Pizza of the Month - Can Your Small Business Use the Subscription Model?

Repeat revenue is magic for a small business owner interested in selling their business someday. 

Buyers love the certainty that confirmed future revenue brings, and subscriptions can help document that future revenue.  

Can you create a subscription model for your business?

Aren't "subscriptions just for online companies?

Tom Taulli's article in Forbes about Why Your Company Needs To Go All-In On The Subscription Model talks about how traditional companies are implementing a subscription offering as a way to solve problems and connect better with customers.  But it does require a change in perspective.

But The Subscription Economy is not only about tech operators either. The fact is that there has been innovation across many traditional companies. Tien points out the following:

  • Fender: The iconic guitar company, which has been around for over 70 years, had a problem where 90% of new customers quit their instrument within a year. To deal with this, Fender launched a subscription video service to teach customers how to better use and enjoy their instrument.
  • Caterpillar: Historically, the company had a big problem managing maintenance, which could be costly for customers. But Caterpillar saw this as an opportunity, as it created an analytics service called Cat Connect Solutions. It uses monitoring systems to find patterns in usage that can indicate when servicing may be needed.

A Pie Subscription

If your client has a problem or need that they solve repeatedly, why make them decide each time how they should solve the problem.   

  • Your customer likes pizza.
  • You sell pizza, but so do a lot of other companies.
  • Your pizza subscription service offers discounted pricing, ease of ordering and "front of the line" service.
  • Your customer subscribes, and stops shopping around each time they want a pizza.

Taulli points out that the transition is in part about the business owner changing the nature of their relationship with their customer.

At the heart of all this is forming direct digital relationships with customers. By leveraging data, you will get a 360-degree view of things. This is why Tien has some startling conclusions in his book. Note that he thinks that cord-cutting is likely to be a boon for the traditional media industry. The reason is that -- by controlling the distribution platform -- there is a better understanding of the tastes of viewers. So it should be no surprise that Disney is investing substantial amounts in its streaming services.

A subscription allows you to transform your relationship with your customer.  It's a system that can help you improve sales, and increase your ability to sell your business someday.

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