Stick Like Glue Radio #157 On this special episode of Stick Like Glue Radio, I interview the serial entrepreneur and bestselling author John Warrillow on his “Automatic Customer” strategy. A powerful ‘extending call’ with lots of nuggets – don’t miss it!
Visit John at www.BuiltToSell.com
Stick Like Glue Radio www.getjimpalmer.com
On this special episode of Stick Like Glue Radio, I interview the serial entrepreneur and bestselling author, John Warillow, on his “Automatic Customer” strategy. This is a powerful ‘extended call’ with lots of nuggets – don’t miss it!
Main Questions Asked:
- What led you to write Automatic Customer?
- Talk about the 5 trends driving the subscription economy?
- How do companies like Dollar Shave Club and BirchBox make money?
- Talk about the 9 subscription models.
- What is the psychology behind selling a subscription?
- How do you help people get their businesses ready for sale?
Key Lessons Learned:
- Lack of recurring revenue is a factor that can drive down companies.
- Most people think subscription models are for software or media companies, but John has developed 9 subscription models regardless of the industry.
The Subscription Economy
- Many businesses are moving from the transaction economy to the subscription economy.
- Examples of businesses that have introduced subscriptions are Starbucks, AMC, and Adobe.
- Young people want ‘access’ as opposed to ‘assets.’
- The subscription model locks in customer loyalty as subscribers have already paid up front and won’t be tempted to shop elsewhere.
- When people subscribe, they want to get their money’s worth and tend to use the service more.
Successful Subscription Companies
- Often the subscription is somewhat of a Trojan horse for a larger sale the company wants to make.
- Recurring relationships with customers creates loyalty and familiarity.
- Subscription companies are the platform that other products are bought and sold to that customer group.
Dollar Shave Club
- This company uses the ‘consumables’ model.
- The concept is that we buy things that run out. Replenishing the items offer no inherent value.
- This model offers taking an item off your ‘to-do’ list.
- The consumables model also applies to B2B models such as HP printer cartridges.
- BirchBox sends cosmetic samples every month.
- This company uses the ‘surprise box’ model and takes a category that people feel passionate about.
- BirchBox makes money as they get free samples and charge subscribers $10 per month.
- The business model is getting customers to buy full-size versions of the samples online.
- Half of the BirchBox subscribers have purchased full-size items on the BirchBox website.
- Amazon Prime is the biggest success story when it comes to subscription services as it’s a $4B business.
- Amazon Prime masks the fact that the subscription causes people to buy more from Amazon.
- Non-Prime customers spend an average of $500 per year.
- Prime customers spend $1,500 per year.
- The act of subscribing causes a behavior that makes customers buy more.
Psychology Behind Selling a Subscription
- Companies approach this model with a 10x mindset. This means that the subscriber gets ten times the value than if they were just buying a la carte.
- Think about your value proposition and create a subscription offering.
- Take your expertise and put it behind a pay wall.
- What do you do better that 99% of people?
- This model works well for providing advice, council, worksheets, templates, and advisory services.
Built To Sell
- The premise is creating a business that would be attractive to an acquirer whether you want to sell in a year’s time or in twenty-five years.
- How your business is viewed by an acquirer gives you the ultimate freedom to run your business.
- Buyers are attracted by financial performance, quality of bookkeeping, growth potential, and monopoly control.
- The normalization process means you recast your profit and loss so that it appears as though the business is operating under normal circumstances.
- Structuring your business so it doesn’t rely on you can take years.
Links to Resources Mentioned
9 Subscription Models (Free E-book)
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