subscription business

subscription business

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 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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.