Audiences: The best response rate will always come from customers who bought something similar less than three months prior. The next best list is those who have bought something from you more than three months ago. The next best list after that is people who have bought something recently from a similar company followed finally by your registered users or people who have opted into your email updates but never purchased.
Exclusive things are bought on emotion and justified with logic.
A company needs to have a Lifetime Value:Customer Acquisition Cost Ratio of 3:1.
You can calculate your monthly customer churn rate by taking the number of customers who leave you in a given month and dividing it by the total number of customers you had going into that month.
Margin : The other number you need to consider is the cost of serving each new subscriber which is considered part of your cost of goods sold.
Most winning companies take a proven model and make it better.
Think “10 times more value“ whenever there is an easy way for your customers to get your product or service without committing to a subscription.
Appeal to convenience.
Force customers to take a subscription model or nothing.
Focus on getting customers to use the product not necessarily to buy the product at first.
Free trials work best when you have a product or service that is better experienced than described.
The larger your business becomes the more corrosive effect churn has (nice breakdown on p.172).
Churn Is directly related to use. The more your subscribers use your service the less likely they are to churn out. The stickiest subscription businesses make it their mission to insert themselves into the daily lives of their customers. If your customers can get away with using your product or service and still get their jobs done, you’ll have a much higher churn rate than if they need to interact with your service to complete their daily tasks.
By the time the clock has ticked for 90 days - the standard customer onboarding period - The customer’s lifetime value and profitability will have been practically set in stone.
Part of getting people to adopt your subscription product or service in the first 90 days is to give them a quick win that provides the motivation for them to learn more.
When you cough up $5000 for a yearly subscription you’re a lot more committed to learning how to use it in the first 90 days then if you were paying $399 a month.
The more your customers pay upfront, the more motivated they are to make the behavioral change needed to get their money’s worth.
The need to over-communicate to new subscribers crosses all industries.
The fastest way to scale your subscription business is to patch the hole in your bucket of customers. The first place to focus is on the product or service itself and make sure it is something that customers value. Then strive to get your voluntary churn rate as low as practical.
This entire review has been hidden because of spoilers.
Read
September 22, 2025O livro explora a crescente popularidade dos modelos de negócios baseados em assinaturas, que se tornaram comuns em diversos setores, desde tecnologia até serviços locais. A obra analisa três razões principais para essa ascensão: uma mudança cultural que valoriza mais o acesso do que a posse, a maior aceitação de compras online e a importância da coleta de dados para entender o cliente. O autor destaca que a receita recorrente proporciona um fluxo de caixa previsível, o que é atraente tanto para a gestão quanto para investidores. Além disso, a previsibilidade permite uma melhor gestão de estoque e planejamento de recursos.Warrillow apresenta diferentes modelos de negócios de assinatura, como o de consumíveis, que envolve produtos que precisam ser repostos regularmente, e o modelo de comunidade, que pode oferecer exclusividade ou valor crescente com o número de membros. O resumo também menciona o modelo simplificador, que visa facilitar a vida do cliente, e a fila preferencial, onde os clientes pagam por acesso mais rápido a serviços. Para medir o sucesso desses modelos, o autor sugere que as métricas tradicionais, como lucros e perdas, não são suficientes, e recomenda o uso de indicadores como o LTV (valor do tempo de vida do cliente) em relação ao CAC (custo de aquisição de clientes).Além disso, o texto discute estratégias para atrair e reter assinantes, como ofertas especiais e testes gratuitos, mas enfatiza que o verdadeiro desafio é manter os clientes engajados e garantir que o serviço seja percebido como essencial. A entrega de valor consistente é fundamental para a retenção, e a inovação contínua é necessária para permanecer relevante. O cenário atual, com avanços tecnológicos