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Robbie Kellman Baxter – Running a successful subscription business (Webinar Summary)

On 20 May, we were privileged to host a webinar with Robbie Kellman Baxter, the world’s leading expert on subscription pricing and membership models. During the webinar, she shared her thoughts on what forever transaction means and what you need to take into account in building a successful subscription business.

Here we give you a quick summary of her presentation:

From customers to members

Kellman Baxter has created the popular business term ‘Membership Economy‘. She explained that the difference between a customer and a member is in the fact that members are not looking for alternatives, they actually have built trust and loyalty with the brand and keep coming back to that same brand with subscription pricing. In a company, the membership mindset is all about long term focus and willingness to continue to iterate the offering in order to justify the customer loyalty that in turn drives the subscription revenue.

Subscription and membership models are everywhere – they are changing how we shop, watch TV, work, eat and play. And why should you as a business leader care for this? Simply because the upsides of turning your customers to members are numerous. According to Kellman Baxter with the membership model you get recurring revenue, direct relationship with your customer, the ability to learn from your customer’s behavior and stay one step ahead in terms of what your product has to offer, and on top of all this, valuation in the public market rises.

Start with your forever promise

Kellman Baxter said that at the heart of every subscription is the forever promise. Forever promise is the reason that justifies the customer paying on a regular basis and not looking for alternatives. As a part of defining your forever promise, Kellman Baxter reminded that you also need to define and identify your best member while clarifying who you are not serving.

Kellman Baxter advised that when you start thinking about your forever promise, you should start with the reason why you got into business in the first place, what are the problems and goals that bring your customers to you, and how you can more fully deliver on that promise. She also highlighted that you need to keep going back to that mission and focus on your customers’ needs and continue to evolve your offering to stay true to that promise. Organizations that do focus on the mission, whether or not they use subscription pricing, have a deeper, more loyal, ongoing relationship with their customer, Kellman Baxter argued.

Building forever transaction

Kellman Baxter explained that a forever transaction means that your customers keep coming back on a regular basis because the relationship is so strong. There are three key phases of maturity for any business that’s moving to a forever transaction: launch, scale, and lead.

Launch: No matter whether it is an entrepreneur starting a new business or an intrapreneur inside the company testing and developing something new, what you need to do first is to make sure you have resources to support a subscription experiment. By this Kellman Baxter did not mean only financial resources, but also people and time. The launch phase is about experimenting and building the model, so you need to be prepared that the first few experiments may not work and you might need to keep tinkering until you get it right. In this phase, you also need to define what is your forever promise and who you are making it to. Design your initial offering for that best customer and keep tinkering until you have product-market fit.

Scale: Once you finally have your product-market fit, meaning that you are retaining the people that you attract, that’s when you want to scale the business and put fuel on the fire and grow your offering. In this phase, focus on things like transforming the culture so that the whole organization has a membership mindset. Change the metrics you use, instead of just focusing on revenue goals or a number of customers, start tracking also engagement and retention of those customers. Keep your pricing consistent and simple. Start considering acquisition as a means of bringing in the talent and the mindset for subscriptions.

Lead: This is the phase for organizations that have done subscriptions for a while, or that have always been a subscription business, like Spotify. This is where you face the challenge of staying relevant and finding the balance between keeping your members happy and keeping tomorrow’s members engaged. Often your old members want you to keep doing things the same way, but in order to attract new members, you need to be aware of the changes.

Optimize and strengthen your model

Once you have built your forever transaction model, Kellman Baxter explained that you also want to keep optimizing and strengthening the model. Here’s a collection of her tips for businesses that have already built a working forever translation model.

  1. Build the right organizational structure in which everybody shares responsibility for retention and engagement. That way everybody is committed to the key metrics.
  2. Think about your funnel more as an hourglass, where the moment of transaction is the starting line.
  3. Keep your pricing simple. The more complicated your pricing is, the more your customers have to become experts in your pricing, and the less they are going to trust you.
  4. Plan your free trials and freemium offering. A free trial is a great way to give the customers a chance to try out and understand your offering. Freemium members can build your network, help market the offer, and give value to your paying members.
  5. Don’t forget onboarding! Onboarding is probably the most overlooked place for building deep relationships. In the first seconds, minutes, or days after somebody joins, you want to choreograph that experience so that they make your product and services a habit and they get value out of the products they are already paying for.
  6. Make sure everybody in your team is technologically literate. People need to be able to understand how things could be better solved with technological solutions.

Next steps

In her concluding words, Kellman Baxter reminded us that subscription is a pricing decision and a tactic, but it is not a strategy by itself, and that the secret to building a forever transaction is to love your customers and their mission and put your forever promise at the heart of what you do.

So what you should do now, is to first look with your microscope at your best customers and think about the forever promise that you are making to them, and then use a telescope to look out onto the horizon and say where do you need to go in order to continue delivering on that forever promise to your best customers.

The recording of the webinar is available for registered users on our digital platform If you already have access, feel free to log in to see the recording of the webinar here. If you don’t, you can buy your access here, and enjoy all our past webinars and tens of keynotes from our past events.


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