Subscription Sales: The Super Summary of the Book "The Automatic Customer"

Before you say "it's not for me" read on.

This article is taken from reading the book " The Automatic Customer " by John Warillow (Italian title "Il cliente automatico"), which I read in the original language during the summer holidays.

I know, I deserve applause just for this.

But let's get to the point: selling by subscription means offering your products or services (also or only) in a subscription formula, creating "automatic" recurring revenue .

The purpose of this sales method is to increase purchase frequency and reduce customer churn .

Not being able (nor wanting) to summarize the entire book, I report in this article the reflections on why to evaluate this modality and on the 9 main approaches codified by the author .

In our small way we are trying to get our clients to apply these strategies, maybe a future article will come out of it with the results obtained.

Do you like this content? Subscribe to our newsletter to never miss similar content.

The advantages of subscription sales

Increase in company value

When a company is sold or acquired, its value depends on its ability to generate future sales, and studies show that companies with "subscription" customers are valued (and paid) up to 42% more on average than companies without recurring revenue.

Increased customer loyalty

The main advantage of subscription sales is the creation of a long-term bond with the customer , who stops looking for alternatives in the market.

Reducing demand risk

You can more accurately forecast future revenues , thus reducing management waste and risks typical of an "on demand" only business, such as warehouse costs, personnel costs, etc.

Payment times

Subscription businesses are based on automatic recurring payments . This means reducing administrative and financial costs by counting on a programmable cash flow. Need we say more?

Increase in average customer value

A customer who has invested (time, money, trust, etc.) in a subscription wants to get the most out of it and therefore tends to spend more (Amazon Prime customers are a prime example).

Subscription customers are also more likely to make extra purchases not included in their subscription.

By now you should have understood the value that a subscription formula (even if only for a portion of your customers or offerings) can bring to your company.

But what are the main subscription models applicable? Here they are below!

"Subscription Website" Template

It works if you are in a niche market and can share your (unique and deep) expertise on the topics of that market.

You need to consistently create educational content or “insider” information that keeps subscribers up to date on your shared passion.

To really monetize you need to have another up-sell product/service ready to sell to subscribers. This works very well in B2B for disseminating key industry information.

"All you can eat content" template

To be clear, the idea is that of Spotify or Netflix , but it can also be applied to "products or services" of small and medium-sized enterprises (an example cited in the book is a training school for artists).

First you need a community of fans/followers/enthusiasts to whom you can offer access to premium content.

You need to create a foundation of evergreen content that exceeds the user's ability to consume.

The basis of success is to make the value perceived with free content to encourage subscription . The bulk of the work is the initial construction of the content, also with the help of the community itself or external partners.

"Private Club" Model

It works when you have something (often a service or experience) that is in short supply and in high demand .

The target audience for this formula is people who aspire to have it because they are always attracted to the "better". You should not offer "à la carte" access in combination because it demolishes the value of the proposal.

"First in line" model

Well, you may have seen it at Gardaland but it is often used in service companies too. Charging a subscription to be "first in line". First to receive something, zero waiting times, etc.

It works well when customers are not too price sensitive or when waiting too long can have very damaging consequences (e.g. medical field, legal advice, etc.)

This subscription model can be used alone or in conjunction with other subscription models.

"Consumables" model

Selling products with recurring purchases , removing the customer's hassle of having to remember the purchase .

There are many success stories in razor blades, socks, diapers, etc. In order not to lose against Amazon, you need to have a particular brand or product.

"Surprise Box" Model

A Trojan Horse to gain traction with customers through curiosity: periodically send selected "surprise" products according to customer tastes.

It requires an audience of people passionate about a category of products chosen from a large number of suppliers. It can be the beginning of a subsequent cross-selling strategy.

"Simplifier" model

It works to sell ongoing services that make life easier (e.g. garden and house maintenance, car cleaning, etc.) or to the person (massages, etc.).

Similar to the consumable model, it relieves the customer from the need to solve specific problems. In the USA there are interesting cases of companies specializing in subscription maintenance of home lights...

"Network" model

It is useful when you need a certain number of people to activate a service (e.g. car sharing): involve the community of users and with word of mouth a network of customers is created.

These types of subscriptions offer superior shopping experiences to people who are open to sharing: it takes an above-average product/service for it to work.

Peace of mind model

This type of subscription relieves the customer of major worries : it prevents the loss of something (or someone) that is impossible or difficult to replace.

An example? The alarm service if your dog wanders too far from home, including GPS recovery. Or the all-inclusive roof maintenance service.

It works when the revenue generated from subscriptions exceeds the cases in which the service fails and you have to pay compensation.

In conclusion

Remember that if you sell products you can also offer subscriptions to services and vice versa, eh! But tell me, what do you think? Do you think it is applicable in your case? Comment below sharing your thoughts!