e facilidades de pagamento, torna o modelo de assinatura ainda mais atraente e competitivo. A reflexão final sugere que pensar fora da caixa pode levar à reinvenção de setores inteiros através de modelos de assinatura.Warrillow provoca o leitor a refletir sobre serviços que normalmente não associaríamos a pagamentos mensais, incentivando a busca por soluções inovadoras que possam ser oferecidas por meio de assinaturas. Ele sugere que a chave para o sucesso nesse modelo é identificar problemas inesperados que podem ser resolvidos de forma contínua, criando um valor real para o cliente. Essa abordagem não apenas atende a uma necessidade, mas também estabelece um relacionamento duradouro entre a empresa e o consumidor. O autor menciona exemplos de empresas que conseguiram transformar serviços tradicionais em modelos de assinatura, como serviços de limpeza, manutenção e até mesmo cuidados pessoais. Essas inovações demonstram que a flexibilidade e a adaptabilidade são essenciais para capturar a atenção do mercado. Além disso, a personalização do serviço, onde o cliente pode escolher o que deseja receber, aumenta a percepção de valor e a satisfação. Warrillow também discute a importância de entender o comportamento do consumidor e como a análise de dados pode ajudar a prever tendências e preferências. Com isso, as empresas podem ajustar suas ofertas e melhorar a experiência do cliente, garantindo que a assinatura se torne uma parte indispensável da vida do consumidor. A construção de uma comunidade em torno da marca, onde os assinantes se sintam parte de algo maior, também é uma estratégia eficaz para aumentar a lealdade e o engajamento. Por fim, o autor enfatiza que a inovação não deve parar após o lançamento do serviço. As empresas precisam estar dispostas a evoluir e adaptar suas ofertas com base no feedback dos clientes e nas mudanças do mercado, garantindo que a proposta de valor permaneça relevante e atraente ao longo do tempo. Essa mentalidade de melhoria contínua é fundamental para o sucesso a longo prazo em um ambiente de negócios cada vez mais competitivo.
April 2, 2020
An excellent book exploring the benefits of the subscription-based model over "sell/do"
Here are the points I noted in my reader:
* Amazon Prime membership was not about additional revenue, it was about changing people's mentality so they would not shop anywhere else.
* Millennials value access over assets. Rent vs. Owning; Spotify vs. buying songs; Blinkist vs. Buying books. Therefore, the subscription model is relevant if millennials are your target audience.
* "Customers want to express their individuality, and increasingly they are using subscriptions do that" That's why subscription boxes with unique items every month are received so well.
* When you run a front-of-line subscription model (premium/faster support, for example), tell your customers that you prioritize them. Tell them how and why. Your customers will appreciate your transparency and perhaps even upgrade. Win/win.
* Build your brand and guard your supply chain. "If customers see 'Dollar Shave Club' as just a middle hawking a commodity blade they can buy elsewhere, consumers will be inclined to price-shop competitors"
* "It's human nature to wait until you absolutely need to act unless there is something you will miss out on by procrastinating". Therefore, sometimes you need to artificially stimulate the customer to act (limited time offer, premium feature, etc)
Also, when your customer no longer needs your service/product to complete their daily tasks, they will quit. Make your service relevant and needed.
* Provide the best possible product/service during the first 90 days. Statistics show that customers that stay subscribed for longer than 90 days, have a much lower Churn rate. However, when this phase is over - slow down. An analogy would be dating & excitement vs. relationship and commitment.
*
Here are the points I noted in my reader:
* Amazon Prime membership was not about additional revenue, it was about changing people's mentality so they would not shop anywhere else.
* Millennials value access over assets. Rent vs. Owning; Spotify vs. buying songs; Blinkist vs. Buying books. Therefore, the subscription model is relevant if millennials are your target audience.
* "Customers want to express their individuality, and increasingly they are using subscriptions do that" That's why subscription boxes with unique items every month are received so well.
* When you run a front-of-line subscription model (premium/faster support, for example), tell your customers that you prioritize them. Tell them how and why. Your customers will appreciate your transparency and perhaps even upgrade. Win/win.
