Robbie Baxter shares a video and transcript of this interview on subscription-based business with insights on how to quantify the value of customer relationships.
Revenue from loyal customers is more valuable than anonymous transactional revenue–it’s more predictable and more profitable. But until recently corporate valuations haven’t had a way to distinguish the quality of the revenue based on customer relationships.
Dan McCarthy, Assistant Professor of Marketing at Emory University’s Goizueta School of Business, is advocating for a new approach, known as “Customer Based Corporate Valuation.
I recently talked with Dan about why customer lifetime value is such an important and misunderstood metric, how to rethink the way companies are valued by the public markets, and what all of this means for subscription businesses.
Robbie Baxter: Can you explain customer based corporate valuation for the lay person.
Dan McCarthy: Customer base, corporate valuation at its most basic level is an enlightened way of forecasting a company’s future revenues, but driving that revenue forecasts off of what the customers will do. So hopefully it’s pretty intuitive that pretty much every major valuation method starts with some sort of a revenue forecast. And the main thing that we would say is every dollar of revenue has to come from a customer who’s making a purchase.
Key points include:
- Customer base corporate valuation
- Customer lifetime value
- The changing landscape of customer data
Read the full interview, How to Quantify the Value of Your Customer Relationships–An Interview with Professor Dan McCarthy, on LinkedIn.
Robbie Kellman Baxter shares a tale from the trenches of subscription-based business success stories. In this episode, how a subscription business can become successful by focusing on subscriber outcomes.
Robbie Baxter: How did you come to run Instant Ink? Looking back, would you say it was inevitable? Or are you surprised at where you’ve ended up?
Anthony Napolitano: Well, I’m thrilled to where I ended up. I can’t say it was fully planned and chartered for sure. I think each of us have sometimes at our career we make a specific choice and sometimes luck just kind of falls upon you and you look back at are grateful that it happened. I think most of my career I’ve spent in what we call startup businesses inside of HP. So these are new businesses that we’re trying to grow and create. And it just so happened to be that before I joined Instant Ink, I was in another startup business inside of HP, which is quite a unique experience, is that I was there from day one until we actually shut down the business. So I was in that business for 12 years. And while it didn’t succeed in kind of a commercial sense, I learned a lot from that business. But because I had that experience, Instant Ink at the time was really only a few hundred thousand customers. And so I had this reputation of being able to grow new businesses inside of HP and I was given the opportunity to come into Instant Ink. Now we have over seven million customers worldwide.
Robbie Baxter: How many customers was that?
Anthony Napolitano: Seven million.
Robbie Baxter: Three hundred thousand to seven million.
Anthony Napolitano: That’s right. In the last five plus years.
Robbie Baxter: Wow. Now, it’s interesting to me that you’re you’re really an entrepreneur, and yet you’ve spent most of your career inside a big established company. What has that been like for you?
Key points covered include:
- Leading trend transformations
- Being the disruptor
- Cohort analysis
Read the full article or listen to the podcast, Reinventing the Razor & Razorblades Model by Focusing on Subscriber Outcomes with Anthony Napolitano of HP’s Instant Ink, on LinkedIn.
Robbie Kellman Baxter shares her latest article with expert insights on the subscription-based business model. This week, she discusses the disruption to the manufacturing industry and three mindset shifts leaders will need to make during the coming year.
Whether you’re a B2B manufacturer or a supplier to the industry, it’s time to rethink your entire relationship with your customers.
Companies like Dollar Shave Club and Birch Box let consumers enjoy cost savings, convenience and the fun discovery. And Peloton offers video subscriptions so purchasers of their indoor cycling bikes can get more out of their fitness regimen.
Now, B2B manufacturing and the companies who supply the manufacturers are starting to get on the act. The implications are huge. Think of the potential if manufacturers were ‘members’ who could subscribe to a factory line instead of owning it outright. I’m talking about the makers of heavy equipment like jet engines, cranes, combines and, of course, automobiles, but also entrepreneurs designing new electronics products.
