Let's face it, no one likes being stuck in a queue. We all want faster or better service. Yet, time and time again we find ourselves waiting, whether it's on the phone, standing in a line, or sitting in a waiting room. Waiting is a problem, as it costs us time, money and patience. So, imagine if you could solve this problem for your clients, and earn recurring revenue in doing so? Let me introduce The Front-of-the-line Subscription Model.
This model involves selling priority access to a group of your customers. It's known as the queue jumping subscription model. In this article we'll show you how this model works, examples of it in-action, and insider tips that will help you decide if it's right for your business.
A Subscription Model that’s not just for the software industry
This subscription model was made popular by the software industry, however it can be used by any organisation with customers that want priority service. Below are some great examples illustrating how this subscription model can work across a range of different industries.
Since it has been a model widely used in SaaS companies, salesforce.com is a good example to start with. They provide all customers with basic level support via email with a two business day turn-around. However, customers who require a faster response time can subscribe to the “premier” success plan for a higher monthly fee. In this plan issues that are deemed as “mission critical” get a one-hour turn-around time. This is appealing to their business clients for whom a few minutes of down-time equates to lost revenue.
Secondly, we can look to Amazon Prime as another great example, this time in the online retail space. In Australia you pay $6.99 per year for Amazon Prime to get free 2 day delivery on domestic purchases, free standard delivery on items under $49, access to Prime Video, Prime Reading, Prime Music and Twitch Prime plus early access to discounts and deals. Amazon prime is one of the most successful subscription services in history, and really all it does is offer people a better service level and a savings on things that they already likely had the intent to buy.
A third example is ThriveWorks, a counselling and life coaching business. They offer an annual subscription for around $99, allowing subscribers to jump to the front of the queue to see a counsellor about a mental health issue or major life decision.
Another example, though it's not really a 'subscription service' but more of a priority access service, is offered by Movie World on the Gold Coast. Guests of the theme park have the option to buy a Fast Track wrist band. This gives them access to a dedicated line at selected popular rides, and they offer four one-and-a-half hour windows throughout the day for people to use their wristbands. Additionally, there is an upsell which is the Unlimited Fast Track wristband which gives guests unlimited access to the ‘fast’ queue between 10.30am – 4.30pm.
What’s your view on this type of service? Should you allow people, who can or want, to pay for the opportunity of faster or better service? Would it work in your business?
Here are some scenarios that lend themselves well to this subscription model.
This Subscription Model Is Ideal When You Have…
- 1A relatively complex product or service
- 2Customers who aren't overly price sensitive
- 3Customers for whom waiting in line can have serious or costly consequences
Is there a way you could provide ‘premium’ or priority access to clients? It’s certainly food for thought, depending on the type of business you have.
As mentioned, the Front-of-the-line Subscription model is the sixth article in our series. In the last few weeks we’ve been making our way through the 9 different models of Recurring Revenue.
If you’d like to catch up on the previous articles in the series you can access them here - The Network Model, The Subscription Box Model, The Content Subscription Model and The Private Club Model. It’s more than likely that you’ll find a subscription model that suits your business.
Why We Love Subscription Models
Recurring streams of revenue, when created well, will feed a business for life. Moreover, we also know that businesses with recurring revenue have a double advantage. They enjoy a steady, predictable stream of income, and this in turn impacts the value of the business.
Why? Because acquirers will pay a premium for the predictability of the income.
Not to mention that reliable, recurring streams revenue can also relieve the day-to-day pressure for making sales, giving you more time and energy for better business strategy and management.
To achieve success, you need to be able to think outside the box. We’ve seen recurring revenue models work in the most unexpected industries, often when people have broken away from the ‘norms’ of their industry. As we continue the series, we’ll continue to showcase examples of these companies.
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Understanding the 8 Drivers of Business Value
Today, we’ve discussed a model for Recurring Revenue, which is one of the 8 Drivers of Company Value.
Now you can measure your business against all 8 Drivers of Value and get an indication of what your business is worth today.
With that information, you can develop a clear plan to increase the value of your business. You'll not only find smarter ways to grow, you'll also be putting yourself in the best position to exit your business, when the time is right, for a premium price.
interested to know
what drives the value of your business?
We invite you to take the Value Builder Score.
This is a powerful bench-marking tool that rates your business against the 8 Key Drivers of Business Value. Over 45,000 business owners have now taken this assessment.
The Value Builder Score shows you what your business looks like through the eyes of an acquirer. You'll discover what's silently dragging down the value of your business, or whether you have untapped hidden assets with the potential to increase value.
The great thing is, there's no cost to take your score and it only takes about 10 minutes to complete.
What you'll discover
- 1Ways to make your business more valuable than your industry peers
- 2How to spot your company's hidden assets or silent killers
- 3Where you are now, where you need to be, and how to achieve the business valuation of your dreams
CEO and Founder, Exit Advisory Group
If you would prefer to reach our directly, I would love to start a conversation. Connect with me and send me a message on Linkedin, or get in touch any of the ways below. Old fashion phone calls are also welcomed!
At Exit Advisory Group we help entrepreneurs maximise company value and exit at the top of their game.
We do this by giving business owners the tools and strategies to design more profitable, efficient and enjoyable businesses to own - that are also less dependent on them. When they choose to exit, they are in the best position to unlock the wealth in their business and be rewarded for their hard work.
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