The Subscription Economy Featuring Guest Tien Tzuo


Welcome to amazing business radio with bestselling author and customer service and business experts. Ship hyphen Chappel talk with some of the smartest thinkers and business to help make you more successful in your professional and personal life. This is amazing business radio with chef hiking. Will ris one shop hike here on amazing business radio back with another amazing episode? This one is sponsored by our friends at Salesforce, be sure to go to our show notes at WWW dot amazing business radio dot com to find out more can't wait to share this week's interview, you are gonna love when we get teams well on the phone, and he's gonna share some incredible insights about a book he's written that is basically the subscription model in any company is capable of creating a subscription model. So our monologue today in the lesson. I want to share before we get into the interview has to do with what I call the membership experience so many years ago, I wrote a book not that many years ago probably about six or seven and it was called the amazement revolution. And I used American Express as a role model for this powerful concept. They are hardly a private club. But they create an amazing customer or should I say? Remember experience, and they say membership has its privileges. And then I've recently, well, again, not recently three or four years ago. Maybe joined another club that I love to share. And I love this one. It's the Dollar Shave Club. Now, it's interesting about the Dollar Shave Club is you can call it a club. I am a member. But actually, it's a subscription. So if you know about the Dollar Shave Club, I know what you're thinking. It's not really a club. But it is an online store that sends you razor blades every single month of valid credit card is pretty much all you need to join this club, and at its basic level. That's what it appears to be. But at a deeper marketing and customer focus level there's much more to the Dollar Shave Club than being an online store for razor blades. I the company's marketing is fantastic. And I love about how they've gotten members are subscribers in that is with fun in engaging marketing you look at their short videos on YouTube and you'll. See what I'm talking about? Now, they're a little risk gay. So I would say they are almost are rated in some cases because there's some language in valor. But who would have thought that selling razor blades could be that much fun. So they're they're a marketing machine. So joining the club in subscribing as easy after you fill out and submit a simple form, you just receive a welcome Email, and and this did a couple of things number one. It welcomed me into their club. It confirmed that I made a good decision to buy and join their club. And again, they used a little bit of humor. The letter was funny and more importantly like I said validated. My decision and actually got me excited to try my new shaving experience and my blades would be coming in just a few days. So and as they promised a few days later, small package came in the mail and the razor handle and the blades were exactly what I thought they would be. They were great quality believe it or not they were less expensive than the blades that I'd been using for years and one of the things about the traditional subscription model with real. Recurring revenue. It's just seems like it's even if it appears to be less expensive often times, it is you save money by paying every month or in some cases every year. And here's the cool part. I didn't have to go to the store anymore to buy razor blades is a member of the club each month. I receive four blades one for each week. And of course, the package comes with a member handbook which told me about the blades when expect my next box of blades and just made me feel like I was part of something. I wasn't just buying a razor blade now. Obviously anyone can join the Dollar Shave Club. So as I asked before is it really a club. Am I really a member? Or is this just another online store, and I might just another customer when technically all of that is true. But here's the reality. My member experience has great value. It's inexpensive the product is high quality and the customer services outstanding. Which by the way, that is extremely important that you always maintain a high level of. Service. No matter how reasonable your product may be priced. How valuable that subscription may seem to be if the product doesn't do what it's supposed to do. And the service is in good. It's not gonna work, by the way. I also get that added benefit of feeling like I belong to something. So there are many names for the people who do business with you. They could be customers guess clients, patients members, whatever it doesn't really matter. What you call them as long as they receive that member experience. So we're going to take a short break when we come back. We're going to talk about kind of the member experience and that it's kind of a subscription model. Once you subscribe, you are a part of of a company, you're it's ongoing receiving things in an ongoing way. It's a different type of model to be thinking about we're gonna learn from an expert who has written in amazing book, titled subscribe more about that in just a moment. Don't go away. We'll be right back. Good customer services. Now, an expectation don't provide it you'll be disrupted by competitor Dutt's. So what can you do the standout? Well, that's the focus of latest book the convenience revolution. How to create a customer service experience in the disrupts the competition and creates fierce loyalty the goal is to reduce friction and be convenient for your customer self. If you're ready to take your customer service to the next level and disrupt your competitors. Well, this is the book for you to order the book, go to WWW dot beat convenient dot com. That's B convenient dot com. It's time for you to join the revolution. The convenience revolution is amazing business radio with ship hike in. We're back on amazing business radio. And I promised you another amazing interview in. That's exactly what we're going to have today with teams. Whoa. Who's the author of the national bestseller subscribed? Why the subscription