HOW TO SURVIVE AI’S REVENUE EXTINCTION EVENT

In partnership with

➤ WELCOME BACK

Today, I want to dive into the existential threat facing every subscription business: customer elimination through AI adoption.

Here's what you'll learn:

• The seven specific ways AI tools are systematically destroying subscription revenue across B2B and B2C models (and the early warning signals to track in your dashboard)

• The warning signals that indicate how close AI is to eating your product or service.

• An AI integration strategy that turns your biggest retention threat into your stickiest competitive advantage

Onward!

➤ IN CASE YOU MISSED IT

How To Implement Value-Driven Engagement Systems That Stick

“Gamification isn't about fun. It's about manufacturing habits that compound into sticky behavior patterns. You might be failing at this because you’re building recognition systems without delivering real value.”

➤ TODAYS FOCUS

👉 Your Subscription Revenue Model Just Entered The Twilight Zone

Every customer you're billing monthly, whether a B2B team or individual consumer, is running AI experiments. 

They're automating and optimizing workflows your product used to handle. They're consolidating tools you thought were essential.

The threat of elimination is advancing on multiple fronts…

👉 The Seven Revenue Threat Vectors

Threat 1: Seat Compression & Subscription Consolidation

• B2B: Teams replace point solutions with ChatGPT or Copilot, cutting redundant seats. Power users stay. Casual users churn. Your ARPA drops even when you retain the logo.

• B2C: Families reduce individual subscriptions as AI tools handle multiple use cases. One ChatGPT Plus subscription replaces Grammarly, writing apps, and tutoring services.

What your B2B customer may be thinking: "We only need 20% of the seats now. ChatGPT is filling the gap."

What your B2C customer may be thinking: "Why pay for three apps when AI does it all?"

Threat 2: Feature Commoditization

• B2B: Tasks your product handles (like drafting, summarizing, basic analytics, image editing, etc) now feel "included" with AI tools.

• B2C: Features consumers pay for (like photo editing, workout planning, language learning, content creation, etc) become "free" with general AI tools.

Your core value propositions become impossible to justify across both markets.

Threat 3: Build-vs-Buy & DIY Shifts

• B2B: Internal teams wrap OpenAI or Anthropic APIs around their data. They replicate your product's functionality in weeks, not quarters.

• B2C: Tech-savvy consumers create custom AI workflows using free tools and APIs, replacing multiple paid subscriptions.

This drives partial downgrades first. Full replacement within two renewal cycles.

Threat 4: Budget Reallocation

• B2B: Flat software budgets now fund foundation-model seats and credits. Your category gets cut even when your value didn't change.

• B2C: Personal spending shifts toward AI subscriptions (ChatGPT Plus, Claude Pro, etc). Entertainment, productivity, and educational apps get cut first.

Threat 5: Workflow & Content Substitution

• B2B: Customers discover AI-powered alternatives that handle 80% of your use cases at 20% of your cost.

• B2C: AI creates personalized content (like workout plans, meal prep, study guides, entertainment, etc) that consumers used to pay subscriptions for.

They tolerate the quality gap for the savings.

Threat 6: Internal Capability Building & Personal AI Mastery

• B2B: Your customers hire AI specialists who build custom solutions using your data and their domain knowledge.

• B2C: Consumers become proficient with AI tools and create personal workflows that replace multiple subscription services.

You're not competing with vendors anymore. You're competing with their internal AI capabilities.

Threat 7: Value Expectation Spikes

Once customers taste AI speed elsewhere, they expect outcomes, not features.

• B2B: If your product can't match AI velocity for business processes, discount pressure rises fast.

• B2C: If your app can't deliver instant, personalized results like AI tools, consumers abandon subscriptions quickly.

👉 How The Incoming Threats Manifest (Warning Signals)

Track these signals before churn conversations start.