Of course, subscription isn’t a totally new concept for the heavy equipment world. Many businesses already prefer to “subscribe” to cranes or trucks rather than bearing the burdens and responsibilities of a major capital expense. But what if you’re a supplier to a manufacturer, or a manufacturer whose primary “customer” is the distributor, not the end-user? If you want to see what the future holds, just look at the “Software as Service” (SaaS) revolution.
Key points include:
- Starting with the service, not the machine
- Customer focused strategies
- How to build a Forever Transaction
Read the full article, The Subscription Model is Set to Disrupt Manufacturing. Here are 3 Mindset Shifts Leaders Will Need to Make, on LinkedIn.
Robbie Kellman Baxter takes a look forward at subscription businesses in 2021 and provides a few tips on how to improve sales through improved membership strategies.
The time leading up to American Thanksgiving is often especially busy, with a combination of major conferences, ambitious sales goals and, of course, planning for the upcoming year before people check out (physically and/or mentally) for the holiday season.
You’ve probably spent some time already thinking about your goals for next year, and what you are committing to your board and stakeholders.
A key ritual of setting the year up for success for many organizations is the Sales Kick Off (SKO).
But this year’s event is likely going to look a little (a lot?) different.
I was inspired by my friend and colleague David Meerman Scott, co-author of Standout Virtual Events to rethink the SKO. David provides some excellent tips for running a quality virtual event, including the right equipment, how to prep a speaker, and how to think about the whole program as part of a whole.
In this article, I look at the SKO from a different angle. I took a step back to really focus on the “Forever Promise” organizations make to their sales teams and which has resulted in the “product” of the SKO event. The Sales Kick Off is a time to educate, engage and inspire the team to maximize the likelihood of hitting all sales objectives in the coming year.
Key points include:
- The modular model
- Creating ‘lean in’ opportunities
- Making the most of events
Read the full article, Rethinking Your 2021 Sales Kick Off With a Membership Mindset, on LinkedIn.
In a recent podcast from Subscription Stories, Robbie Kellman Baxter shares the secrets behind building a successful membership community.
We crave community.
More than ever, community is what ties us together and motivates us to be our best selves every day. Increasingly, we’re finding those connections online. From clothing manufacturers to conference organizers to professional services providers, community creators struggle to build authentic, sticky, and even profitable communities.
Gina Bianchini knows the secrets to strong communities.
She has dedicated much of her career to ushering in a new era of digital community. In addition to MightyNetworks, the community platform, she also co-founded Ning and grew it to over 100 million users in 300000 active networks.
I recently sat down with her to talk about how to launch and build community as part of a broader Forever Transaction. In our wide-ranging conversation, we also discussed how to incorporate other elements of value into your community, such as content, digital courses and subscription commerce. Enjoy!
Key points discussed include:
- Distinction between the ad business versus the subscription business matters
- Identifying sticky content as opposed to quantity of content
- Subscription overwhelm and subscription fatigue
Read the transcripts or listen to the podcast, Secrets to Building Membership Communities, on LinkedIn.
Robbie Kellman Baxter shares key points on developing tiered pricing options that elicit a positive reaction from subscription-based customers.
Netflix, one of the largest and most successful subscription companies in the world, has among the simplest of business models. There’s a one-time, short, free trial and then the only option is to subscribe.* They only offer a few subscription options, are very limited in the partnerships they utilize and generally stay away from bundling their products with those of other organizations. You don’t get a free toaster with your Netflix subscription and you don’t get a free Netflix subscription with your toaster. The clean model makes it easy to track subscriber behavior and understand how people value their offering. After all, if you only subscribed to get the toaster, you’re going to behave differently than if you intended to make Netflix content part of your new normal. In contrast, news organizations have a huge range of offers. They bundle with other content providers–music, video and other news organizations. They have dynamic paywalls, offering more free articles to some people than others. And they have dynamic pricing, trying to optimize for revenue on every transaction and every relationship.
