The Automatic Customer | John Warrillow

Summary of: The Automatic Customer: Creating a Subscription Business in Any Industry
By: John Warrillow

Introduction

Discover the power of subscription services and how they can revolutionize businesses across various industries in ‘The Automatic Customer: Creating a Subscription Business in Any Industry’ by John Warrillow. The summary delves into the reasons for the rise in subscription models and explores practical ways to implement them in your own business. Learn about different subscription models, such as consumables, surprise boxes, private clubs, networks, and more. Gain insights into boosting customer relationships, increasing financial value, and reaping the benefits of transitioning to a subscription-based business model.

The Rise of the Subscription Model

More and more companies are opting for subscription-based services. This book summary explores the three main reasons behind this shift. Firstly, there’s a growing preference for access over ownership. Secondly, people are more comfortable with online transactions. Lastly, data collection is now a key asset, and subscriptions rely heavily on this. Successful companies like Apple and Microsoft have shifted their business strategies towards subscription-based models. In addition to offering specialized services, the subscription economy allows businesses to compete with both small and big players. Amazon’s success with Amazon Prime and their new grocery service, AmazonFresh, has proven the power of these services.

The Benefits of Subscriptions for Entrepreneurs

Subscribing to a service offers entrepreneurs significant financial perks as it provides a steady stream of cash flow. Monthly subscriptions are predictable, making it an attractive proposition for potential investors. In contrast to a one-time installation, investors would instead prefer a steady monthly charge for continued monitoring. Aside from the financial benefits, subscriptions simplify running a business. With a clear estimate of subscribers, inventory can be optimized, labor, and raw materials can be planned accordingly, and customer demand can be accurately met. Furthermore, subscriptions improve customer loyalty by fostering a consistent service. Therefore, subscribing not only offers a predictable, reliable source of revenue but also provides a reliable relationship with clients.

Subscription Service Models

Subscription services can be implemented in two ways: consumables and surprise box models. The consumables model, adopted by Dollar Shave Club, involves providing a subscription for regularly replenished products. To add fun to their service, Dollar Shave Club has given their blades nicknames. On the other hand, in the surprise box model, companies curate themed packages of goods to be shipped to subscribers, like Bark Box. While this model can serve as Trojan horses to entice subscribers to buy full-size products, it poses challenges due to the varying demands of different manufacturers.

Building a Community: Models and Strategies

To build a successful community, businesses can follow the private club or network model. Private clubs offer exclusive experiences to wealthy members who buy social status, while networks aim to grow and benefit all members. To create a network, subscribers should be in close proximity, and satisfaction is crucial. Zipcar strategically built up areas before scaling their network, while World of Warcraft experienced a decline in players when early advocates became critics. By understanding these models and implementing effective strategies, businesses can create a thriving community around their product or service.

Simplifying Customer Lives

The Simplifier model is ideal for companies looking to provide subscription services that help ease the lives of busy customers. Hassle Free Home Services utilizes this model by offering a monthly subscription where technicians take care of routine tasks. This type of ongoing relationship opens opportunities for cross-selling. Similarly, The Mosquito Squad keeps bugs off people’s patios without requiring frequent contact. Alternatively, companies like Tagg offer peace of mind by tracking pets and sending alerts if they leave designated areas. The Site24x7 monitors websites to ensure they don’t go down, ensuring peace of mind. The key challenge is charging more for the subscription than the cost of performing the required services, which requires accurate estimation of service frequency.

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