B2B Account Usage Patterns:

• Seat utilization dropping below 70%

• Inactive users exceeding 30 days

• Sharp drops in core workflow usage

• Export activity increasing (sign of data migration)

B2C User Behavior Patterns:

• Session frequency dropping (daily to weekly usage)

• Feature adoption declining (using fewer app capabilities)

• Shorter session times within the app

• Support tickets asking about "AI alternatives"

Commercial Red Flags (Both Markets):

• Procurement/billing notes mentioning "Copilot," "ChatGPT," or "AI tools"

• Requests to move to monthly terms "while we test alternatives"

• Questions about data export capabilities or API access

• Subscription downgrades rather than full cancellations

Support Ticket Patterns:

• "How to export our data"

• Integration requests with AI platforms

• Complaints about manual processes AI could automate

• Feature requests that sound like AI capabilities

👉 Competitive Repositioning Framework

I’ll be blunt. The real solution is to adapt by offering the tools and outcomes customers are being trained to expect in the age of AI.

Until then, you need to reposition value…

Against Pure AI Tools:

• B2B: Emphasize domain expertise, data integration, and workflow context that generic AI can't match.

• B2C: Highlight personalization depth, community features, and specialized knowledge that general AI lacks.

Against Internal AI Builds:

• B2B: Highlight speed to market, maintenance overhead, and compliance complexity they'll face building internally.

• B2C: Focus on convenience, reliability, and integrated experience versus DIY tool-switching.

Against AI-Native Competitors:

• B2B: Focus on your data advantage, customer relationships, and industry knowledge.

• B2C: Emphasize your user base, content quality, and established habits/workflows.

Competitive repositioning should be temporary. For the longer term, you need to start adapting now.

👉 ADAPT: Develop Your AI Integration Strategy

Step 1: Map Customer AI Behaviors

• B2B Audit: Survey your top 20% of accounts to understand their AI adoption patterns. Which workflows are they moving to ChatGPT? What tasks are they automating with other tools?

• B2C Research: Analyze user behavior data and conduct exit interviews. Which features are customers replacing with AI? What content are they creating elsewhere?

Create a heat map of the most vulnerable features in your product.

Step 2: Identify Integration Opportunities

Look for three types of AI enhancement opportunities across both markets:

Input Acceleration: Where customers currently type or upload content, add AI generation capabilities.

• B2B: Email drafting, report writing, data entry

• B2C: Photo editing, workout creation, meal planning

Processing Intelligence: Where customers perform analysis or categorization, add AI-powered insights.

• B2B: Data analysis, customer segmentation, workflow optimization

• B2C: Personal recommendations, habit tracking, progress analysis

Output Enhancement: Where customers create final deliverables, add AI formatting and optimization.

• B2B: Presentations, reports, communications

• B2C: Social content, personal documents, creative projects

Step 3: Build Compensatory AI Features

Instead of building from scratch, integrate existing AI capabilities into your current workflows.

Quick Wins (30-60 days):

• Add ChatGPT integration for content generation within your interface

• Implement AI-powered search and summarization of existing data

• Create intelligent templates and suggestions based on user patterns

Medium-Term Builds (3-6 months):

• Custom AI models trained on your industry/use case

• Automated workflow triggers based on AI analysis

• Intelligent categorization and personalization systems

Long-Term Platform (6-12 months):

• Native AI capabilities using your proprietary data

• Predictive features that anticipate user needs

• AI-powered automation that eliminates manual steps

👉 Prioritize The Right AI Features (Retention First)

Survival is the priority…

Churn Prevention Features

Target the workflows customers are most likely to replace with AI tools.

• B2B: If customers use your product for email drafting, add AI writing assistance. If they use it for data analysis, add AI insights generation.

• B2C: If users rely on your app for workout planning, add AI-powered routine creation. If they use it for photo editing, integrate AI enhancement tools.

Expansion Drivers

Create AI capabilities that justify higher pricing or additional usage.

• B2B: Advanced analytics, predictive features, automated workflows that save significant time

• B2C: Premium AI features, personalized coaching, advanced customization

Stickiness Amplifiers

Build AI features that make your product harder to replace.

• AI that learns from your proprietary data

• Automation that requires your integrations

• Intelligence that improves with usage and personal/business context

➤ TILL NEXT WEEK

Whether you serve businesses or consumers, your recurring revenue now depends on integrating AI capabilities before your customers replace you with them.

Your AI integration timeline is shrinking from "someday" to "this quarter."

Audit your top accounts and highest-value users for the early warning signals covered above. The data you gather will tell you exactly how urgent the threat really is.

And keep building.

Cheers,

~ Rick