Tactics around dynamic pricing, while effective in the short term, don’t always make sense from a Membership Economy’s long-term perspective, and focus on lifetime customer value (LCV). For example, it’s accepted wisdom that long-time subscribers are less likely to cancel or complain about pricing. So there’s a temptation to give new customers better pricing than loyal ones. To me, that logic seems like “our best customers are dumb enough to trust us, so we can charge them more than we charge new customers.” In a world of increasing transparency, where it’s easier than ever before to quickly assess what any product is worth and the best available price, this is dangerous.
Points covered in this article include:
- Dynamic pricing
- Gaining the trust of the subscriber
- Managing internal systems
Read the full article, How to optimize tiered pricing options for a subscription, on LinkedIn.
In this episode of Subscription Stories, Robbie Kellman Baxter interviews Electronic Arts’ Mike Blank about bringing subscription to the world of gaming. They discuss the challenges of subscriptions in the gaming industry, how to encourage consumers to discover new content within the subscription, and how EA offers multiple consumer models to support their “player first” promise.
‘EA has historically built their model around these awesome specific franchises, each with their own fan base: Madden, Battlefield, The Sims. So why did you decide to implement subscriptions across all the franchises? Do you remember how that happened?’
‘I frankly, I think this is what inspired us to think about this idea of a gaming subscription because we were seeing what was happening in the world of movies and music and books and where Netflix was. And it was clear that if you could offer something of value in the entertainment space to a consumer with low friction, with tremendous convenience, at a price that was reasonable, that that package would be something that someone would want to pay for. In our case, in the world of console gaming games are roughly 60 dollars as an upfront cost. And that cost has been relatively similar for many, many years. And so our business has been built around blockbuster releases of amazing entertainment, immersive entertainment experiences that someone would pay for and then enjoy for some period of time. Not dissimilar, perhaps, to a blockbuster movie that you might go to a movie theater for. Although the price point is a lot higher for games, it cost hundreds of millions of dollars to build a triple-A game. The world of gaming has evolved, but that price point that sixty dollars price point has remained relatively stagnant. And so when I reflect back about like, well, why did we get into this business? It was because what we were seeing, the behavior that we were seeing in the rest of the entertainment world. And the question we asked ourselves was, why is this not happening in games? What is different about gaming that is preventing us or any other publisher or any other major developer of gaming consoles to experiment in the world of subscriptions? Gaming is more complicated, though.’
Key points from this interview include:
- The metrics EA used to measure success
- How EA shares subscription data across the company without distracting from other “player first” projects
- How to tackle pricing in the gaming world and how EA chose its pricing model
Catch the full episode, Mike Blanc on keeping a ‘players first’ mindset within a subscription business, on RobbieKellmanBaxter.com.
For more information on building a subscription business, Robbie will be speaking at a zoom conference, How to Build Super Compelling Subscription Products, on Tuesday, October 27, at 1:30 PM ET.
The scope of an internship or employee position can be difficult to define; fortunately, Robbie Kellman Baxter shares key tips that help clarify communication and identify requirements, ensuring expectations are understood.
The needs of a new subscription business change rapidly, especially early on.
Before organizations invest in technology infrastructure, they often serve subscribers in a more labor-intensive way. This is a good strategy for businesses to take as they work to refine product market fit and race to launch that first offering (minimum viable product) into the market.
Having an intern, or a contract (short-term) employee can be a cost-effective and flexible resource. And because of the global pandemic, there is a lot of talent available. Many talented people have been laid off and want to get into something new and growing. Students taking all their classes online have extra time available that would have gone to extracurriculars, sports and socializing. And many students are taking time off from college.
Even though the market for interns and contractors is huge and highly active, many executives seem unclear about how to optimize roles that work for both the organization and the individual workers.
I know this is a little bit of a departure from my usual newsletter content. But I hope many of you find it useful as you get creative in building out the talent for your team. And I also hope it is helpful for students and jobseekers who are open to roles that are less structured than the standard full-time employment.
Areas covered in this article include:
- Intern vs Contractor
- Payment Options
- Negotiation and communication
Read the full article, How to Scope and Define an Internship, on LinkedIn.
Robbie Kellman Baxter shares a podcast from her new series, Subscription Stories – True Tales from the Trenches. This week, she is in conversation with Brad Handler, vacation entrepreneur. They discuss his affordable business model, the integration of membership and subscription into the luxury travel service, and more.
