The Battle for Recurring Revenue

Is it just me or are subscription services getting out of hand?  The brand I love the most, Kong – a Colorado-based dog toy company, recently let me know that they now also have a subscription service.  For $30 a month I can have 6 Kong products, including 3 toys, delivered to my home.  That’s 36 Kong toys a year.  Kong is known for making indestructible toys that stand the test of time, in addition to long-lasting leashes, harnesses, etc.  I have 2 30-lb dogs who spend most of their time sleeping.  What in the world am I going to do with 36 Kong toys a year?!

Kong Box Content

But they’re hardly the only ones are they?  Barkbox and Pupbox also offer unique hand-selected boxes that I can have delivered to my door every month to keep my puppers spoiled.

Dog-focused subscription services

Additionally I can have wardrobes, furniture, hot sauce, wine, international snack foods, prepackaged date nights, cook-your-own meal sets, beauty products, and socks all delivered to me each month for a low(ish) monthly fee.

Here’s my question –  What problem are all these subscription boxes solving?

I submit that the only problem most of these services is really serving is to create recurring revenue models for their relative companies.  

I get it.  Recurring revenue is better than one-time revenue every day of the week.  But where does it end?  Am I going to start getting ads for “lubrication boxes” that contain a bottle of WD40, Astroglide and extra virgin olive oil?!

Recurring revenue models without a customer-centristic mindset is bad business and does more to harm your brand than support it.  

Picking on Kong – only because I love them so much – I would rather they had a “new dog” pack.  Kong toys last forever.  That’s why I buy them whenever I get a new dog, which admittedly is only once every 5 years or so.  But when I shop for that new dog, I’m buying everything.  Kennel, leash, harness, toys, beds, treats, dishes, hiking bowls – everything.  The only thing I repeatedly buy for my dogs after that is food, training treats and insurance. I rarely buy all of these products from a single brand, but what if Kong took the work out.  Here is everything you could possibly need for your new family member – in one box – from the brand you trust.

Then everyone who comes to my house will see the Kong beds and toys and bowls and leashes and on and on.  They will ask me why I love Kong so much and I will say, “because they last forever”, at which point I get to mention that all of this comes in one box.

What that creates is repeat revenue for life, rather than recurring revenue for a few months.
If you (mr or mrs reader) are considering creating your own recurring revenue model, ask yourself – what customer problem am I really solving?

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