model will be your company's future. And what to do about it the subscription model is a hot hot topic, as you know, I've been talking about that not only in the monologue leading up to this interview. But also in many of the episodes, we've had on amazing business radio. And it's a big chapter is one of the convenience principles in the book, the convenience revolution, which just came out not that long ago. But here's some interesting things about teen. This is really cool. He was one of the original forces in Salesforce, the eleventh employ not think about that. There are tens of thousands of employees. This company is huge and in nine years at Salesforce. He decided, you know, what I'm gonna go out, and I'm going to start my own thing. And that's what he did. He'll tell us more about it teen. Welcome to amazing business radio. Thanks me on. So that's pretty cool. One of the first we weren't the first, obviously. But number eleven that's that's like right at the very very beginning. And now, you know, how long ago did you leave? Just over ten years ago. So it was pretty big then. But now look at it today. I mean, they're taking up an entire city block with their building. And gosh, they shut down the city for their conference dream force. Which has been an amazing story. And I do feel fortunate. I joined so really it was before we had a product before we had customers. My interview was actually out a Mark Beeney ause house since we didn't have a I in office just yet. And they really turned something that that completely disrupted and revolutionized the entire soccer industry and something is certainly in proud of and it's part of the subscription model that you talk about. So let's get into that the solicitor option. You know, it's we're really in that subscription economy. So you release this new book subscribed? So let's look at the big picture. What is the subscription economy? Well, it's. That you and I you don't have to buy products anymore to meet our everyday needs. If you want to get them twenty eight point be you don't need own cars. Right. You can just happen to a service on the phone. Whether it's Uber really rise. These scooters the same thing with entertainment to seem for software. Just connected back to my. If you simply by Salesforce down it was really about using new technology model that people now, call cloud computing beside by side with that was a new business model this idea that you don't have to buy software. Right. You can simply subscribe to it in use as much as you wanted. Right. As many users many months as many days as much of the functionality in that concept, really revolutionizing higher soccer sectors. You're seeing Microsoft adobe even harder companies like Cisco really moving into this type of business model, and you know, ten plus years ago, the reason we peeled off in myself himself, my co-founder from WebEx another software to service company is we asked ourselves the subscription business model really just something that was disrupting software or could it really happen every single other industry. And this is what we looked at early versions of Uber. There was a company called zipcar out there because we had not been invented yet in plenty of people. A New York or campuses around the world. We're seeing I don't need to buy cars anymore. I can simply subscribe to to to the zipcars. If you will we looked at net flicks. Which was still sending out just DVD's at the time and saying, you know, look at this idea is limited right? There's three million people out there that have not bought the DVD or a movie in years. They simply subscribe to a monthly service where they get any movie they want, right. And we said ourselves look technology is gonna make these things better. And better. This is the future this discussion business model is going to be everywhere. So and it really is. Let's let's just look at the car industry, and I've talked about this before on the show, you can go, and you even in your book, you talk. I believe about Porsche I noticed in their in their past program. I mean, give him an example. I I was just recently was talking to auto owners of automotive dealerships from Australia, the top thirty dealers for Volkswagen came to the US, and we're in a meeting, and I said how many have heard about the concept of subscribing to a car? Nobody raise. Her hand. And by the way, I think some of them knew it, but they weren't sure where I was going with it. And you don't have to own a car. You don't have to maintain it. You don't have to ensure it you just subscribe to it take us through that model. So that we can really understand that outside of the traditional magazines newspapers and software that really anything could be a subscription type of model. Well, you're seeing just about every major car manufacturer Porsche, you cited that great example Cadillac is doing the same thing Audi is doing the same thing. And this idea that that you know, why why make the customer via car or even Lisa car? But what the difference between subscribing to a Porsche? And leasing a Porsche. Well, you don't enter into any long-term contracts, even treat a car in for different models. Perhaps today, you know, I want to see in. But tomorrow, I want that nine eleven to to kind of buzz around around the neighborhood with and so this idea that you can you can actually change things. But it goes way beyond that. I mean, we see companies out there like Naven that are saying gosh described any cars described chart flea or in need. You talk about the book, we actually titled the book not about cars, we actually titled it planes trains, and automobiles can when we pull up we actually see that the revolution going on. It's not just cars, but it's in transportation as a whole in the book actually sites Newseum people from the French rail system. Right. If you ever backpack through Europe, I'm sure you take into French rail system. It's called SNCF CF is launching a monthly service has launched a monthly service because they see their competitors. Not just as the train system anymore. But there's a local ridesharing service called, blah, blah car. It's more of an internal intercity, but between cities and inside the city, and they're seeing that is competition. And