I’m Robbie Kellman Baxter. Today’s subscription story belongs to Brad Handler. He and his brother, Brent Handler, are vacation entrepreneurs who are incorporating membership and subscription in some really novel ways. Brad has done a lot of different things over his career, first as an engineer at Apple, then as an attorney at a top Silicon Valley law firm, then at eBay as their first in-house counsel from 1997 to 2001. But he is best known for his innovation in the world of destination travel clubs. The Handlers launched Exclusive Resorts in 2002. More recently, they have been building Inspirato, a membership model which also has introduced a subscription option.
‘I walked into a little dorm fridge and a tiny little bar sink and my wife turned to me and said: ‘shut up or solve this problem.’ So we spent the rest of that vacation week solving the problem.’- Brad Handler
We’ll talk about how to package value for subscriptions and determine the right price and features and what he learned as a Silicon Valley insider that has informed his work in rethinking the travel industry. And finally, we’ll discuss the unique benefits and challenges of working with your family.
Areas of interest include:
- Using technology to pull ahead of competitors
- Subscription vs membership business models
- Inspirato’s most important metrics
- How data collection can transform and improve customer experience
- How Inspirato is structured for profitability
Listen to the full podcast, Inspirato’s Brad Handler on Revamping a Thousand Year Old Industry, on robbiekellmanbaxter.com
Robbie Kellman Baxter takes a look at the Apple ONE bundling strategy to assess the pros and cons of bundling offers and partnerships from the perspective of a subscription-based business strategy.
Rumors are flying about Apple’s emerging bundling strategy. Apparently they are getting ready to launch several tiers of new bundled subscriptions, incorporating different combos of the following: Apple Music, Apple TV+, Apple Arcade, Apple News+, iCloud storage and eventually a new Fitness offering.
It makes sense. We’ve already seen the power of Amazon Prime, both as a driver of revenue and as a powerful “habit driver” for all of Amazon’s offerings. I know I joined Amazon Prime several years ago just for the free shipping. Today, that free shipping has motivated me to go to Amazon first for nearly everything. Just as important, Amazon Prime has introduced me to many other features that deepen my family’s engagement and loyalty, including video, audio, storage and ebooks.
Apple has been focusing more on service revenue over the past few years, and this move is one more step on their recurring revenue journey. They already have a “forever transaction” with millions of hardware customers who have stopped looking for alternatives to Apple for their hardware purchases. Now they are simply formalizing that relationship and extending it with their various subscriptions.
Areas covered in this article include:
- Partnering with a bigger player
Read the full article, Apple ONE (Or the Pros and Cons of Subscription Bundles, Rundles and Partnerships), on LinkedIn.
Jason George takes us back a few years to an original disruptor, Aereo, a company that tried to bypass regulations and use technology to distribute media content in the days before Netflix and the subscription-based business model.
The scrappy technology startup faced an existential threat. The company was down to its final arguments in the United States Supreme Court, where the ruling would determine its fate and if millions of invested dollars would be lost. The fact that Aereo existed at all was a byproduct of arcane telecommunications regulations, which had evolved over the decades along with the medium of broadcast television, which it intended to disrupt.
The American government mandated that over-the-air channels using the public airwaves be distributed for free. Their shows could be viewed by anyone with a basic antenna. This could be a clunky means of accessing television, as broadcasting is subject to the vagaries of weather and topography that interfere with the signal.
Cable and satellite providers stepped into the gap, becoming the preferred entertainment sources for many households. In addition to numerous specialty channels they always included the primary broadcast networks viewers demanded. The wrinkle in this arrangement arose from the fact that television providers had to pay over-the-air networks for the rights to carry their programming, even though a home viewer could presumably access the same content for free.
Areas of interest in this article include:
- Subscription fees and copyright infringement
- Innovation and regulatory workarounds
- Modern capitalism and corporate value creation
Read the full article, Innovation and Hacking Regulations, on the Jason George website.
