subscription business

Key Considerations when Starting a Subscription-based Business

 

For all those thinking about starting a subscription-based business, or adding a subscription service to a business, Robbie Kellman Baxter shares an article that identifies five things you shouldn’t do and one you should. 

Netflix is a true leader of the Membership Economy. Back in 2002 when I first started working with them, I fell in love with their business model.

I loved their focus on doing one thing really well, their Forever Promise (FP). I describe that FP as “a huge selection of professionally created video content, delivered in the most efficient way possible, with cost certainty.”

I also loved their data-driven approach, the metrics they popularized around engagement and churn, and their continuous tinkering to always improve their model. And I loved their commitment to transparency.

But that doesn’t mean that every organization that wants predictable recurring revenue should copy everything Netflix does. Building a forever transaction with your own customers requires more than the “Netflix Playbook”.

Here are some times when you should consider charting your own course rather than doing what Netflix did.

 

Key points include:

  • Subscription revenue
  • Variable costs and customer usage
  • Distinctly different customer segments

 

Read the full article, 5 Reasons NOT to Make Your Subscription “Like Netflix”​…and 1 Reason You Should, on LinkedIn.

 

Building a Successful Membership Organization

 

Robbie Baxter interviews Scott Mordell the CEO of the Young Presidents Organization (YPO). They discuss the YPO processes and membership.

 

Scott Mordell was CEO of the Young Presidents Organization, or YPO, from 2011 through 2020. What is fascinating about YPO is how intensely engaged their community is. Members will move mountains to make sure they can attend their regular meetings, despite the fact that they’re among the busiest people in the world. Many of them even qualify as “Superusers”—my word to describe members who go beyond just being good paying members, and actually contribute significant time and money of their own to benefit the organization. 

Scott and I recently discussed the processes YPO has developed to attract, engage and retain CEOs around the world, the surprisingly friction-laden process they use to onboard new members, and the reason so many members become superuser.

Welcome to the show, Scott.

Thank you, Robbie. It’s great to be with you.

Tell me about the forever promise that you make to your members. What is it that you’re going to do for them forever in exchange for their engagement and loyalty?

First of all, we welcome extraordinary leaders to come together and grow together to improve their lives, businesses and ultimately, the world. It can be lonely to be a leader of an organization. Our forever promise is that you’ll never walk alone in your journey as you go forward.”

 

Key points include:

  • Peer-To-Peer Relationships
  • Whole-person leadership
  • Keeping a high level of community and culture

 

Read the full article, YPO’s Scott Mordell on a Subscription that Transforms CEOs into Superusers, on LinkedIn.

 

Launching a Subscription App?  Read these Tips

 

Robbie Kellman Baxter shares valuable advice for product managers who are ramping up operations to prepare for new subscribers to their subscription-based business.

So you’ve launched your subscription app, and you have some subscribers. You’ve only scratched the surface. Now the real work begins. The key to subscription models is that the benefits keep improving to support the subscriber’s ongoing goal. And at the same time as you’re optimizing for your existing subscribers, you have to continue to stay relevant for tomorrow’s members.

Subscription models are complicated.

If you’re responsible for the product roadmap, how do you prioritize where to invest first, and what can wait til later? Here are 10 tips that might help you focus.

Design for the whole party. Think of your product as a party. Then identify your greatest opportunity for improvement. There might be some people who don’t know the party is happening, or don’t realize that their favorite band is going to be there. That’s an awareness issue–can you build in a way to attract people who might not otherwise know about your product? There might be some people who pass by the party but don’t feel an urge to go inside and check it out–that might mean you lack a headline benefit that will attract them. But just because someone signs up, or enters the party, that doesn’t mean your work as a product manager is done. You need to make them feel welcome, and help them figure out where the fun activities are–the bar, the buffet, the band. This challenge is about surfacing features, and onboarding a new subscriber to create habits. Without good onboarding, you will have a leaky bucket. Even if you engage people and they find their way to the best parts of the party, they might grow tired of what’s familiar. If that’s your issue, you may want to expand the features for the most engaged subscribers, or even just create features to remind subscribers to re-engage. With subscriptions, it’s not enough to just attract new subscribers, it’s critical to engage them.

 

Tips in this article include:

  • Optimizing for customer journey (not subscription journey)
  • Understanding where the blockage is
  • Investing in onboarding

 

Read the full article, 10 Tips For Product Managers to Optimize Your Subscription App, on LinkedIn.

 

Subscription Stories – Subscription Business for Non Profits

September 28, 2020

 

Charity: water’s MZ Goodman joins Robbie Kellman Baxter to share how she is applying subscription model best practices to a nonprofit. They discuss how MZ leverages content marketing and digital community strategies developed in her work at The New York Times to build a donation-based subscription model, how they’ve leveraged a single 20-minute video to raise millions, and how to think about a Forever Promise in the context of engaging donors.

Welcome to the show. It’s your host, Robbie Kellman Baxter sharing subscription stories with you. Today’s guest is MZ Goodman. MZ is a true innovator, bringing the best practices of subscription, engagement, and brand from her work at The New York Times, Ralph Lauren, Glossier, and goop, to charity: water, a nonprofit that provides clean water to people in developing nations. The organization has been phenomenally successful by taking a different approach to fundraising. The 14 year old organization has raised over 450 million dollars. Join us as MZ shares the secrets of charity: water’s success and how to bring these principles to any organization. Welcome to the show, MZ. 

‘Hi, Robbie, thanks so much for having me.’

‘Now your title at Charity: water, can you tell me what your title is?’

