4. Gillette switched to challenge the new competition
Gillette gives us what could be the biggest capitulation to the wonders of recurring revenue. When Gillette was founded, they effectively built their own business model. Allow people to buy razors for cheap, but then charge steeply for extra blades. This model worked excellently for over 100 years until subscriptions came along to usurp it.
Dollar Shave Club and then Harry's made buying razors and blades simpler, and importantly cheaper, through the recurring revenue model. Instead of $13 a time for blades, as well as a trip to the store, you could get blades for as little as $3, and delivered straight to your door.
Granted, the actual cost of the blades weren't high, so if you wanted to go through special channels you could get extremely cheap blades, but the brands of Dollar Shave Club and Harry's, along with the convenience, won over modern consumers looking for both of those pieces.
The massive success of these subscription companies hit Gillette hard. In 2016, Proctor & Gamble, the owners of the Gillette brand, saw sales for their grooming segment fall by 6 percent. Dollar Shave Club on the other hand grew like the peskiest of facial hair to the point that Unilever bought them for $1 billion in 2016.
As typical incumbents tend to act, Gillette at first went on the offensive about the quality of DSC's blades, but eventually saw the light and moved to their subscription model. What's beautiful about Gillette's shift is that when a giant incumbent finally moves to the recurring model, wonderful consumer experiences start to surface.
For instance, you can now get Gillette blades for $1 delivered to you by simply texting a number 'BLADES.' While still early, a company that built one of the most successful business models in history is now evolving again to stay afloat and get to the next level of convenience and relationship building with their customers.
Bottom line on Gillette: It's not just about the money. A huge aspect of the recurring model is convenience and brand with your customers, baking in that relationship that keeps that subscription revenue flowing.