In Subscribed, written with Gabe Weisert, Tien Tzuo observes, “Simply put, the world is moving from products to services. Subscriptions are exploding because billions of digital consumers are increasingly favoring access over ownership, but most companies are still built to sell products. As a result, huge opportunities are up for grabs.”
What does he recommend? “In working with hundreds of companies, we’ve learned that the solution to high growth rate is to diversify your approach to growth and embrace multiple growth strategies. We’ve boiled it down to eight essential ones.”
Here they are:
1. Acquire your initial set of customers. “What’s the firsty thing yuou need to do? Find the right kind of cistomers. Why? Bercause someday, your future customers will be looking very closxe at your first set of custiomers to gauge whether or not you’re really long-range partnership material…Second, it’s really important to avoid tghe temptation to ramp up a big sales force.”
2. Reduce your churn rate. “How can you tell if you’re running a successful subscription service? It’s pretty simple — you’ve tamed your churn rate. That marks the transition from adolescence to adulthood, from having a cool new service that people potentially might like to running a mature, successful business.”
3. Expand your sales team. At this stage, “growing means expanding your sales team p– hiring more reps, getting more productivity out of your current sales team, and signing up more resellers and dealers.”
4. Increase value through upsells and cross-sells. “Eventually every company realiΩes that the best way to maintain growth is to increase the value you get from your customers. When you can upsell or cross-sell a customer into opting for more of your services, that’s a testament to thge strength of your relationship. It means you’re aligned.”
5. Launch into a new segment. “If your subscription is designed right, it can go anywhere. It can be universal…Here’s the key takeaway — you need to be able to segment your sales force. You can do it by business size. You can do it by vertical. You can do it by geography. But you’ve got to do it…remember that selling today is about building, maintaining, and deepening long-term relationships.”
6. Go international. “It’s never been easier to go international. But the main issues to consider are establishing some kind of ability to transact overseas, establishing the ability to accept local currencies, setting up the right alternative payment methods, and dealing with price arbitrage.”
7. Maximize the growth opportunities of your acquisitions. If and when a mature company haThis is where acquisition strategies really become important.s a significant market share (“let’s say north of 70 percent)… growth has to come from increasing your value per customer…Successful acquisitions can help a growing subscription business increase its market viability and market share while enhancing its offerings to build out a more comprehensive solution [to the challenge of building, maintaining, and deepening long-term relationships]. You need an integration plan.”
8. Optimize your pricing and packaging. The most successful companies “update their pricing at least annually (which means that they’re thinking about pricing constantly throughout the year). Why do you do this? Because pricing is the key growth lever behind the other seven strategies I just discussed.”
All this is explained thoroughly in Chapter 12.
To learn more about Tien Tzuo and his work, please click here.