Lather, rinse repeat. This set of simple instructions found on shampoo bottles is also proving to be, metaphorically, a sound business approach in today’s digital economy. From personal care items like shampoo and razors to streaming video and even technology, consumers and businesses are increasingly signing up for subscriptions to a widening range of goods and services.
Subscription businesses are hardly new. People have been signing up for newspapers and other periodicals for many years, and the 1970s and ‘80s saw a boom of order music with subscribers receiving a new record or cassette in the mail every month.
Once the purview of old-economy companies — such as makers of elevators offering lifelong service contracts, or Gillette’s approach to practically giving away razors and selling the blades — recurring revenue businesses have come into fashion with cutting edge technology companies. Digital platforms and the advent of cloud computing have added a new dimension to the subscription model by providing smart, nimble companies with three potential benefits: expand their addressable markets, provide repeatability of cash flow and deepen client loyalty.