BY JOHN WARRILLOW, FOUNDER, THE VALUE BUILDER SYSTEM@JOHNWARRILLOW
In a traditional business, the customer buys your product or service once and it is up to you to try and convince them to buy again in the future. In a subscription business, you have what I call “Automatic Customers” who agree to purchase from you into the future as long as you keep providing your service or product. Through the research for my new book, I’ve discovered there are nine different subscription models, which can be leveraged by anyone from a flower store to a sock maker.
Feeding Rover Automatically
One of the reasons subscribers are such attractive customers is that, once they subscribe, consumers become less price sensitive. To illustrate, imagine that you live in England and own a 100-pound Pyrenean Mountain Dog that eats two hearty bowls of dog food a day. Feeding the love of your life is an expensive proposition, so you’re always on the lookout for a deal on dog food. Once every two weeks you trudge down to the local pet supply store and cart a case of kibble home. Or if you see dog food on sale at your local grocery store, you’ll buy it. Or if you get a coupon for a buy-one-get-one-free offer from another store, you’ll take advantage of it.
Eventually, you get tired of last-minute trips to the store, so you subscribe to Warwickshire, U.K.-based PetShopBowl.com, which offers a “Bottomless Bowl” subscription service. Now you know you’re going to get a shipment of dog food every fortnight, and the part of your brain that scans the flyers for dog food starts to shut down, knowing that the convenience of having dog food shipped automatically far outweighs saving a few dollars on kibble.
Integration Drives Stickiness
Beyond the simple convenience of automatic service, subscribers become even more loyal when they start to integrate their subscription into their daily lives. At The Value Builder System, we subscribe to Salesforce.com, the software platform that allows us to keep in touch with our subscribers. We have customized Salesforce with a number of integrated applications and special reports. Given how much we rely on Salesforce and the investments we’ve made to make it work for us, we’re unlikely to switch to a competitor to save a few bucks.
Subscribers knowingly enter into an agreement in which the convenience of uninterrupted, automatic service is exchanged for their future loyalty. Rather than buying once without returning, subscribers stick around–hopefully for years, which is why subscribers drive up the value of your company so dramatically.
This article is adapted from the new book The Automatic Customer by John Warrillow. The book is published by Portfolio, an imprint of Penguin Random House, and is available wherever books are sold. Copyright John Warrillow, 2015.
Original document posted online at https://www.inc.com/john-warrillow/how-to-create-sticky-customers.html