* Build your brand and guard your supply chain. "If customers see 'Dollar Shave Club' as just a middle hawking a commodity blade they can buy elsewhere, consumers will be inclined to price-shop competitors"
* "It's human nature to wait until you absolutely need to act unless there is something you will miss out on by procrastinating". Therefore, sometimes you need to artificially stimulate the customer to act (limited time offer, premium feature, etc)
Also, when your customer no longer needs your service/product to complete their daily tasks, they will quit. Make your service relevant and needed.
* Provide the best possible product/service during the first 90 days. Statistics show that customers that stay subscribed for longer than 90 days, have a much lower Churn rate. However, when this phase is over - slow down. An analogy would be dating & excitement vs. relationship and commitment.
*
September 24, 2020
Последните години доста се напрягам покрай цялата нова мода (не толкова нова, де) на абонаментната икономика. Всички видяха финикийски знаци и се юрнаха така да си предлагат услугите и аз само се чудя как да се ориентирам между всички, които се чудят как да ти приберат парите и по-възможност да забравиш, че им ги даваш. :)
Прочетох книгата, защото много исках да разбера нещо за това как се случва един абонамент, за да може да взимам по-осъзнато решение, когато натискам бутона да им дам достъп до кредитната си карта (Е, докато четох книгата - два абонамента си заминаха чисто и просто, ей така, да им прецакам статистиките на бизнесите, хаха). Определено беше интересно четиво и успях да се разпозная като жертва на някои от моделите. Та, просветляващо четиво, тъй като за първи път четох на тази тема. Ще продължа да се образовам, тъй като абонаментите за мен са един от най-големите разходи, които ти изяждат приходите, а не винаги получаваш добра стойност, каквото и да говорят компании и предприемачи. Важно е да знаеш как да избираш правилния за теб абонамент и то така да постигнеш максимална стойност за минимално пари. Бизнесите това им е целта - максимална печалба за минимални усилия и разходи. Защо ти като индивидуална икономическа и бизнес единица да не мислиш по-същия начин как да получиш повече? :)
Едно обаче е ясно, винаги, ама винаги някъде трябва да си имаш отчет какви са ти абонаментите, на какъв принцип са, на коя дата се подновяват и да си поставиш хиляда и една аларми и нотификации да те подсещат, че да може с ясно съзнание да даваш парите си, а не на автопилот, както се надяват всички бизнеси, използващи този модел.
Прочетох книгата, защото много исках да разбера нещо за това как се случва един абонамент, за да може да взимам по-осъзнато решение, когато натискам бутона да им дам достъп до кредитната си карта (Е, докато четох книгата - два абонамента си заминаха чисто и просто, ей така, да им прецакам статистиките на бизнесите, хаха). Определено беше интересно четиво и успях да се разпозная като жертва на някои от моделите. Та, просветляващо четиво, тъй като за първи път четох на тази тема. Ще продължа да се образовам, тъй като абонаментите за мен са един от най-големите разходи, които ти изяждат приходите, а не винаги получаваш добра стойност, каквото и да говорят компании и предприемачи. Важно е да знаеш как да избираш правилния за теб абонамент и то така да постигнеш максимална стойност за минимално пари. Бизнесите това им е целта - максимална печалба за минимални усилия и разходи. Защо ти като индивидуална икономическа и бизнес единица да не мислиш по-същия начин как да получиш повече? :)
Едно обаче е ясно, винаги, ама винаги някъде трябва да си имаш отчет какви са ти абонаментите, на какъв принцип са, на коя дата се подновяват и да си поставиш хиляда и една аларми и нотификации да те подсещат, че да може с ясно съзнание да даваш парите си, а не на автопилот, както се надяват всички бизнеси, използващи този модел.
August 30, 2024
This book is well written and contains good insights about SAAS business model.
This book along with PREDICTABLE REVENUE are a must read if you are planning to start a SAAS business.
The Automatic Customer talks about how a SAAS business is different from traditional business. The author digs deeper about the pros and cons of running a SAAS business model.
He also talks about the difficulties in raising funds or showing great projections while running a SAAS business.
The best part is where he talks about 10 different kinds of SAAS business models.
