Robbie Kellman Baxter asks and answers what features should be free and what should be paid in a freemium subscription?
I get asked all the time what features should be freemium (aka free forever) and what features should go behind the paywall.
The answer is, of course, it depends.
But here are some useful frameworks.
Does your business model depend on VIRAL MARKETING?
If your “free” subscribers are a marketing channel for attracting paid subscribers, you might want to invest in making your offering attractive for free subscribers.
Does your business model depend on a NETWORK EFFECT?
If your free subscribers create value for your paying subscribers, simply by participating in your network, and are part of the product, you might think of your investment in features for free subscribers as part of your product development investment. This could be through their content, through their data, or even through their eyeballs.
Does a significant percentage of your freemium subscribers predictably CONVERT to paid?
If your free subscribers are your best acquisition channel, that’s a good reason for continued investment from your lead gen budget.
There are some other things to consider as well.
Have you ALREADY offered the feature for FREE?
Many businesses launch with generous free offerings, planning to “monetize later”. This can be an effective way to build community or to beat competitors in a land grab situation. However, when you build a trusted ongoing relationship by giving stuff away for free, you might be building an expectation, an implied commitment, to giving it away for free forever. It can be very hard to put something previously available for free behind a paywall.
Key points include:
- Later monetization
- Lost leaders
- The top guiding principle
Read the full post, What Features Should be Free and What Should be Paid in a Freemium Subscription?, on LinkedIn.
In this article, Robbie Baxter interviews Alli Harper, founder and owner of OurShelves, on how an e-commerce subscription can play a role in social impact.
Most subscription entrepreneurs initially are attracted to the model for its predictable recurring revenue, but there are other benefits to having an ongoing relationship with members. Our guest, Alli Harper, works at the intersection of subscription eCommerce and social impact. Her subscription business is an intentional tactic to advance change in the picture book industry and to achieve that impact. Alli is building a scalable enterprise that serves the currently underestimated audience for diverse children’s books. Alli is the founder and owner of OurShelves, a diverse children’s books subscription service and advocacy effort. OurShelves has a dual mission, to connect high-quality curated, diverse children’s books to the families, teachers, and librarians seeking them, and to leverage the collective consumer power to advocate for the many more diverse books still needed. Alli who was trained as a lawyer and community organizer launched OurShelves from her kitchen table in the home she shares with her wife, Jenn and their two children. I featured her launch story in my recent book, The Forever Transaction.
I invited her to share the way she’s using her subscription business to persuade publishers to include more diverse families in the everyday stories they tell in their children’s books. In this conversation, we talk about what it takes to bootstrap a subscription eCommerce business, what metrics are most important when profitability isn’t the highest priority, and how her training in law and advocacy has helped her build a vibrant community of parents, librarians, and schools around her subscription offering.
Key points include:
- Starting the business
Running the subscription part of the initiative
What a year of prepay cost
Read the full article, How to Use an eCommerce Subscription to Change the World, on LinkedIn.
In the latest Subscription Stories podcast from Robbie Baxter, she identifies how YPO gets CEOs to engage in membership community, even though they’re really busy.
Scott Mordell was the CEO of the Young Presidents’ Organization or YPO from 2011 through 2020. Prior to that, he was a YPO member as the result of leadership roles at Chamberlain Group, HeathCo LLC, Duchossois Industries and Arlington International Racecourse. The YPO Community includes more than 29,000 members in more than 140 countries. Membership is limited to executives and entrepreneurs who have achieved significant leadership success at a young age. Combined, they lead businesses and organizations contributing $9 trillion in annual revenue.
What I find fascinating about YPO is how intense and powerful the community is. People I know who are members will move mountains to make sure they can attend their regular meetings despite the fact that they’re among the busiest people I know. Many of them fit the bill of superusers, my word to describe members who go beyond just being good members who pay their dues and get value from the offerings, but contribute significant time and money of their own to benefit the organization. Scott and I discussed what YPO has done structurally to attract, engage and retain CEOs around the world, how they’ve managed to recreate the magic globally and how they transform members into superusers.
Key points include:
- The friction-laden process of identifying ideal members
- Leadership as a whole-person experience
- Keeping a high level of community and culture even as you grow, expand and evolve
Read the transcripts or listen to the full podcast, How YPO Gets CEOs to Engage in Membership Community, Even Though They’re Really Busy, on LinkedIn.
Robbie Kellman Baxter takes a look forward at the future of subscription-based business and the application of a popular pricing tactic.
Subscriptions are everywhere. Big companies, small companies, public, private, venture-backed, bootstrapped, and across virtually every industry.
And many are starting to complain of “subscription fatigue”.
They might feel that the subscription pricing isn’t justified by the offer (a Product/Market Fit problem).
Or maybe they feel bad about fact that they aren’t taking advantage of all the great value their subscriptions provide–too many unread New Yorkers, uneaten Blue Apron kits (Subscription Guilt).
Or maybe they’re just angry that it’s so darn hard to find the cancel button.
