Professional advisors and subscription ala Pret

The move to subscription models continues apace. Whether it is the music you listen to, news you read, films you watch or even the coffee you drink…the monthly subscription is becoming an integral part of our lives.

Pret is the latest business to enter this arena. For £20 a month you get up to 5 drinks every day. With Pret predominately based in the cities at a time when many are still working from home, it remains to be seen whether this will be successful or not but it is a bold and (for the hospitality sector) innovative move. Inevitability Pret are presumably gambling on a number of things including:

a) not everyone will take up the offer to the full and buy 150+ coffees a month;

b) many people (including me) never manage to walk into Pret just for a drink and so the “subscription” coffee will on occasions be pre-fixed with the breakfast veggie roll;

c) there will be people that pay the subscription and then lazily forget to cancel when they do not use/use it in a limited way; and

d) once signed up, the choice of Costa or Pret becomes much easier to decide. The Pret subscription terms (drafted in such a way that you need the coffee to just stay awake whilst you read them) includes various provisos, restrictions and exemptions but in fairness, the fundamental principle of the offer is clear – pay the money and help yourself to 5 drinks a day.

Following swiftly on the heals of Pret, Apple has emulated Amazon and moved one step further with the announcement of the AppleOne model which sees six of its independent models including music, TV, fitness and cloud all brought under a single subscription fee (a move that is apparently “Even Better Together” although we doubt that Spotify will agree). The move to recurring revenue bundles (which the industry has been quick to label as a “rundle”) is the natural progression for any subscription based service as, potential competition issues aside, it allows you to easily separate yourself from your competition whilst expanding the customer reliance on the various services you provide.

Whilst reoccurring revenue models have undoubtedly changed the world of entertainment and seemingly are about to do the same to our eating habits – could this model be used for professional services?

A recent survey by Thompson Reuters highlighted that 94% of legal firms still see the hourly rate as their primary mechanism for charging. Indeed, the hourly model (for our discussion on the hourly rate please visit https://www.gsm-services.co.uk/post/the-end-of-the-hourly-rate) is still deeply entrenched into the psyche of most professional service firms both in the way they charge their customers, how they build their profit models and the way they determine an individuals value or worth internally and so the idea of this changing rapidly is hard to image.

Some professional services firms have and do offer some form of subscription service. For example, a number of firms offer employment, HR or health and safety advice services based on a fixed monthly charge for access to help lines and even insurance backed advice. There are also a number of contract services that allow you to download and access contracts and obtain advice for a regular set fee. However, in general the hourly rate reigns supreme. Even these limited form of subscription models are often caveated by vast restrictions on the amount of “hours” you can use and the type and level of advisor you will receive. They are also, more often than not, limited to very specific parts of the business with the rest remaining safely ensconced under the hourly rate.

Like all businesses, professional service firms need to adapt to the changing habits and needs of its customer base. The strategy of a number of firms seems limited to “focusing on the basics” which is a short way of saying that they are hoping that what works today will continue to work tomorrow. Ignoring the fact that focusing on the basics should actually be a given rather than a strategy, customer needs are changing and so the professional advisor must also adapt and listen to the changing environment. We are entering into a different world where typical financial charging structures are at odds with the ways that we operate both as consumers and businesses and professional advisors need to take this opportunity and adapt accordingly.

COVID (yes, we know that it would be nice to read something that didn’t mention the word) has accelerated a change that was already happening. Businesses need and should be demanding greater control on their external spend, and consumers are already acquainted with and happy to engage with subscription style services. A subscription based service that sits wider than limited historic areas and allows a customer the ability to flex their advisory requirements (a bit like increasing the amount of “data” you need) provides an array of advantages for both customer and advisor. In particular:

For the customer it:

a) provides greater certainty and control over the hourly rate. Allowing them to not only spread their advisory costs over longer periods but also have a more holistic control over company spend;

b) expands their access to different advisors and build relationships with the wider firm.

For the advisor it:

a) provides a regular income stream. In a profession where “cash is king”, having a strong subscription model will assist against the ebbs and flows of business;

b) is a “lock in” model. Subscription services may not work across an entire service offering but they enable a continual and ongoing relationship to build with the customer.

By introducing subscription services, professional advisors can give customers access to a range of services that will remove some of the fear that is often is associated with the sense that the “clock is ticking”.

Needless to say, moving professional advisors away from its traditional hourly rate approach is not easy but with the changing appetites of both businesses and consumers, it is hoped that we will start to see more innovative and customer focused approaches to billing. Who knows…we may even see more firms taking a leaf out of the likes of Apple and offering their customers wider complementary products and services beyond just advice.