If you are not using subscription models to increase your revenues, you’re missing out. Since consumer buying habits are trending toward simpler and hassle-free shopping experiences, an increasing number of companies are jumping into the subscription space and seeing incredible revenue growth.
Dollar Shave Club was expected to generate $60 million in revenue in 2014 nearly tripling its 2013 revenue (it was later sold to Gillette for an undisclosed sum). Even more impressive, Honest Company was expected to bring in $150 million in revenue in 2014, landing the business a $1 billion valuation. These are just a few examples of companies that were built on an entirely subscription-based model.
Gone are the days of the Columbia House record club – but that model is still alive and well. Why? Because it works for everyone – customer and vendor alike.
But along with the increasing success of subscription-based businesses comes the cautionary tale of the failure to adapt. Take, for instance, the decline of movie rental giant Blockbuster. Faced with Netflix’s budding success, Blockbuster failed to recognize the changing needs of the modern consumer. By the time it rolled out its “no late fees” campaign, the last nail had already been hammered in place. In 2010, just 10 years after the arrival of Netflix, Blockbuster was worth just $24 million with $1.1 billion in losses.
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). Believe it or not, 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. I’m going to show you the various types of subscription base models that you could employ in your business to improve cash flow, increase sales, and make for happier customers.
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