PART THE NINE SUBSCRIPTION BUSINESS MODELS
Chapter 3: The Membership Website Model
Chapter 4: The All-You-Can-Eat Library Model
Chapter 5: The Private Club Model
Chapter 6: The Front-of-the-Line Subscription Model
Chapter 7: The Consumables Model
Chapter 8: The Surprise Box Model
Chapter 9: The Simplifier Model
Chapter 10: The Network Model
Chapter 11: The Peace-of-Mind Model
This is the best part of the book.
This might not be the complete guide but it is a great introductory read for someone who is new to SAAS and SAAS math. This is like a tour guide.
There are more advanced books, but this book is a good read none the less
This book along with PREDICTABLE REVENUE are a must read if you are planning to start a SAAS business.
The Automatic Customer talks about how a SAAS business is different from traditional business. The author digs deeper about the pros and cons of running a SAAS business model.
He also talks about the difficulties in raising funds or showing great projections while running a SAAS business.
The best part is where he talks about 10 different kinds of SAAS business models.
PART THE NINE SUBSCRIPTION BUSINESS MODELS
Chapter 3: The Membership Website Model
Chapter 4: The All-You-Can-Eat Library Model
Chapter 5: The Private Club Model
Chapter 6: The Front-of-the-Line Subscription Model
Chapter 7: The Consumables Model
Chapter 8: The Surprise Box Model
Chapter 9: The Simplifier Model
Chapter 10: The Network Model
Chapter 11: The Peace-of-Mind Model
This is the best part of the book.
This might not be the complete guide but it is a great introductory read for someone who is new to SAAS and SAAS math. This is like a tour guide.
There are more advanced books, but this book is a good read none the less
July 20, 2022
Listened to what he had to say, and he takes quite an interesting perspective when it comes to the differences of having automatic and regular customers. The hassle of managing employment workloads each month is quite the challenge when you’re working with regular customers, but with automatic customers, one can easily predict the workload not only for the following month, but also for the following 6 or 12 months.
Also he spoke about the subscription businesses requiring more “brain” and regular “sell-do” businesses requiring more “brawn”. A really interesting comparison indeed.
Then he explained some instances of how to use brains in a subscription business and having to change the approach to dealing with customers differently. Literally made a comparison of a one-night stand and a long-term relationship, where the long-term relationship is obviously the subscription business. Yet another interesting comparison.
He listed some subscription models, and I liked the private club model, the peace of mind model and the network model.
Overall, a really interesting listen, enjoyed it a lot. I was actually listened to a big chunk of it while riding my bike!
Also he spoke about the subscription businesses requiring more “brain” and regular “sell-do” businesses requiring more “brawn”. A really interesting comparison indeed.
Then he explained some instances of how to use brains in a subscription business and having to change the approach to dealing with customers differently. Literally made a comparison of a one-night stand and a long-term relationship, where the long-term relationship is obviously the subscription business. Yet another interesting comparison.
He listed some subscription models, and I liked the private club model, the peace of mind model and the network model.
Overall, a really interesting listen, enjoyed it a lot. I was actually listened to a big chunk of it while riding my bike!
This entire review has been hidden because of spoilers.
September 1, 2017
The author has much experience running businesses and converting his consulting business from a per-episode individualised one to a subscription-based one with generic research. So he knows his stuff. He strongly advocate running the subscription model of business because it allows you to plan and sleep at night. Rather than starting from zero income at the start of each month, the subscription model allows you to have recurring income so you would know how much manpower you will need 6 months down the line. He introduced different kinds of subscription business, for example the convenience one (automatic diaper/shaving blade), buffet-style one (Amazon Prime), peace of mind one (air-con/ swimming pool service), insurance type (roof fixing guarantee). He introduced new concepts to run a subscription business: monthly income, cost of acquiring new subscriber, lifetime income, churn (loss) rate, etc that will make an accountant proud. Oh and the most important: subscriber businesses are considered to worth more in the sale of businesses.
An excellent read.
An excellent read.
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