Subscription-based business models have transformed how many companies engage and retain customers. From B2B to B2C, the popularity of developing a subscription-based service has been steadily increasing and is fast becoming the new normal in terms of a sustainable business model. Robbie Kellman Baxter, leading expert in this field, has recently launched a new podcast Subscription Stories – tales from the trenches, where she interviews leaders of this revolution about how they’re using subscription pricing and membership models to redefine the biggest industries and generate predictable recurring revenue.
Subscription models are crazy powerful. Savvy small companies can easily deploy them to knock huge Goliaths off kilter. We’ve seen it in entertainment, software, hardware, news, retail, hospitality—the list goes on.
‘Our goal is to teach forever habits.’ Joanna Strober has reimagined the youth weight loss industry through her wellness program, Kurbo. Tune in to hear Joanna talk with Robbie about the role of a human coach in a digital program, how to communicate with both parents and kids, and instilling habits in customers for the long term.
Joanna Strober is an entrepreneur and investor who founded Kurbo, the first digital weight loss platform for kids. Joanna grew Kurbo into a subscription business so successful that it caught the interest of WW (Weight Watchers reimagined), one of the biggest names in wellness. She is currently the CEO of Kurbo and a Senior Vice President at WW. Before diving into the weight loss industry, Joanna was Senior Managing Director at Sterling Stamos, and co-authored Getting to 50/50. Joanna earned a Bachelor’s Degree from University of Pennsylvania and a JD from UCLA school of Law.
Highlights from this episode include:
- What triggers people to enrol in subscriptions and what motivates people to make subscription a habit
- The 7 key areas of competence in a subscription business
- The “reverse freemium” model, and the power of breaking the mold when it comes to adopting a subscription model
Listen to the full podcast, Kurbo’s Joanna Strober on a digital program to make kids healthier, or download the transcript from the Robbie Kellman Baxter website.
Robbie Kellman Baxter writes about her experience as an online subscriber to Disney+ and whether Disney will deliver on their forever promise of family connection through membership.
This weekend, my family watched Hamilton on Disney+. We weren’t the only ones. I’m guessing a lot of the 54 million (as of May) subscribers were also singing along as part of a “shelter at home” Fourth of July holiday.
Like many others, we subscribed last week, specifically to watch the musical. To be specific, we upgraded from our Hulu-with-ads subscription (which I got initially so my kids could watch The Handmaid’s Tale…but then we got hooked on some other shows) to the Hulu/Disney+/ESPN+ bundle.
Disney is most certainly seeing a spike in subscribers this week, but will it last?
Will this cohort of subscribers who joined to watch Hamilton be less likely to stay engaged and more likely to cancel? Probably.
Points covered in this article include:
- The key to retention
- Five retention tactics
- Disney’s approach to on-boarding
Read the full article, Everyone Subscribed to Disney+ for Hamilton. Will Disney’s Onboarding Process Be Enough to Retain This Cohort?, on LinkedIn.
In this latest post from Robbie Kellman Baxter, she explains the difference between ad revenue and subscription revenue, subscription pricing, valuable content, and advertising in a subscription-based business.
I have always encouraged organizations to choose a lane when it comes to pricing. The power of subscriptions is that they are a good way to price when you’re solving the subscriber’s problem on an ongoing basis.
Subscription pricing aligns the goals of the reader with the ongoing goals of the organization. In advertising models, you might say that the readers are the product and the advertisers are the customers.
Doing both concurrently is problematic, because you’re trying to please two groups with different goals.
Advertisers want eyeballs. So the goal is to attract lots of viewers–maybe with a video about Kim Kardashian, or the day’s most sensational breaking news story.
In contrast, audience revenue is generated through content worth paying for. So it’s going to need to be differentiated content, and perceived of as being valuable, like an analysis of the bond market or the final match of a water polo tournament. It may attract a smaller, more committed audience.”
Included in this article:
- The move from cost per click to cost (CPC) per acquisition (CPA)
- The relationship between content and advertisements
Read the full article, Maybe the Secret to Advertising Is… Subscriptions?, on LinkedIn.
