Subscribed: Why the Subscription Model Will Be Your Company's Future - and What to Do About It Kindle Edition

The topic of subscription pricing is very important to businesses today. Yet I felt that this book missed its mark for the following reasons:1. It is full of hype and tired old assertions like "Successful companies start with the customer", "Ownership is dead. Access is new imperative," "You've probably heard of unicorns..." etc. While some degree of this sort of commentary is to be expected, this book is full of it.2. A significant amount of the book reads like a PR brochure hyping up the services and the clients of the author's company, Zuora. Detailed successes of these clients are described. But what is missing is any discussion about the weaknesses and the problems with subscription pricing. What about the thousands of subscription service companies, startups and established companies alike, that have failed, largely because they used this model poorly or inappropriately? As one example, just look at the tatters that the meal kit delivery industry is in at the moment. The subscription model didn't seem to do much for them. Selectively discussing successful clients reduced this book's value to me significantly. I felt I got a distorted picture of this model.3. Everything in this book is discussed in very general terms. There are no detailed case studies, no discussion of underlying math, or comparison of a subscription model vs. other models. Information about how to work out whether a subscription model makes sense in a particular situation vs. other alternatives would have been really helpful rather than the simplistic positive view of this business model.

There are changes that are profound and changes that are merely interesting or even fascinating. This book describes an easily missed but profound change, that simply cannot be ignored.To understand this change, consider that more than half of the companies listed on the Fortune 500 in 2000 are now off that list. Today companies last only 15 years before dropping off. Then consider GE and IBM which have been on the list since it started in 1955 and are still there.Today however, you will hear very little talk of GE’s refrigerators and washing machines, or IBM’s mainframes. Instead they talk about “providing digital solutions”. Their focus is achieving outcomes for their clients, not selling them equipment. They are not alone: Xerox has moved from equipment to information services. McGraw-Hill now offers financial services and adaptive learning systems. “They don’t really sell stuff anymore,” Tzuo and Weisert explain.Neither do the new behemoths on the Fortune 500 list - Amazon, Google, Facebook, Apple and Netflix. The common thread between all these companies is that they all recognize that we live in a digital world, and it is quite unlike the product world of the past 120 years.As Peter Drucker pointed out, we manage what we measure, and so executive teams became hopelessly product-focused. This however came at a cost to the relationship between the vendor and the customer.To grasp the importance of this issue, contrast Walmart with Amazon. 90% of all Americans live within 20 minutes of one of Walmart’s 5,000 stores which serve 140 million shoppers a week. Walmart clearly knows how to buy and sell products, but every customer is nothing more than a vehicle for purchasing goods.Amazon now has 90 million ‘Prime’ members (customers who get special treatment such as free delivery,) or roughly half of all American households. They pay $9 billion in membership fees and spend $117 billion each year. “The Amazon versus Walmart battle has been framed as ecommerce versus traditional retail, but that’s always been a false dichotomy. It’s about starting with the customer instead of the product,” the authors note.Walmart has no idea what you purchased last week, and no way of finding out. A focus on the customer was not built into their business model. Amazon, by contrast does know. In fact, they know the first book I ever bought from them in 1999 – ‘Maximum Achievement’, by Brian Tracy, and they know everything I have bought ever since. (Check your order history. I just did.) The customer is the centre of their business model.In the digital economy customers are different: they prefer outcomes to ownership, they want the ride, not the car. The milk, not the cow. Forrester describes the new customer mindset: “The expectation that any desired information or service is available, on any appropriate device, in context, at your moment of need.” Today successful companies start with the customer.Ecommerce represents 13% of the total retail market and is growing at 15% per annum, versus just 3% for physical retail. Physical stores are not going to disappear soon or ever: they need to and will simply pivot the script to customer centricity.Smartphone manufacture is a useful illustration. The battle is no longer over units sold, but on how phone use can be monetized. In February 2018, Apple revenue from services was $31b – enough to make services alone a Fortune 100 company. Apple’s focus is now on revenue per Apple ID over a user’s lifetime - and growing this base.With a focus on the lifetime value of customers, suppliers must do everything to know them, their interests, aspirations, and more. This customer focus includes making it easy for customers to leave if they want to. You can certainly ask them why they’re leaving, or try to win them back, but you don’t get in their way of leaving. This demands that you constantly raise your game.“You need a mindset that treats your customers like subscribers—partners in an ongoing, mutually beneficial relationship,” state the authors – hence the title of this book, ‘Subscription’. To achieve this requires a change to your entire way of thinking.According to McKinsey, the subscription ecommerce market has grown by more than 100% a year for the past five years.Husqvarna, a 329-year-old tool manufacturer, is now offering a monthly subscription. It allows access to tools that are serviced daily, and fully charged before customers take them home. Then customers return them when they are done, no storage, no maintenance, no hassle.Netflix, which started streaming movies in 2007, went from zero to 100 million subscribers in ten years. Spotify, founded ten years later, went from zero to 50 million paying subscribers in less than nine years. Music streaming in the U.S. now represents more than half of the US music business.Subscribers to Ford’s Canvas programme can pick a monthly mileage plan for your car, and can roll over unused miles into the next month, much like a data plan. Everything is covered except the petrol. And your FordPass app allows you to warm up your car in the driveway on cold mornings, find and reserve parking spots, schedule service appointments, find nearby gas stations, and make mobile payments.Ford has around 6 percent of the $2.3 trillion global automotive market, but close to nothing in terms of the $5.4 trillion transportation services market.Surf Air, an airline operating in the Western U.S. and Europe gives it members access to limitless flights for a flat monthly fee. Together with its other travel-related perks, is growing rapidly.SNCF, the 80-year-old French state-owned rail company, is competing against transportation start-ups like BlaBlaCar, an online marketplace for carpooling. Through clever use of its digital subscription system, it does not tie customers down, but serves them better.Can getting rid of earth for construction be “subscription?” Komatsu has achieved this by moving from the question: “How many trucks can I sell you?” to “How much earth do you need moved?”Building starts with the removal of earth to lay the foundation. Manual surveys generally have a 20% - 30% margin of error contributing to the knock-on effects that routinely cause time and budget overruns.Komatsu, the world’s oldest construction and mining equipment manufacturer offers the ‘Smart Construction’ programme. Their drones create a 3D-rendered topographical model of the site in centimetre-level detail, calculate the exact area and volume of earth that needs to be removed, and runs thousands of simulations of possible scenarios. All in 30 minutes. They provide a finished project plan, with materials, equipment, labour, and a work schedule detailed down to the last hour.Oh, they also feed your project plan into its fleet of semiautonomous excavators, bulldozers, and backhoes, and these giant robots basically take care of the project for you.Subscription is a mindset that faces the reality that manufacturing is not giving way to a digital world: it is the basis on which the digital will grow. In fact, manufacturing is a stirring giant, not a relic. Rethink Detroit vs. Silicon Valley, but from a subscription viewpoint.Readability Light ---+- SeriousInsights High +--+- LowPractical High -+--- Low*Ian Mann of Gateways consults internationally on strategy and implementation and is the author of the ‘Executive Update’ and ‘Strategy That Works’.

