AuthorConnect Chat: Tien Tzuo and the Subscription Model

Tien Tzuo, founder of subscription management software company Zuora, is no stranger to the subscription model. In his book, Subscribed: Why the Subscription Model Will Be Your Company’s Future—and What to Do About It, he gives actionable insights into adapting your organization to the Subscription Economy.

 

We are witnessing the end of ownership and the rise of usership.

As consumers, the need to buy things to fulfill everyday needs is decreasing and being replaced by services. Just look at the stats—in a 2019 poll by Harris International, 57% of people surveyed wanted to own less stuff. Additionally, 70% agreed that subscribing to products and services frees people from the burden of ownership and 74% believed that, in the future, people will subscribe to more services and own less physical goods. We can see the trend toward services in a few examples:

•  People are buying less and less physical newspapers, but consuming more news than ever.

•  Car sales are down, but miles driven are increasing.

•  Fewer gaming consoles are being sold, but more hours are being played.

• More people use Airbnb than Hilton for their vacation stays.

This concept of usership changes the traditional product-focused business model to one that concentrates on the user experience. It is all about the outcome, not the specifics. One example Tien gives involves transportation. Consumers want to get from point A to point B—all without worrying about where their car is, if it needs gas, if the documents are up to date, etc. Additionally, retail used to be about location—you can walk into a store and buy a product, all at a convenient distance to your work or home. Now, this isn’t the case. Customers are more concerned about the relationship.

 

This is a chance for companies to rethink how they deliver their products and innovations. Tien gives examples in four different industries:

Media: Gone are the days of renting or buying physical movies or music. Now, you can access the entire library of content digitally for a fee per month (aka, a subscription). Companies like Spotify and Netflix create an experience for consumers to discover things, set preferences, and see recommended items based on past behavior.

Transportation: With the rise of Uber and other ride-sharing companies, the need for cars has diminished. The trend has gone from two cars per family to one car per family. These services, as mentioned before, have become popular due to their convenience over owning a car.

Newspapers: In today’s online-driven world, sales of physical newspapers have dropped significantly. Newspaper companies across the world have begun to go digital, offering subscription services. In return, every newspaper that has launched a subscription service has seen an incredibly loyal customer base.

Manufacturing: A majority of the products coming off the assembly line are connected to the internet – so many physical products are connected to a service. Take the iPhone as an example. What model you have is relatively unimportant. What is important is the services you can access from the phone.

Putting this into practice: Think of a tractor company. The traditional model would be to sell each tractor for a certain amount. With the subscription model, you can charge per metric ton of dirt moved. In this case, you aren’t charging based on the physical product, but the outcome – how much dirt you moved.

A new way of thinking

In Subscribed, Tien provides stories from the marketplace about creating new experiences and, ultimately, creating a new way of thinking. The fastest-growing companies today don’t think traditionally – they start with the customer, not the product.

 

For the full AuthorConnect Chat, check out the video below. Purchase copies of Subscribed for your team to learn how you can transform your own product into a valuable service with a practical, step-by-step framework.

 

Be the first to hear about future AuthorConnect Chats:


This post was written by Megan Habel, the Brand Strategist at BookPal. She is currently reading The Silent Patient by Alex Michaelides

Leave a Reply

Basic HTML is allowed. Your email address will not be published.

Subscribe to this comment feed via RSS

[type=field]
[type=field]