Kindel’s 2nd Law

Woot! I now have two laws named after me.

Kindel’s 2nd Law: All companies where the primary business model is subscription-based eventually predominantly behave in ways inherently hostile to that company’s customers.

This law is a law due to companies’ getting focused on a made-up LTV (lifetime value of a customer), CAC (cost to acquire a customer), and churn rate. Especially churn.

Once a subscription business becomes real for a company, the motions of that company become dominated by a) acquiring debt to pay for ever increasing CAC, and b) trying to reduce churn.

Churn can (theoretically) be reduced by making the product/service better or by making it harder for customers to leave the service. Efforts to enhance the value of the product end up getting harder and harder to justify. Companies default to reducing churn by doing things hostile to customers.

Where’s the one-click unsubscribe button for your cable TV sub? Ever ask yourself why they make it so hard to un-sub?

If you don’t think this law is real, I’m willing to bet you haven’t really studied CAC and churn.

Related: See my 1st law:

© Charlie Kindel. All Rights Reserved.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.