Subscription Relationships: How to Build Sustainable Business Value

This is Episode 31 of This Old New Business weekly business podcast with Jeff Korhan.

Subscription Relationships: How to Build Sustainable Business Value

Our guest this week is John Warrillow. If you don’t know John you will want to get to know his work because it will change how you think about your business, your industry, and most important, your customer.

It should not be surprising to learn that building a more valuable business involves giving your customer what they want, when they want it, and how they would want it.  – if they knew more about your business capabilities.

That’s the key to subscription relationships. Listen in as John gives us several practical examples of businesses (large and small) that have adopted the subscription business model to become wildly successful.

Our Featured Guest: John Warrillow

Subscription Relationships: How to Build Sustainable Business ValueJohn Warrillow is the creator of The Value Builder System, a statistically proven methodology for improving a company’s value.

John is also the creator of The Sellability Score, and the author of the bestselling book Built to Sell: Creating a Business That Can Thrive Without You, which was recognized by both Fortune and Inc Magazine as one of the best business books of 2011.

Johns new book, The Automatic Customer: Creating A Subscription Business In Any Industry was released by Random House in February 2015.

Subscribers are Invested in Their Relationships with Companies

“In a subscription relationship, the customer agrees to stay loyal on a long- term basis, while you agree to keep your partner’s interests at heart. Like all long- term relationships, each party is giving up a little bit of freedom in return for what he hopes will be a better deal in a committed relationship.” – Excerpt from The Automatic Customer

The subscription business model helps companies achieve more predictable income, which concurrently leads to a more focused commitment to those most loyal customers. This symbiotic relationship between customers and businesses naturally builds sustainable business value because the customers are so invested in the relationship with the business. They want it succeed because they in turn benefit.

In addition to predictable income, the subscription business model can give your business competitive advantages by eliminating common industry challenges.

Subscription Relationships: How to Build Sustainable Business ValueFor example, John gives the example of HBloom a florist that unlike many others is not overly dependent on Mother’s Day or Valentine Days because it’s customer subscribe to regular flower deliveries throughout the year. As a result, it buys smarter, with customers receiving fresher flowers at consistently favorable prices.

Listen to the audio for more examples of the 9 different subscription business models.

How is your business building sustainable value?

Lighting Round Tips and Advice

John’s Top Sales or Marketing Advice – Think big: Go for ten times (10X) the value vs. 10% more. That’s what is going to earn sustainable subscription relationships.

His Favorite Productivity Tip – Put the big rocks in first. Like so many other guests on This Old New Business, John believes in giving priority to high-value projects.

A Quote that has Inspired John’s Success – “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.” – Theodore Roosevelt   

Key Take-Aways

  • To get started building subscription relationships with your business, John suggests mapping out the ideal customer relationship.
  • Subscriptions work best for narrow “micro-niches.”
  • Learn more about John’s work at The Value Builder System and The Automatic Customer

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About the Author:  Jeff Korhan, MBA, is the author of Built-In Social: Essential Social Marketing Practices for Every Small Business and host of This Old New Business podcast.

He helps mainstream businesses adapt their traditional growth practices to a digital world. Connect with Jeff on LinkedInTwitterFacebook, and Google+

Facebook Buys WhatsApp: 3 Lessons for Your Business

WhatsApp is an instant messaging service for smartphones that has over 450 million users, and it is growing globally at a rate of one million users every day.

How WhatsApp operates promises to influence Facebook as much as its mobile technology. Tweet this

That has lessons that can help your business ensure its relevancy moving forward.

#1 – Don’t Fall in Love with Your Business Model

Facebook’s business model is clearly driven by revenue from advertising. This enriches Facebook at the expense of advertisers and users. That’s right, the content that finds its way into your newsfeed is largely the result of advertising. We tend to forget that.

This is one reason why I have never liked this model, and have instead suggested a subscription model, much like the one that WhatsApp employs. They charge all of their users 99 cents per year, with the first year being free. I’m sure you can expect that to go up in the future.

Is there anything wrong with that? Keep reading to learn why some form of subscription model may prove to be beneficial for everyone concerned.

#2 – The User Experience Matters

Wouldn’t your business gladly pay a few hundred dollars/year to have all of its content delivered to 100% of its fans? Would you as a user pay fifty dollars/year to have an unfiltered Facebook experience? Would you pay one hundred to have no advertising at all?

Thankfully, WhatsApp co-founder Jan Koum is an industry veteran who now has a seat on Facebook’s board of directors. If his voice is heard it will hopefully encourage more focus on earning revenue while respecting the user experience.

It’s doubtful Facebook will ever adopt a pure subscription model, but a hybrid incorporating some of its qualities is a possibility.

#3 – Partner with Relevant Businesses

From the beginning Facebook has encouraged it’s employees to “move fast and break things.” Breaking things will often get you into trouble, and over the years it has for Facebook, especially in regards to privacy. However, now that Facebook is a public company it is taking more prudent risks.

Facebook recognizes that it is not cool anymore, especially with the younger crowd that is gravitating towards applications like Instagram and WhatsApp. Thus, in order to ensure its future relevancy Facebook is buying relevancy.

While making acquisitions may not be a possibility for your business, it can partner with those in your industry that have different perspectives, approaches, and platforms. Many are lauding Facebook’s acquisition of WhatsApp, with some even beginning to compare Mark Zuckerberg’s forward thinking wisdom to that of Steve Jobs.

If this acquisition influences Facebook as suggested here, then count me in that camp too. Facebook has never been more profitable. That’s the best time to break things.

Is it time to reconsider your business model to provide a better customer experience?

About the Author:  Jeff Korhan, MBA, is the author of Built-In Social: Essential Social Marketing Practices for Every Small Business – (Wiley 2013)  

He helps mainstream businesses adapt their traditional growth practices to a digital world. Connect with Jeff on LinkedInTwitterFacebook, and Google+.