Theme of the Book
The Automatic Customer is a book by John Warrillow. John owned a consulting business and fought up and down, roller coaster revenue streams for years. Then he decided to implement a subscription model instead. The beautiful part for us as readers and business owners is that he failed. He failed at his first attempt at implementing a subscription model.
After several more years of the up and down cash-flow, John committed to figuring out the subscription model. John walks readers through his own experience and let’s be honest, we learn more from our failures than our successes. This book is our benefit from John’s failures.
Things I liked About This Book
He writes the book in a very clean and concise way, making use of stories, stats and case studies when appropriate and cutting to the chase when the point is simple to make. The other thing I love about this book and makes it Uncommon is that John walks readers through all nine different types of subscription models. You say 9, I thought there is just one? Nope. That is the beauty of a business consultant writing this book.
He breaks down the nine different subtypes of the subscription model, how they work, why they are different and the industries and business types they are most likely to apply to. John and now Phillip and I, challenge all entrepreneurs and business owners alike to not only read this book but to utilize it to benefit your business.
Most businesses aren’t residual in nature. Let’s look at Amazon, the biggest subscription model of all. When it started out, Amazon was a glorified web version of Barnes and Noble. Then Jeff Bezos, CEO of Amazon created this little thing called Amazon Prime. It is an annual based subscription that provided free shipping, access to digital libraries of TV, movies, and music and now so much more. Amazon just disclosed that they have over 100 million subscribers to Amazon Prime at $99 a year. You do the math. That is a lot of recurring revenue. Amazon also just announced they are raising their prices 20%. Think about that.
Things to Keep in Mind
Subscription models are not for the faint of heart. They require constant care, attention and value creation to stay fresh. Subscription models can be hard to implement if you are pivoting from a traditional business model. What this means is communication, communication, communication to your existing clients about how and why you are changing. Further, if you are thinking about closing your business or retiring within the next 2-3 years, taking on a subscription model could be a bad idea or a great idea. It will make your business more saleable at the end, but require you to put more time and effort in up front to make the conversion or addition to your business.
The Big Takeaway
Subscription models are very powerful and can provide a more stable flow of cash and client loyalty if implemented and managed properly. We urge all business owners or entrepreneurs to evaluate the subscription model as part of their business planning.
This book, our mentors, and our advisory board are the reasons that Phillip and I set our business up as a subscription model. Financial planning isn’t a onetime event, but a lifelong process and we were frustrated by the old way of making a living in the financial services businesses. We want to sit on the same side of the table as our customers and we want to have an open and fluid relationship with them creating value throughout the year in many different ways.
This book is a must read and has changed our business for years to come. It’s worth a read to see if it may change yours.