I am a big fan of subscription pricing. I have dedicated more than twenty years to helping organizations use subscription pricing as a tactic in building deeper, more trusted relationships with their customers. But they’re not for everyone and they aren’t right for every situation.
Increasingly, people are wondering if subscription pricing is here to stay, or just a fad.I was motivated to write this article by these questions and in particular by product strategy guru Gib Biddle, who asked me to weigh in for his Ask Gib PM newsletter on Substack.
Subscriptions are not new–people paying recurring fees in exchange for access to content, commerce and/or community benefits for hundreds of years. What is new is that technology is extending the infrastructure that enables the kind of trusted relationships needed to justify subscription pricing.
With the rise of things like cloud computing, subscription billing, usage analytics and community platforms, it’s never been easier, operationally, to implement subscriptions as part of a business strategy.
Subscriptions support a more customer-centric approach. To be successful with a subscription, an organization needs to focus on delivering ongoing value, that supports a subscriber’s ongoing goals or problem solving-needs. Therefore, in many cases, the subscription offering provides more value. I don’t need to own a car–I need to get to work every day. I don’t need a CD collection–I need access to the music I love.
Key points include:
- The ongoing impact of using subscriptions
- Going beyond the traditional ways of paying for value
- The value of using impact data
Read the full article, Will Subscriptions Work Forever? The Future of a Popular Pricing Tactic, on LinkedIn.
Robbie Baxter shares a roundup of key insights from this year’s D2C (direct to consumer) summit.
A perk of my work as a speaker is that I get to go to a lot of conferences.
It’s one of my favorite ways to learn, and to build my community.
This month, I’m taking it a step further, and co-creating a new conference, along with my friends at FIPP, the global media association based in the UK. Definitely more work, but also a greater opportunity for learning and connection.
Next week, we are launching the first D2C Summit, where we will explore the world of direct-to-consumer revenue models, which are critical to the success of media businesses today.
I’m personally hosting “fireside chats” with 10 experts and practitioners for the conference, so I have been busy the past few weeks, researching their stories, and developing outlines for each conversation. Many of these stories center on subscription and membership offerings, my area of focus, but each has a different angle and I’m learning so much.
Here are some tidbits of what I’ve learned from this early preparation.
If you think you would find it useful and interesting, join us at d2c.global. And, as a subscriber to my newsletter, enjoy this 20% off code: SPEAKER20
A SNEAK PEEK OF KEY INSIGHTS FROM THE D2C SUMMIT
From David Lorsch, CRO, Strava, who will be speaking on Building a Subscription Business in a Social Platform
Key Learning: There’s a fine balance when your subscription is based on participation in a social community, and the organization needs to have a clear philosophy on what features should be free, and what goes behind the paywall.
From Ira Ehrenpreis, Partner, DBL who will be speaking on How Profit and Purpose are Combining to Create The New 21st Century Iconic D2C Companies like Tesla, The Real Real and Farmers Business Network
Key Learning: Your organization’s mission is increasingly important to investors, employees and customers alike, particularly in direct-to-consumer businesses, and how to balance longterm goals around impact with short term goals around revenue.
Key points include:
- Determining the use case for the B2B2C buyer
- The power of storytelling
- Strategy in phases
Read the full article, Best Practices in D2C Subscriptions and the Power of Professional Development, on LinkedIn.
If you wonder whether writing a periodic newsletter is a waste of time, Robbie Baxter’s latest article may help you understand when and how a newsletter is a valuable marketing tactic.
I don’t know about you, but my inbox is full of newsletters.
Some of these newsletters are really just daily ads, reminders from manufacturers and retailers to come back and buy more. Some are from software and media organizations, encouraging me to use the features and read the content I’m entitled to through my subscriptions. Some are calls to give money to, or volunteer for, causes and candidates. And some are updates on ideas and activities of organizations or individuals.
Some of them I delete immediately.
In fact, about once a month, I go through my newsletters, with the help of an email management app, and delete many newsletter subscriptions entirely.
But that doesn’t mean that newsletters are not valuable, or that newsletters as a concept are “dead”.
A “newsletter” is a tactic that can be deployed in service of a strategy.
And some strategies are better than others.
If you are on the fence about your own subscription strategy, take a step back and make sure you’re clear on a few things:
Key points include:
- The goal
- The value
- The results
Read the full article, Are Newsletters Dead?, on LinkedIn.
Robbie Baxter shares the latest interview from Subscription Stories. In this article, she interviews Matt Fielder of Vinyl Me on beginning his business and scaling up.
What comes next, once you’ve launched your subscription model, you’ve proven that there are people who wanted what you were offering and that those people would continue to subscribe after joining?
You’re holding everything together with paper clips and duct tape, maybe with your kitchen table as global headquarters now it’s time to operationalize your business. You need a real team, systems to support your processes, and metrics to let you know how the business is doing.