‘Sure. So I’m SVP of Subscription.’

‘That is not a title that I’m used to hearing at nonprofit.’

‘I know.’

‘How did that happen? And what is a subscription to a nonprofit?’

‘I think it was, leadership was incredibly smart when they decided to pivot the business at the nonprofit in this direction, in that our COO, Lauren Letta, who’s incredibly visionary, she was already evaluating whether it made sense to create a subscriptions team focused on a North Star metric of predictive revenue so as to enable significant growth across the organization. And our model is very complicated. But it took a lot of moving parts. So it was a very intentional move on the part of leadership to create a cross-functional team focused on a North Star goal of building membership and growing recurring revenue.

 

Key points covered in this podcast include:

  • Why a mission is the most important factor for attracting subscribers
  • The importance of building a brand based on quality over charisma
  • Ways for nonprofits to allow members to remain active without opening their checkbooks
  • MZ’s advice for product leaders who want to transition to the nonprofit world
  • The differences between building a community at a news company, a make-up company, and a nonprofit

 

Listen to the full conversation, Subscription Stories, Charity:Water, on RobbieKellmanBaxter.com.

 

New Ways to Provide Inspiration, Connection, and Education

 

As we begin to consider the far-reaching and long-lasting impacts of the current pandemic, Robbie Kellman Baxter thinks ahead and shares her thoughts on the future of live gatherings and how that will affect a wide range of institutions, organizations, and individuals.

A few weeks ago, Facebook announced they’re canceling any large physical events with 50 or more people through June 2021. (Some they’ll hold as virtual events.) Microsoft announced something similar. Many organizations are allowing no business travel through at least June of this year.

 It looks like many organizations are going to be “virtual only” for at least another year.

And if businesses are being cautious, consumer gatherings are likely to be limited as well. What does that mean for sports, concerts, museums, theaters, theme parks and cruise ships? Industries most hard hit by the ban on large live gatherings include education, conferences, entertainment (sports, theater, concerts, amusement parks, museums, zoos) and travel.

 

Included in this article:

  • Re-engineering virtual events
  • Online content to maintain and deepen relationships
  • Four ideas to help you move forward

 

Read the full article, “The Future of Live Gatherings and What it Means for Your Forever Transactions”, on LinkedIn.

 

How the Freemium Tactic Works

 

Robbie Kellman Baxter identifies what ‘freemium really means’, how it can be used as a tactic, and the role of freemium in both ordinary and extraordinary times. 

Lots of organizations, particularly subscription businesses, are changing their rules about what is free and what is paid, in response to the coronavirus.

The Atlantic, The Wall Street Journal and Bloomberg News are a few of the many publishers that have removed the paywall in front of coronavirus-related content. In other words, non-subscribers have access to articles relating to the pandemic and impending financial meltdown.

News isn’t the only industry that is giving away more than usual during this time of crisis.

Fitness organizations, like Orange Theory are live streaming classes that were formerly in-person, for members only.

Hello Core is offering free meditation classes to the public 3x/day through Instagram Live.

Zoom Communication CEO Eric S Yuan is expanding the features available on free accounts for K-12 educators.  

Many of my clients are asking what they should be giving away–a difficult choice in a time when many businesses are desperate for short-term revenue to avoid mass layoffs and ‘keep the lights on’.

 

Points covered in this article include:

  • The difference between free trial and freemium
  • Viral freemium models
  • Customer engagement and retention

 

Read the full article, In Crisis, What Should Be Free(mium)?, on LinkedIn.

 

How to Attract and Retain Subscription Members

 

Robbie Kellman Baxter explains what a subscription business can do to mitigate customer loss and generate customer gain through attraction and retention strategies.

‘Millennials aren’t joiners.’ ‘Millennials don’t pay for news.’ ‘Our customers love us, but the average age is going up. It seems like millennials just aren’t interested.’

These are statements I hear all the time from membership organizations that have been around for a few decades or more: professional associations and trade groups, religious institutions, newspapers, gyms, and country clubs. Having some success under your belt is both a blessing and a curse. What you’re doing seems to be working, so you keep doing it. But let complacency take hold and you’re doomed. When businesses can’t attract new members, they die a slow death as old members age out.

The problem is two-fold. One, if you don’t evolve your offerings and communication strategy, new prospects will find your company ‘old fashioned’ or ‘not for me.’ Two, you might mistake inertia for loyalty: those members are still with you out of habit, and when new competitors come along they suddenly realize someone else can better meet their needs.

 

Points covered in this article: 

  • Common mistakes made by old and new subscription businesses
  • Tips to reinvention
  • Self-disruption as a strategy
  • The benefits of paranoia

 

Read the full article, Walking the Generational Tightrope: How To Keep Older Members Happy and Also Draw In Younger Ones, on LinkedIn.

 

The Cost of Free

February 18, 2020

 

Robbie Kellman Baxter explains why a free trial is not always the best tactic and identifies three  reasons a subscription business isn’t attracting new members.

Recently, a CEO of a major professional association asked me what I thought of a 30 day free trial for new members.

He worried that potential members would sign up for the free trial, binge the value in that free period and then cancel without paying. But his board was concerned that not enough people were joining and thought a free trial could be the solution.

In this case, I agree with the CEO, not the board, about offering a free trial. Here’s why.

A free trial is a taste of the best you’ve got, which you offer because either:

 

  1. They don’t understand what it tastes like
  2. They don’t believe it tastes as good as you say

 

Read the full article, “Free”​ Is a Tactic, not a Strategy, on Linkedin.