Building a B2B Subscription Business. In Blackboard Fridays Episode 26, Jacob talks about Growth Planning. Need this implemented into your business? Talk to the international business advisor who can do exactly that – Contact Jacob, Learn More, or Subscribe for Updates.
Most professional services or other business-to-business (B2B) companies are ‘lumpy’ – some months are super busy and revenue is high; but often the next month is quieter and your team fail to meet their targets.
Whether this is seasonal (accountants are busy in tax planning season), cyclical (architects are a lead indicator of the construction market’s health), or just the nature of your business (clients call lawyers when they need them, or shortly thereafter), you know there has to be a better way.
Every business has the potential to be a subscription business, in one form or another. Maybe for you this is ‘just’ an additional product you can provide to your clients, or a new segment of the market? Perhaps you want to tear down the entirety of your existing, lumpy, unpredictable business and replace it with a steady stream of work and revenue where the only lumps are profitable cream on top?
Either is an exciting opportunity for you. Today’s video starts the conversation about how you can build a B2B Subscription Business. If you want to advance the conversation, let’s chat.
Who is Jacob Aldridge, Business Coach?
“The smart and quirky advisor who gets sh!t done in business.”
Since April 2006, I’ve been an international business advisor providing bespoke solutions for privately-owned businesses with 12-96 employees.
At this stage you have proven your business model, but you’re struggling to turn aspirations into day-to-day reality. You are still responsible for all 28 areas of your business, but you don’t have the time or budget to hire 28 different experts.
You need 1 person you can trust who can show you how everything in your business is connected, and which areas to prioritise first.
That’s me.
Learn more here. Or Let’s chat.
Transcript
In 2013, Adobe sent a ripple through the software world by making their Creative Suite of products (previously enormously expensive to buy) available only via an ongoing subscription model. The low monthly fee made their products accessible like never before, and was a pioneer of what we now know as SaaS – “Software as a Service”, rather than being something you bought and owned.
The low monthly fee was heralded, though few of us foresaw the current software world where we “rent everything and own nothing“. Which creates the focus for this week’s video:
Can you build a subscription business model even if you’re in a Professional Services or B2B environment.
Why Offer a Subscription Service?
It’s no longer sufficient for us to find ways to build clients for life.
We need to find ways to build paying clients for life. The opportunity for us to deliver value to our client base on a regular and consistent basis, in exchange for a regular and consistent income stream.
This blue line on this week’s Blackboard represents most professional services businesses – and the revenue models that they generate from a client relationship.
This applies to lawyers, IT companies, accountants, advisors, even business coaches. So what can you see?
It’s lumpy. It’s unpredictable.
And the pain? You’re probably familiar with it, it’s real. You’re never quite sure when that client, when that project, when that revenue is going to come in. A big project that you’ve been preparing for gets bumped by a month or bumped by a quarter.
Your business goes through ups and downs, peaks and troughs, capacity stress when everybody’s overworked because three clients have come on at once and a whole period of waste where people are inefficient, twiddling their thumbs because projects all finished at the same time or didn’t come online when you were expecting them.
Your Pain is Mirrored by Your Clients
That frustration, that inconsistency, is also a pain for your clients. Nobody likes having big lumpy expenses in their life or in their business – and that’s how most professional services relationships can feel, a huge expense landing all at once.
Your clients are wanting you to find a way to deliver them value on an ongoing basis that’s much more bite-sized, much easier for them to manage regarding their cash flow. So, how do you do it? How do you shift to this new revenue model where you have regular consistent income with perhaps the occasional spiked specific project or additional value that you can deliver? The green line!
How to Build a B2B Subscription Business
The process I’ve gone through with several clients who have looked to change their business model is this.
- Understand your current Capacity Business Model
- Identify which levers you can move to offer an ongoing service
- Market test with your existing clients
- Launch. Slowly
First, you need to be able to calculate the Capacity Engine of your business today. and determine from that model whether you’re running at a high Utilisation Rate, putting a lot of power out of your engine, or whether there’s a lot of waste. (If that’s speaking gibberish to you, go back and watch the earlier Blackboard Fridays video on why growth is the most dangerous word in business).
Once you have a model of your business, all the little parts that make up the engine that drives you, you need to stress test them with some ideas around this new model.
Exactly what your ongoing subscription model might look like is going to differ depending on your industry and your business and your client base; but you want to take key elements like (a) time and cost to your business and (b) to your clients and stress test them against the Capacity Model that you’ve built.
This will give you an idea as to what is a realistic and feasible ongoing subscription model that you can deliver to your clients.
Once you have an idea of that, you need to wrap that up in some of your marketing language and connect it with your brand promise, your buyer personas, and most importantly go out and have a conversation.
If you watched last week’s episode about how to validate your startup idea, it applies in this situation as well. Go and interview ten of your clients – not the ten best clients, not the ten worst clients, but a good cross-section of your target client base. Listen to their feedback as to whether this model that you have started to design is going to add value in their life.
If it does then fantastic you’ve now got an opportunity to launch a subscription business model!
Launch Slowly
I’d encourage most businesses that I work with to launch it over time rather than all at once. You don’t want to overwhelm your clients experience by having all of them going through the new process at the same time. Any mistakes that you make as a business will be exacerbated.
Much better to start with better clients and slowly roll it out to the whole client base so that they all receive a seamless experience.
The best thing about this is even if your new model is designed to deliver just the same amount of revenue as the old one, by having this consistency, you and the team will be much better placed to find new ways, new opportunities, new revenue streams for your client moving forward.
That’s growth! And it’s growth that isn’t as dangerous.
Next Steps
Want to learn more about how this can apply to your business? It costs nothing to chat:
- Email me jacob@jacobaldridge.com (I read them all)
- Call, Text, or WhatsApp me +61 427 151 181
- Or just Subscribe https://jacobaldridge.com/about/subscribe-to-jacob-aldridge-com/ to stay in touch