I recently talked with Matt Fiedler, the Cofounder and Chairman at Vinyl Me, Please, a record of the month club and online record store, about how he grew this business from kitchen table to $15M in revenue. After launching in 2013, Matt successfully scaled Vinyl Me, Please into one of the largest direct-to-consumer vinyl retailers and one of the most admired and respected brands in music. I recently spoke with Matt about how he scaled Matt scaled Vinyl Me, Please from a labor of love for a few fellow music fans to a $15 million business, how he operationalized that business without losing the personal touch, and how he decided when the time was to step back as a founder.
Take me back to the day when you sent out your first shipment. Can you tell me what that day was like and who you were sending those early boxes to?
Key points include:
- Building credibility in a subscription business
- Challenges in acquisitions
- The promise that motivated membership
Read the full post, When & How to Scale Your eCommerce Subscription Operations with Matt Fiedler of Vinyl Me, Please, on LinkedIn.
Robbie Baxter shares the latest post from her Subscription Stories series. In this episode, “Freemium, Free Trial and Free Surprises with Elena Verna of Reforge. When Does It Make Sense to Give It Away, and When Doesn’t It?”
In my work with subscription and membership models, one of the books that influenced me the most was Free: The Future of a Radical Price. Free was written by Chris Anderson, Editor-in-Chief of WIRED Magazine and published in 2009 by Hyperion. That book got me thinking about the role of Free in subscriptions in a more strategic and systemic way. If your business hasn’t analyzed the possible role of free in your business model, whether it’s a free trial, a free sample, or a freemium offering, you’re missing out. The judicious use of Free can be one of the most powerful tools in your subscription pricing toolkit. Our guest, Elena Verna, is a growth enthusiast and pricing expert. She’s been responsible for growth at companies like Miro, SurveyMonkey and Malwarebytes. Now, she’s at Reforge, a membership-based learning community where she teaches monetization. In this conversation, we’re talking about the role of Free, the rise of growth as a discipline and what it means to truly be data-driven.
Key points discussed include:
- What Elena is teaching in her monetization class
- Intuition versus data and the combination of the two
- The many uses of ‘free’ within a business model
Read the full interview, Freemium, Free Trial and Free Surprises with Elena Verna of Reforge, or listen to the podcast at Robbiekellmanbaxter.com.
Robbie Baxter takes a look forward for all those running a subscription-based business to provide insight into the future of loyalty programs.
For the last fifty years or so, for many marketers,“Loyalty” has been synonymous with Points Programs. Nearly every hospitality organization and retailer has a Points Program to drive engagement in episodic businesses. The value on both sides is clear. Consumers “earn” rewards in exchange for frequency, recency, breadth and depth of purchase. Businesses enjoy greater Lifetime Customer Value (LCV) and also have a means of tracking consumer behavior by individual.
These programs have grown increasingly sophisticated—consumers are allowed to use their points not just with the points-issuing brand but with an array of partners, and can accrue points through a broad range of activities, with special accelerators and bonuses based on desired behaviors.
Consumers have kept pace with that sophistication. People spend hours understanding the implications of these rules and optimizing shopping and travel to maximize points. There’s a whole cottage industry or experts that has sprung up around these points-based programs, to help consumers quantify the value of their points, and use those calculations to determine which programs, cards and brands to use.
While these programs can be effective in driving revenue, they work in much the same way as promotions and discounts. In other words, they are financial transactions—discounts for frequency, recency, and depth of purchase. They aren’t really about loyalty, or “preference” at all—it’s not an emotional relationship. And these programs have become expected, a box to check, rather than a differentiated way of building connecting with one’s best and most loyal customers.
Key points include:
- Points based programs
- Premium Loyalty Programs
- Forever transaction best practices
Read the full post, What is the Future of Loyalty Programs? on LinkedIn.
Robbie Kellman Baxter shares a recent post from her series Subscription Stories. This week, why customer success growth closely aligns to the rise of subscription-based businesses, and how a customer success orientation can help dramatically increase your customer lifetime value.
Nick Mehta, CEO of Gainsight, which is often called the Customer Success Company. Nick is both an expert on the emerging discipline of customer success and the leader of a SaaS company that is dedicated to a forever promise of helping businesses develop deep and lasting relationships with their customers. We’re going to go deep on the discipline of customer success, what it is, why its growth closely aligns to the rise of subscription-based businesses and SaaS specifically, and how a customer success orientation can help dramatically increase your customer lifetime value. That is a key metric in the membership economy. Anyone who wants to build a forever transaction with customers can learn a lot from Nick.
The following interview is adapted from my podcast, Subscription Stories: True Tales from the Trenches.
Robbie Baxter: Let’s start with the basics. How do you define customer success?
Nick Mehta: We believe customer success was created out of this transition to the subscription business model. In more transactional business models, the way to make money, was to build something and then to go sell it. That is what created a lot of the economy out there. In a subscription business model is, as you know, if you build stuff, sell it and your customers leave, you don’t make any money because all that money comes over time and the lifetime value of the customer.
Key points include:
- Defining customer success
- The role of community in the growth of Gainsight
- Energizing virtual events
Read the full article, Why Customer Success Matters For Subscriptions With Gainsight CEO Nick Mehta, on LinkedIn.
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.
“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.