so what you're seeing is look I'm just trying to get I'm here point eight. I'm just trying to get the point be it could be two blocks away could be in another continent. And what are the services between planes trains, and automobiles that will give me from point to point B in a fastest of time most convenient and in cheapest way possible, and that's where transportation is going. And it looks like it made it scales out rather. Well, it has guaranteed income for the people that provide it and typically it's a little less expensive for the people that buy it. And I could give you an example away from transportation, Microsoft, you mentioned them a few minutes ago. I remember. I used to buy a box and the box head CDs in it, and I would put the CD in my computer. And then I had a second computer. I'd put it in there too. Because it said I could. But then as soon as I let somebody else use that computer. I was breaking the law didn't realize I was doing it. So I, of course, absolve myself of that at this point, hopefully. The time has run out on that one. But they switched to a different system where they say, you know, what let's subscribe to the individual. And like now, I own a license to gives me X number of seats. It's less expensive than I was paying for the one box. But guess what? Everybody's complying now because it's reasonable nobody's cheating the system, and Microsoft is making dramatically more money as a result. So I mean, it really is a win win. Well, it's a great win win. I think Microsoft really was falling on the heels of a company called adobe. Right. That sells the creative out. Sweet. If you will in we had a chance to interview, the general manager of the division, and what he pointed out was, you know, in the old model where we'd make a company meeting we make a customer by say version four the Photoshop and then two years later they had to pay money to buy version five. Well, a lot of them opt out of doing so. Version of all this money. Version four, and so we spend all this money all this research and development, you know, money to create the latest and greatest in our customers aren't even taking advantage of it because of the transactional model, and they said, look if we flip to a subscription model, it's not just a benefit of paint over time. You don't have to show out that five hundred dollars up front for that Photoshop. But you know, we'll make sure that this offers always upgraded, right? Because we taken away the need to ask you for more money every few years. It's simply part of your monthly service as long as you using it, right? And you pay monthly and we will make sure that you always got had the latest and greatest version, and it's just completely changed the dynamic of their customer relationships. Yep. And I am also an adobe monthly subscriber. We we have a licensed that our gal over in who does all our videos and all our Photoshop, and that type of thing that's what she uses, and you know, what so much better than trying to order it cash. Should I buy it again three years from now is it really that different? Are we really using all the functionality? No, they make it easy. It's not even a decision anymore just magically happens. All right. So here's a great book. Got it in my hand subscribed. Why the subscription model will be your company's future. And what to do about it talk to me about how this book helps companies get into this subscription economy. Well, we hear so many stories of success stories. A lot of them out of the software industry. You talked about cars. I mean, I think the media industry with newspapers and magazines. I is another fantastic industry that has been the positive prescription businesses. But we think that all aspects of our lives, right? Once a will be run by these things once consumers taste the subscription service. They start asking themselves. Why can't everything be like this? Why can't everything be like, Netflix, zipcar Uber or Salesforce or adobe? And so so there's so many companies out there that we talked to they're saying we want to make this shift. Right. The week. Tell us how tell us how. So we wrote the book to really inspire companies with all the stories that we hear from engaging with this in the first half of the book is really to talk about how this this cushion model chance forms a specific industry. So we cover retail cover software, we covered manufacturing. Again, we covered a chance mutation industry, and so really showing how the industry should switches from. From from visualizing selling products to delivering a service that consumers can actually use. You know, how that transforms the industry for the better the second half the book really then does inside of a company. Now, let's talk about how this changes your are indeed department. Let's talk about how it was changed your marketing department. Let's talk about how how the change your sales department and even your finance night. He organizations have to change. And so the book really becomes a blueprint want to inspire you with the stories of what's going on in the industries that that that that you're in. But also blueprint for how you actually have to change the way you operate inside of a company I love that. And as I read through the book, I I noticed second half got a little bit technical for me. But that's what's necessary to make these these changes in your process. I mean, you really do have to look at the finance department in your accounting department things change the way you Bill change the way, I it's all going to. And I think it's all all for the better. I've got to ask you any chance to will ever. See home ownership turned into home subscription. I'm not talking about renting an apartment. What would that? Look like if you subscribe to that big home with a big yard and driveway in a three car two car garage. Well, I think if you look at the younger generation it they're they're really highlighted by by by mobility. They they move around quite a bit. And so why are they opting for Airbnb is because wherever they are. They wanna feel like they're in their homes, and so whether it's in sporadic with with with with holiday memberships, whether it's we work right in terms of renting space where you work or serve Corp is