Key Considerations when Starting a Subscription-based Business

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For all those thinking about starting a subscription-based business, or adding a subscription service to a business, Robbie Kellman Baxter shares an article that identifies five things you shouldn’t do and one you should. 

Netflix is a true leader of the Membership Economy. Back in 2002 when I first started working with them, I fell in love with their business model.

I loved their focus on doing one thing really well, their Forever Promise (FP). I describe that FP as “a huge selection of professionally created video content, delivered in the most efficient way possible, with cost certainty.”

I also loved their data-driven approach, the metrics they popularized around engagement and churn, and their continuous tinkering to always improve their model. And I loved their commitment to transparency.

But that doesn’t mean that every organization that wants predictable recurring revenue should copy everything Netflix does. Building a forever transaction with your own customers requires more than the “Netflix Playbook”.

Here are some times when you should consider charting your own course rather than doing what Netflix did.

 

Key points include:

  • Subscription revenue
  • Variable costs and customer usage
  • Distinctly different customer segments

 

Read the full article, 5 Reasons NOT to Make Your Subscription “Like Netflix”​…and 1 Reason You Should, on LinkedIn.