Four years ago, I interviewed Tien Tzuo about his thoughts on subscription. His insightfulness, vision and generosity blew me away.When I received Subscribed, the book Tien wrote with Gabe Weisert, I tore through in in one night, and filled it with notes and yellow stickies. There are so many great case studies, not just about today's subscription businesses--the SaaS, Media and Services organizations, but also on how subscription pricing is transforming other industries--from automotive to manufacturing and consumer products.In addition to their surveys of key emerging industries for subscription, the authors delve into the organizational impact of subscription pricing. I particularly enjoyed the section on marketing, and how CMOs need to rethink the "4Ps" (Pricing, Place, Promotion, Packaging) in light of this new way of selling value.I bought two copies--one to keep on my desk (that's the marked up one) and one to share.

Tien Tzuo is the founder, chairman, and CEO of Zuora, which has raised $250 million in funding - so clearly it's worth listening to anyone with that on their CV... however while I found his book interesting and thought provoking, I'm not convinced by all his explanations.For example on page 17 he says "People increasingly view the prospect of buying something as unnecessary baggage. That's why most of the big box retailers I grew up with are gone now: Circuit City, Tower Records, Blockbuster, Borders, Virgin Megastore." The stores may have gone but many people still want *things* - for example, many people are buying their music on vinyl, and lots of people still buy books - it's just that they're cheaper at Amazon than they were at Borders.On page 20 he says, whey talking about the 'old' (non-subscription) model: "Of course there must be a customer on the other end buying all this stuff, but often you didn't really care who they were, as long as more units flew off the shelves." Really? I have no doubt many product managers, marketeers and focus groups (whose work he has just dismissed at a stroke) totally cared about who the customers were, as this was the only way that they could indeed 'make the units fly off the shelves'.On pages 51-53 he writes about how to operate a subscription service for cars. I really can't see that the approach that he describes would be so simple in practice - what about damage to vehicles, different drivers having different accident histories and therefore different risk levels, etc.His general tone throughout the book is totally dismissive of non-subscription organisations: I really do think that there's a bit more to a lot of those organisations than he realises.So while I definitely found the book thought provoking I thought a lot of it was far too glib and simplistic.

An introduction book to the new digital and direct to consumer businesses.A lot of introduction examples of best in class DTC, but also experiential brands etc.For me doesn't go indepth enought on the different subscription models, pricing, strategy etc.Tendancy also to put all digital DTC startups in the 'good' category vs other models, which I found a bit simplistic and not looking at certain datas (a lot of subscription models selling products are not profitable if I'm not mistaken...).

The book is a great introduction to how more companies are switching to a subscription model, and is clearly written and covers several interesting instances, with my favourite probably being Fender's foray into the market. That being said, it didn't spend enough on the drawbacks of such a model, or how one should strive to run a business differently to make it work with said business model. At what point the book mentions that many companies struggle to do such a switch, but instead of then focusing on who, how, and why, it then moves to an example of someone who has succeeded. That being said, if one brings a bit of scepticism to one's reading, then it still makes for a very good read and overview of the subject.

Any book that talks about Netflix and Adobe indepth is a good read to me. He explains the subscription model alot. An easy book to read. I hope he writes another book, a follow-up maybe. Maybe a book about more companies or where the internet age is heading. You learn alot from this book. I would recommend.

I’m fascinated by subscription models (we use one at RBC) and Tien has built a successful business to business model. Interesting to see how many big companies like Adobe are switching to recurring revenue to save themselves and grow again. 7/10