another fantastic example of this or whether it's your home. What you're seeing is is people want to same type of things wherever they are. And so imagine if you can pick yourself up go to another city is still get all the things that you expect your house that same coffee maker the shame systems right the same clothes same car. Now. We're not there yet. But I'm sure some companies will come along the next three to five years and really figure this out and deliver a service that that gets you that type of capability that's not a vision. It's it's all possible today at one point I was looking at a time share, and there's a whole. Conversation for another day. But one of the things that intrigued me about this particular one is they said you're gonna come in. And you're going to get a decorator. You're going to get your artwork your pictures, your blanket, your pull everything you want the exact way you want it. And when you have it all set up we come in. We take pictures. We know exactly where everything belongs in is. When you come back. It's going to be like you walk back into the place that you walked out of yesterday, not six months or a year ago. And I thought wow that was more timeshare ownership, but I could see the subscription model really is working there. And that's what you are. You're subscribing to you know, a guaranteed X number of days of AK Shen. But it's no longer owner showed checkout, a checkout Virata is a company that we work with us. That's that's one of the leaders in this area. Yep. I love this idea. I love it. All right. We're gonna take a short break we come back. We're going to talk more about subscribed and teams. Well, you are the reason we call this amazing business radio. Amazing information everybody don't go away. We'll be right back. If you like what you're hearing on amazing business radio. And I know you do then you can get much more of this information. All you have to do is go to my website, hike and dot com. That's WWW dot H Y Keynesian dot com. Fill out the subscribe to the shepherd letter form and each week. You will get an article that contained a business tip stories. Much more all about customer service and experience delivered straight to your inbox. Thanks for listening. And don't forget to always be amazing. Two amazing business radio with bestselling author and customer service and business expert, chef hike and we're back on amazing business radio talk with teens. Whoa. About his new book subscribed. I love this book. And I just want to know if I if I'm a business, I'm trying to get my arms around it. How do I create this subscription model? If you're saying, this is where your company's future is how do we get started? Well, in early in the book, we actually show this picture this two diagrams on the left, and right, and the left side is really the old model in in in in the right side is the new model into key lesson from that picture is to start with the customer not the product in. If you're running a business today you have customers today. And but I would say you'll start with a view of what your customers are doing with you track all the usage and interaction to customer in one place. And then really understand how you can broaden your footprint with the customer, right? And and and in and make that much much more meaningful. And so we talk about a subscriber idea, if you will if you kind of think about this, you know, how how how did you relationship with apple or Amazon or Google transform involve over the last few years, and it all started with because you have an apple ID, you've got an Amazon ID you've got a Google ID in through those ideas that establishes your relationship with them. They've been able to go into groceries. They've been able to go in. Into into into assistance voice activated assistance, and you're in your apartment and in over time. They get a sense of you know, what we're already servicing your books needs. Nets come up on Amazon prime that's Advil to the Amazon prime that's add movies to the Amazon prime or or apple saying, you know, what we already sell you a lot of phones. But now that you have the phone you have your apple ID would've we use? His apple Di Di to show you more music or more news or more movies and so establish a one to one relationship with all your customers and making sure you haven't you take every aspects of that relationship back to that idea. If you will is really the best place to get started. All right. So I'm I don't want this to sound self serving. But I'm going to ask you, how do I turn my business? Now, I have a piece of my business. We have online customer service training that is a subscription based program. You can pay annual your pay by the month. Whatever works in your pocketbook. We have group licenses but as. As a traditional speaker that goes out there as a keynote speaker, I'm thinking, hey, I'll tell my clients you can buy me for one speech, but if you pay annually you can have four times a year. I mean is that how it works? Well, let's just up about I would say how many do you have right now and listeners how many of them do you have an Email ID where you actually know? I actually listened to five of your shows. I've listened to ten view shows I've listened to one hundred of your shows, you know. And so now you start classifying these customer saying this is the first time customer that has watched my first show. And what is the next step? I wanted him to take. And here's another customer. Let's listen to all my shows. And actually once more of me is willing to take out their wallet and pay me. Right. And then how do I monetize that relationship? And so the mindset is less about, hey, how do I get you to pay for one show or two shows as a transactional product. But how do I stop wishing ongoing one to one relationship with you? And how do I find all sorts of ways of monetize that relationship? And by the way, that's what I think what apple and Amazon have done when you log on. They don't say, hey, welcome back one seven nine two four eight six. No. It's welcome back Shep as soon as you log in. To an apple on the website. They know who you are the histories there. You're no longer a number. You're a customer. You're a person. I think that's an important piece of