Unpacking The Subscription Economy (Series) – 1. The Network Model
This series of articles follows on from an article I published recently, titled “Unpacking The Subscription Economy”, where I mentioned that subscription businesses are more valuable and appealing to investors than traditional businesses, because they are more predictable to operate and they extend the lifetime value of a customer. This article looks at The Network Model.
The Network Model
The Network Model is a subscription offering where the value of the subscription goes up, the more people that subscribe.
One of the oldest Network Model subscription offerings was the telephone. When only a few people had a telephone, its utility was limited because there was nobody to call. As more people subscribed to a telephone service, it became more valuable for all subscribers.
What makes The Network Model unique is that the users themselves have a vested interest in promoting the subscription: the more people who subscribe, the better it is for everyone.
For example, with the WhatsApp messaging platform, subscribers can send an unlimited number of messages to one another for free, because instead of routing the messages through a mobile carrier, WhatsApp messages are sent through the Internet.
Subscribing to the multi-user video game World of Warcraft is fun but even more fun when you get all of your friends to join you in cyberspace.
Who This Model Works Best For
Consider The Network Model if:
- You have a product or service where the utility improves as more people join.
- You can attract tech savvy customers and prospects. The more socially connected your customers, the faster your network will grow.
- You can offer a remarkable experience that people feel compelled to share. (If your product is only somewhat better than the alternative, this is not the best model.)
What The Insiders Say
- You need subscribers to build the network, but you need a network to attract subscribers. Focus your limited resources on a small, tightly defined group of early-adopting customers and then build density in that specific market.
- The Network Model is best suited for companies that have a lot of capital, or entrepreneurs that are good at raising it.
Recurring Revenue is one of the “8 Key Drivers Of Company Value” from the Value Builder System™️, which I use to help small business owners increase the overall value of their businesses.
Being able to cash out the maximum when the time is right, is every business owners dream. It’s the dream of having a long and happy retirement, without financial worries, and being rewarded for all the hard work they put in over the years. But so many fail to get this right, because they never formally worked towards that goal, they thought it would just happen.
So if you’re a business owner who’s planning ahead and considering ways to exit your business on your terms, I hope the information I provide in the coming weeks will help you reach those goals. If you would like to chat to me about this in person, feel free to book a slot in my calendar and we can discuss it further.
If you want to see how you score in each of the “8 Key Drivers” right now, take 15-minutes to complete this survey and you’ll get a comprehensive 25+ page report benchmarking your business against its peers, plus 49 tips on how to improve those 8 key areas.