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Does the Subscription Business Model Work for your Company?

Posted by Michelle Kratzer on May 9, 2019 10:00:37 AM
Michelle Kratzer


Do you want to grow your company 9 times faster than those on the S&P 500? Transition your business to a subscription model. If transforming a single customer transaction into multiple transactions (and multiple payments) sounds like a good idea, but you can't quite pull the trigger, it may help to hear that since 2014 the subscription market has grown by an astounding 890%.

The question is, would the subscription model work for YOUR company?


Tien Tzuo

According to Zuora CEO Tien Tzuo, everything you purchase

will soon come with a monthly plan.


According to Stanford School of Business graduate and subscription expert Tien Tzuo, the answer is yes. His belief that subscription models are the way of the future motivated him to found Zuora, which provides software and support to companies shifting to the subscription model.


Tzuo encourages business people to change their thinking from what does the customer need to what is the customer trying to doIn his recent book, Subscribed: Why the Subscription Model Will Be Your Company’s Future — and What to Do About It, Tzuo aims to change how executives think about their products and organizational structure in the subscription economy encouraging them to make the shift or get left behind.



But, how do you turn customers into subscribers? According to Tzuo, by taking the focus off of your product and putting it onto your customer. Changing your focus to building dynamic customer relationships will revolutionize your business. Most often, this requires reinventing different aspects of your business model, but the customer-centric, recurring-revenue potential is enormous.


Data Collection

In addition, subscription plans allow for data collection which produce behavioral insights. These insights assist in creating meaningful customer relationships; and ultimately a loyal customer base. Subscription-based companies' time has come. They are taking over everything from razor blades and wine to air flights. 


Access Instead of Ownership

A large sector of today's consumers show strong preference for as-needed access to services instead of ownership. For example, some see no reason to deal with the hassles of owning a car when they have access to luxury vehicles. No gas, no maintenance, no insurance. You don’t own the car, so you don’t have to insure the car. Popular car programs include CARE by Volvo and Flexdrive. Some car subscription programs allow you to switch to different models. The Porsche Passport program allows unlimited vehicle swaps. All of this and NO OWNERSHIP!


volvo subscription

CARE by Volvo


Products that require frequent replacement, like razors, fit the subscription model well. Customers are asked to answer a few simple survey questions on their preferences and frequency of use. Then a system is set in place to keep the products they want coming as they often as they need them.


dollar shave club

Dollar Shave Club



Fun, curiosity-type subscription boxes like Try the World are a fun way for consumers to explore other cultures. Just sign them up for their preferred products, and voila! A box will arrive every month to their screaming delight. 


Not everyone wants a stack of CD's and records sitting around; but that's no problem! Subscription streaming services bring customers all of the music they want, whenever they want it.


itunes subscription



One amazing feature of subscription services for customers is not having to put out large expenditures for complicated systems. For instance, 3M Library Systems offers a Technology Subscription Program, a new way to implement RFID and self-service in libraries. This program enables libraries to take advantage of state of the art library technology without spending major capital, allowing libraries to pay only for their particular technology needs.







In Technology-as-a-Service Playbook: How to Grow a Profitable Subscription Business, Thomas Lah and J.B. Wood provide a roadmap to transitioning to a service model. Research data reveals a rapid trend away from the traditional technology company business model, and toward the subscription-based model. The authors insisist that you don’t need to be an Adobe, Cisco, and PTC to navigate the shift with phenomenal results; any company, regardless of size, can transition to the model.

Their method, called “swallowing the fish" includes an adjustment period in which costs increase and revenue drops. After the transformation is complete, we see costs go down and revenues bounce back.


Buyer Persona

Buyer personas rule in this customer focused business. Figure out the specifics of the buyer persona as it applies to your specific product, then add these other prominent characteristcs:

  • Younger millennial
  • College degree
  • Live in a college town or hipster enclave
  • Female
  • $100,000 annual income
  • Reads & contributes regularly to online reviews
  • Buys online
  • Foodie
  • Democrat
  • Amazon shopper


Get personal with your customers! As long as it enhances their shopping experience, they want you to get to know them.


It’s a win-win

The subscription model is a win/win for customers and businesses. Business professionals like the guaranteed revenue and easy execution. Your customers will love the hassle-free process. 


Need to ask your customers what they'd like from a subscription model? Call SurveyMe, or just click on the image below!

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Topics: Business & Marketing, Technology

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