it. All so I would love to be able to get the analytics that you're talking about on this show. It's so hard to find first time or you've got to get subscribers. And then companies like I have to be willing to part with that information. But that's another story for another day. Let's let's talk about a B to B for a moment. Because so many of the things we've been talking about our beat ac-, but you mentioned be to be earlier what examples of business to business type models. Have you seen out there that are really working? Well, the g to tell the BBC stories since we can all relate to it. But the BB stories this this whole thing started with be to be I think companies really have been subscribing to soccer from Salesforce and Google for I for so long now and not opting to buy software companies also prefer to go, no acid, light or capital light. And so they can subscribe to a service for food for water for real estate, right? They they will opt to do. So now what we're seeing is probably the IOT space. Right. The internet of things is really transforming this and so-. Caterpillar is a great example, you think a Caterpillar, and you think well, gosh, how does a company like Caterpillar sells tractors excavators engine? How do they switch to the subscription economy? This about renting tractors and Caterpillar and say, no, no, it's not that. It's like all our assets or physical products today are smart products. We have two million physical assets in the field will perhaps them now have sensors collecting data, right? You know, by Gration data usage data. How often have I been used where am I in? They clicked all this data, and they send it over the internet into a cloud based service. And so now what happens is Caterpillar saying gosh, we have all this information about these products. We've actually manipulate these products remotely from our phone is all these new revenue streams that we can imagine of services that are tied to these products services like like safety services, where where if construction workers are wearing RFID paj in their standing behind one of these gigantic excavators. The s could've eight a can know that and shut down from a safety point of view or even predictive maintenance applications where I can tell based on the vibration patterns that this device this asset needs to be serviced. So let me take it off line now proactively so you only have three hours of downtime versus two weeks of downtime where you gotta wait for the part. You gotta wait right service person. Right. This this this. This translates me. Millions of dollars of savings on behalf of their customers. And so this is a really really exciting area that we're seeing companies go into so the put it into more of consumer based terms on star from General Motors can actually track if I hit a pothole it'll say, hey, your car just hit it sends a signal to the dealer the dealer, then informs me you'd better come in and get this car back in the alignment, or are you going to be buying new tires ten thousand miles sooner than you need to. That's essentially what caterpillars doing with these sensors is proactively seeing there's maintenance issues that are going to come up, and they're fixing them before the become problems in parts have to be ordered. And you have to wait to get fix me stuff to order the part. But it's proactively sent there before it breaks. So I love this idea. All right. We're starting to run out of and any any parting thoughts, I'm gonna ask you the one thing question. This is the big parting thought here is there. One thing you want to emphasize that you've already talked about or is there. Some nugget of information, you absolutely want our. Our listeners to here before we leave today. I know so many of your listeners are running businesses today. And I would say this to them. I would say that once you actually flipped to the other side, and you running a subscription business with strong recurring revenue. These are much much better businesses to run you wake up into at the start of a month as the start of the quarter. You've got known recurring revenue because it'd be a loyal customer base that you can plan around. It's so much easier to run these types of businesses. And then if you think about competitive edge, these days, anybody can take your product, whether it's a phone, whether it's a car in reverse engineer, and basically clone your product and offer the same product. But if you're competitive advantage is not based on your product. But instead is based on your knowledge of what your customers are doing. And the relationships that you have had only you uniquely have that is a much stronger position to be in. It's hard for another company to go Steelers relationships or to have the same knowledge of customers that YouTube you do much much better businesses to run. And the last thing is you can feel it in your own. Personal lives that you're finding more and more Utah you're turning into services and not the products to meet your everyday needs. And so from a business perspective. You got to believe that your customers for your businesses are doing exactly the same thing. And so this is a future business today. And we encourage every company to really move fast and furious into this new subscription economy. And even if you do it today with all the examples that are in your book and all that we've talked about today. It's still a fairly new concept for many businesses. So you're on the leading edge of something that's already been tried tested. Proven. The book is called subscribed. Why the subscription model will be your company's future. And what to do about it by teen is? Whoa. Ladies and gentlemen, boys and girls, this is why we call this amazing business radio. It's been another amazing interview. Thank you so much for sharing your knowledge. We are talking to the guru of a model that is going to revolutionize this entire industry is entire world of business. So thank you so much, man. It's been awesome. Thanks for being on the show. Well that wraps up. Another episode of amazing business radio. We will be back next week with another interview. So until then shop hike in here reminding you to always be amazing.

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