Unpacking The Subscription Economy (Series) – 5. The Front-of-the-Line Subscription 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 Front-of-the-Line Subscription Model.
The Front-of-the-Line Subscription Model
The Front-of-the-Line Subscription Model involves selling priority access to a group of your customers. For example, at Salesforce.com all customers get basic level support where someone will provide you with a response over email within two business days. However, if you want a faster response, you can subscribe to a monthly service plan. The “premiere” package offers a one-hour turnaround time on what Salesforce.com deems “mission critical” problems. If a few minutes of downtime equates to lost revenue for your business, you can buy the “mission critical success” package, which gives you a response within 15 minutes.
This model was popularized by the software industry but it can be used by any organization with customers willing to pay to jump the queue. For example, in Atlanta, drivers can subscribe to a Peach Pass to get access to a highway lane that allows them to zip past traffic jams. Your local bank may offer a special counter for their business customers whose monthly banking fees are more than a consumer’s. For $99 per year, ThriveWorks allow its subscribers to jump to the front of the queue to see a counselor about a mental health issue or major life decision.
Who This Model Works Best For
Consider The Front-of-the-Line Subscription Model if you have:
- A relatively complex product or service.
- Customers who are not overly price sensitive.
- Customers for whom waiting in line can have serious or costly consequences.
What The Insiders Say
- The Front-of-the-Line Subscription Model can be used in conjunction with other subscription models to add an additional annuity stream of recurring revenue.
- To use this model, it’s important that you already have a good reputation for the baseline service.
- Ensure that you don’t lump your standard customers in with those who are paying for a special tier of service.
- This model can work well when your customers are small and mid-sized businesses that lack their own in-house resources to get their questions answered.
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.