Selling a product or service can be done through several models (or a mix!) One model that’s becoming increasingly popular is through a subscription service; the user pays a set amount every month or so, and in return gains access to the service or product in a low-fuss way.
Tiddall is an Artificial Intelligence platform that uses data science and machine learning to help anyone find their weight loss secret efficiently. Founder Bernard Dark talks about why selling through a subscription model is the right approach for them.
Tiddall works through split-testing strategies on people identical to you over a period of time to find the best performing strategies. It learns from many data points and optimises these, comparing the losing strategies to those of the winning ones. Because Tiddall is performing these tests on many people identical to you, results come in quickly and this allows our complex algorithms to continuously improve your strategies over time, tuning the strategies for perfectiom.
The average person spends on average 8-10 months to find a strategy that works best for them - but the problem with this is that it’s not permanent. Sooner or later your body shifts again and the quest to find that sweet spot again continues. This is what is known as a plateau. With Tiddall you needn’t worry as because the platform is so smart it will work things out for you when this phase appears.
Why did you decide to go for a subscription model?
First, we wanted a way to measure predictively, and to create a more accurate financial forecast. This allows us to plan and budget with a degree of precision. It allows us to measure the life time value of our customer (LTV), customer acquisition cost (CAC), churn rate and run rate easily. A subscription model allows you to make a better business decisions, because you have all the major metrics at a click of a button. This is not always the case with other models.
With everything listed above, it really brings value to your company because they clear the path to scale and growth; this makes it easier to value a company and to raise funding.
Secondly, we chose the subscription model because we wanted to give our users the freedom to cancel when they wanted to. If they do not like the product they can just cancel, and there’s no added stress. It brings transparency and trust, and it’s one of our core cultural values here at Tiddall. It also makes things much more convenient for our customers. And if they do love the product, they can just relax and continue to use it without having to worry about payments. This is too much a friction and can cost you a lot of sales. With a subscription model, the process is smooth and easy.
Think of Netflix or Spotify, and their customer relationships. You don’t have to think about it - it has almost become part of your life. You just log in, and off you go. You can even forget that you pay monthly. The pain of having to pay for something is eliminated, which provides your customers with a better experience.
Thirdly, subscription models give you an awesome flexibility that is unrivalled. If conditions change, you can adjust and play with prices. You can split test and get results quickly. With this model, you are at the right place to react to everything going on in the economy or in your industry to remain highly competitive.
What are the benefits of providing a service on a subscription basis?
One of the top benefits that this model gives you is time. Accounting is so much easier. Forecasting into the future is a walk in the past. You can plan with very little risk. We can decide when to hire because we can be sure of our projections, for example.
It makes everything in the business somewhat predictable and it makes running a business very efficient and proactive as oppose to been reactive all the time to changing conditions. If you want to raise funding, it allows investors to see the potential of the business and allow them to make decisions with efficiency. It makes valuing your start-up easier, which sets the scene for raising seed funding (and beyond!) in the future.
Any tips for start-ups providing this selling model?
Selling through a subscription model can help you build a better relationship with your customers, and can help customers efficiently continue using your service. You can manage your finances better and run a much more fluid and efficient business that grows in value every single day. But to make this business model work, you must ensure you provide a strong product that will ensure the retention of your customers. You really benefit from this model if you can maintain that customer satisfaction over a long period. Failing to provide a product that is enjoyed by many of your customers could result in a rising churn rate, making this model not effective at all.
Use surveys to ask your customers how likely they are to recommend the product to a friend (a process called the NPS score, or Net Promoter Score). A higher score means they love your product and that you are on the right track. A lower score is a good indication ahead of time that they will be churning out, but at least you have time to stop that from happening by taking proactive actions to make thing better - something you can do with a subscription model. Take advantage of this model to help you improve your product.
Customers who subscribe to a product on a subscription model are invested, and so they are generally willing to tell you how they feel and what needs to be changed to make their experience a good one. They are willing to give you a chance to make things better. Use this to your advantage and let them help you build a better product that they will love, and you can also be proud of. Remember: do not build a product to find a problem, but find a big pain in the market and build a better solution to solve it.
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