Subscribed Book Summary

Book Summary

15 min

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Brief Summary

Consumers are moving away from purchasing products in favor of accessing services. With this shift, the subscription model is rising as the most important change a business can make. Although it will come with challenges in the transition, the end results will be well worth it.

About the Author

Tien Tzuo is a prominent leader in the software-as-a-service industry. He founded Zuora in 2007 and built one of the fastest growing SaaS companies. He is the primary promoter of subscription-based business models and coined the phrase “Subscription Economy.”

Gabe Weisert is the managing editor of Zuora, a publicly-traded company in the New York Stock Exchange focused on creating software for subscription-based businesses. He started his career as a content marketer, writing for the Wall Street Journal, San Francisco Chronicle, New York Post, Forbes.Com, Huffington Post, Daily Beast, and Yahoo! Travel.

Topics

Entrepreneurship

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Key Insights

Eighty-eight percent of the companies on the Fortune 500 list in 1955 are no longer there today. The twelve percent who made the list in 2017 did so because they learned to adapt to the ever-changing business environment. One of the most unparalleled changes in the current market is that people are no longer looking for ownership, they simply want access. In Subscribed: Why the Subscription Model Will Be Your Company’s Future- and What to do About it, the authors Tien Tzou and Gabe Weisert provide the knowledge companies need to understand this new digitally-driven trend and advise on how to capture a share of the billions awaiting those who can make this transformation.

Go Digital or Go Home (i.e. out of business)

The reality is that digital services in business are essential to thriving in today’s market. At its core is the subscription model. Netflix, a subscription-based service, expanded to 100 million users in a decade while Blockbuster, the antitheses of this model, went out of business. IBM, one of the 12 Fortune 500 companies to make the cut rose from being 61st on the list to 32nd, by focusing on IT and business subscription services.

Customers have moved away from wanting to own products. Surprisingly, they don’t want or even need to own cars anymore, as seen by the growth of transportation services such as Uber. Today, demand is access. People would rather pay for access to music than buy music C.D.s; they prefer live streaming from Netflix, Amazon Prime, or HBO than to own or even rent movies. For today’s consumers, the music or movies matter more than the silver disc they are recorded on.

Tzou wrote an article in 2015 for Fortune magazine which asserted that people shouldn’t bother with business school anymore. The reason, he claimed, is that they only teach the students to make a hit product and sell lots of it. The rise of the subscription-based model proves his thesis correct. If a company wants to compete, or even survive, in today’s market, it needs to go digital, and the real profit is in the subscription model.

It’s Still About The Customer

A well-known mantra in many businesses has been, “The Customer is Always Right!” and that is still true. By paying attention to what the customers want, businesses can determine what direction to take their services in the digital market. The key is to slightly change the mantra to say, “The Subscriber is Always Right” and learn what it is customers will sign up for that will bring both profitability and longevity. One example is Fender guitars. Most of their guitars are sold to first-time users (We’ll call them “aspiring musicians.”), but the abandonment rate is extremely high. Fender determined that they could reduce the attrition rate by 10% and double their market size, creating life-long customers, by developing an online service teaching guitar lessons via video.

Another unique approach to the subscription model comes from Hyundai who now sells cars on plans which are reflective of cell...