As more people turn to online platforms for education and professional development, how can you share your wealth of experience and knowledge, and turn it into financial revenue through a subscription-based platform? Robbie Kellman Baxter explains how.
For years, learning and development professionals have been talking about the coming transformation of adult learning and particularly professional development within ones career.
What are the best practices? What are the pitfalls?
How can YOU build a membership model and justify subscription pricing for your excellent content?
Understanding the Learning Landscape
The number of options through which to continue to develop and hone professional skills has been growing for the past several years. Several different types of organizations share a forever promise to ‘help people thrive in their careers’.
In this article you will learn:
- Best practices
- How to layer in value
- Pitfalls To Avoid
Read the full article, How to Build a Subscription Membership Around Your Learning Content, on LinkedIn.
Robbie Kellman Baxter shares expert tips on how to build revenue through a subscription business model.
I’ve been noticing something funny recently.
As I make my rounds being interviewed by podcasters, influencers and subject matter experts, the conversations turn from ‘advice for listeners’ to ‘advice for the host.’
In other words, these solopreneurs, subject matter experts, and social media celebrities are trying to figure out how to build a viable, profitable business around their own community and expertise. They’re not just trying to provide useful information to their audiences–they’re struggling with their own revenue model.
Don’t underestimate the power of the “forever transaction” for small businesses.
Subscriptions can be a powerful tool for virtually any organizations–public, private, big, small, venture-backed, family-owned, non-profit, old, emerging, and across all industries. It can be a particularly effective tool for the smallest businesses.
This week, I presented my work to several hundred small business owners through BNI Global, and was inundated with questions. They wanted to know how to apply the principles to their accounting firms, restaurants, car washes, real-estate businesses and solo-consultancies.
Membership models and subscription pricing work great for most small businesses, subject matter experts and even celebrity influencers.
Included in this article:
- Identifying the value
- Segmenting the audience
- The ROI of Free and Freemium
Read the full article, How Influencers, Subject Matter Experts and Small Business Owners Can Build Subscription Revenue on LinkedIn.
Robbie Kellman Baxter provides a few words of encouragement and valuable links that will inspire and motivate.
Now is a good time to sharpen the saw.
Abraham Lincoln is reported to have said “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”According to recent data from Zuora, only 11% of subscription businesses using their billing platform have seen a decline in members vs 2019.
We all need a little inspiration right now. Whether our business is going well or not.
I’ve been talking with subscription executives that are worried and pulling back for sure. But many subscription businesses are growing, and practitioners working in those companies, the product managers, marketers, customer success teams and sales organizations, are busier than ever.
Organizations are dealing with new demands, and a new environment, which requires pivoting and fresh ideas. Those of us who are seeing a slowdown in business and in “to do” lists, are thinking about how things will be different in the foreseeable future.
- A Financial Planning Marketing playbook
- Leading Learning
- Read to Lead
Access links and read the full article, Sharpening the Saw for Subscription Practitioners & Entrepreneurs–FREE STUFF, on LinkedIn.
Robbie Kellman Baxter explains why the customer relationship is even more valuable and volatile during times of crisis and provides six practical steps you can take to maintain strong customer relations.
Subscription-based businesses seem to be the most resilient during this time of crisis. With predictable recurring revenue, they have greater flexibility to withstand the storm. But there’s more to it than just revenue. To hang onto customers during a crisis, you need to build a forever transaction with the people you serve.
Around the world, everyone is adjusting to their own personal “new normal.” They’re sheltering in place. They’re worrying about the elderly and immunocompromised in their community. Their kids are distance learning and not going to school or childcare. Most people, except those on the front lines and in essential businesses, are working from home. And many of those who own or run businesses are trying to hang onto their customers when seemingly all forces are working against them. Smart marketers know they can kill their brand if they screw this up.
The six steps include:
- The focus on the forever promise
- Determining your best members
- Expanding customer success
- Learning from frontline team members
- Placing the customer at meetings
- Identifying the customer challenges
Read the full article, How to Hold onto Your Customers in a Crisis – and for the Long Term, on LinkedIn.