Bestselling author, Robbie Kellman Baxter explains the importance of subscriptions and why the payoff is worth it.
Every organization is trying to build a “forever transaction” with the people they serve. They want predictable recurring revenue, a direct relationship that avoids intermediaries and they want behavioral data that allows them to continue to plan for the future. The good news is that customers are comfortable with subscriptions, and that there is a huge array of technologies and services to help your organization implement subscription pricing. The bad news is that customer expectations are very high.
Subscriptions are everywhere right now. But subscription pricing isn’t enough. To earn a Forever Transaction, organizations need to treat customers like members, and commit to the long term.
There are subscriptions for music, movies and news, for software and services, but also 3d printers, clothing, cars and even coffee.
It’s easy to understand why organizations love subscription. They want to build “forever transactions” with the people they serve. They want that magical moment when a customer stops looking for alternatives, decides to make your offerings a habit, and stop looking for alternatives.
But if you want your organization to win with subscriptions, you need to work backwards. Start with retention. You want to have an offering designed so that newly acquired customers don’t leave. This means you need to focus on attracting not just people who will “sign up” but people who will stay—maybe a narrower audience, but a more profitable one.
You need to track engagement—how recently, frequently and deeply they get value from your subscription.
And you want to make sure that the moment they sign up, they are “onboarded” in such a way that they:
- Get value immediately—with no friction
- Get reinforcement for the wise decision they made
- Are shown how to use the products and services so that they get the value they’re paying for
It’s not enough to just get them to sign up. You must optimize for retention.
I wrote The Forever Transaction because I saw so many companies launching subscriptions that didn’t work.
- Some were giving away too much in the free trial or in the free version of the subscription (often described as “freemium” get it—free + premium equals freemium)
- Some were attracting new subscribers who “grabbed” all the content in the first month and then canceled.
- Some were so focused on making their existing members happy that they had become irrelevant for prospective or new members.
- Some were having trouble building support and understanding for a subscription model across the entire organization, and finding employee pushback or passive aggressive behavior
- And some were struggling to scale their offering across the organization, with the right metrics, culture and technology infrastructure
The challenges are many, but the payoff is worth it. This model for engaging with your customers, and more importantly, this mindset, can guide your organization to a disruption-proof business. If you do this right, not only won’t your subscription leave, they won’t want to leave.