Subscription Business Strategies With Robbie Baxter
Robbie Baxter (who previously appeared as a guest expert on episode 43 of this podcast) is back to share her latest 
findings from her ongoing journey as a recurring income/subscription model expert. And Robbie would know! …. She’s a Stanford graduate and has consulted with the likes of Netflix, Microsoft, and lots of other ‘A players’ who are actively shaping the future of the membership economy.
In this conversation Robbie and I talk about: What’s changed since we last spoke in episode 43 The fact that people are moving from an ‘intellectual understanding’ of memberships to a more ’emotional acceptance’ of the model Apple’s move towards subscriptions since Tim Cook took over from Steve Jobs (and their contrasting styles of management) How to approach pricing in memberships and subscription businesses Covid-19 has proved subscription models to be resilient The new opportunities presented to subscription business owners in this new (post coronavirus) world …. and lots more.
Links Mentioned:
- www.robbiekellmanbaxter.com
- www.theforevertransaction.com
- www.GetMeToDone.com
- www.Productiveinsights.com
- www.YouTube.com/ProductiveInsights
- https://productiveinsights.com/the-eisenhower-matrix/
Book Mentioned:
Related Episodes:
- 043. Membership Economy with Robbie Kellman Baxter
- 170. Ryan Deiss From Digital Marketer Reveals The 5-Step Conversion Funnel That Turbo-Charges Your Business Growth
- 173. The 5 Step Process To Optimize Your LinkedIn Profile And Attract Your Ideal Clients With Marcus Murphy From Digital Marketer
Ash Roy and Robbie Baxter Video Transcript (This transcript has been auto-generated. Artificial Intelligence is still perfecting itself. There may be some errors in transcription):
Ash Roy 0:00
What are the biggest challenges you’ve seen people face around getting their business models switched across to the membership model? And how have they solved them?
Robbie Baxter 0:11
Yeah, well, your example is a great one actually ash.
You know the first one is just getting over the hurdle of doing it.
Ash Roy 0:21
Welcome to the productive insights podcast. This is Ash Roy, the founder of productiveinsights.com and the host of the productive insights podcast. If you’re watching this on YouTube, please like this video if you find it useful. Today’s guest is the founder of peninsula strategies, LLC, a consulting firm that helps companies excel in the membership economy and as subject matter expert on membership models and subscription pricing. Her first book the membership economy which we discussed in Episode 43. And you can find out more about that at productiveinsights.com/43 is an international bestseller and a widely anticipated second book The Forever Transaction is now available. Her clients have included Microsoft, Netflix, The Wall Street Journal, and over 100 membership economy organizations. Over the course of her career, Robbie has worked in or consulted to clients in more than 20 Industries. If you’re watching this on YouTube and you find this useful, please do share this video with somebody who you think might benefit. And if you’re listening to it on the podcast, I recommend you head over to our YouTube channel to watch Robbie and I speak in person. You can do that at youtube.com/productiveinsights. So welcome back to the productive insights podcast, Robbie. And let’s start by talking about the key changes that have happened in the subscription world since we last spoke, particularly since COVID-19 has struck.
Robbie Baxter 1:44
Yeah, well. So since Episode 43, a lot has happened. The biggest thing is, you know, when I wrote a membership economy, I really wrote it as a one-pound business card to say to the world. This is how I see a massive trend that is changing virtually every industry moving from ownership to access from transactional to relationship from one to many subscription pricing digital community. And people weren’t seeing they weren’t connecting the dots, they weren’t seeing that what Netflix was doing was something that you know, a retailer could do or something that an insurance company could do, or a manufacturer could do. Flash forward five years later, everybody gets that. Finally, almost every industry has experimented with subscriptions has a digital community in some form. And what they’re saying to me is I get it, it’s important. I see what a good model it is. But it’s hard for us to do or we don’t seem to be cracking, cracking the code on how to do it. And so that’s why I wrote the forever transaction is it’s really much more how-to and it breaks down. How do you get started with a subscription business? Whether you’re an entrepreneur or solopreneur, or whether you’re inside a much larger organization, and you’re doing something innovative. The second part is about scaling your business, right infrastructure, the right culture, right metrics. And the last section is for businesses that have had a subscription for a long time, but that is getting a little long in the tooth. How do you stay relevant? And how do you continue to attract tomorrow’s members? So that’s Episode 43. Today, yeah. And then do you want to talk a little about the spring of 2020? And what’s going on with it? And
Ash Roy 3:34
yeah, sure. Let’s dig into that a little bit further into the conversation. I wanted to just mention that since we last spoke, I have launched my own recurring subscription business, and I now have online business growth coaching subscription business, and it has worked far better than I expected. Something that was holding me back initially was I was worried that there wouldn’t be enough members and it would feel like a bit of a ghost town but that wasn’t a problem. The key thing that I discovered along the way was having an engaged community that’s getting results is more important than having a voluminous community, which is unnecessarily getting results. So the ghost town anxiety that I had was very quickly sold, because I turned it into an advantage by saying, look, there are a few members in here right now, but I can give you a lot more personal attention. And I was able to get much better results. That’s something that I discovered since we last spoke. What are the biggest challenges you’ve seen people face around getting their business models switched across to the membership model? And how have they solved them?
Robbie Baxter 4:44
Yeah, well, your example is a great one actually, Ash. You know the first one is just getting over the hurdle of doing it, especially for businesses that are already doing well. So the question of what if I take this successful client relationship put them into a subscription, and count cannibalize myself so I make less money from the subscription. And I don’t attract new people. And the ones that I have don’t stay for a long time because the model doesn’t really work. Yeah. So I think that’s kind of the Getting Started challenge. Also for some organizations just having the resources to do it so fine in the case of a solopreneur small business, setting aside those resources, the hours, and the dollars can be challenging in a bigger company getting approval to have the budget and the runway and the staff to experiment. You just have to have the right mindset. I think as organizations grow, you know, the challenges with scaling, it often needs a different kind of person to scale a business. That theme isn’t in any kind of entrepreneurial endeavor. The people that are kind of visionary, creative, iterative, flexible, that are great for a startup are not necessarily the best people for scaling a business where you need process discipline, consistency, attention to detail, repetitive work, processes. So that’s I think the other kind of big challenge in the middle and also creating the right culture. And then for organizations, this is something, you know, that you may come up against as your model is really successful is that what happens is kind of the tyranny of the members, which is, you know, you create this community, the members feel like it’s theirs, because they’re so engaged with you and they’re so engaged with each other, then they’re not necessarily welcoming to tomorrow’s members. Because they come with a different mindset. They come with different questions. They come with different expectations. They might say, hey, why aren’t we doing this on zoom? and current members say, well, we like doing it the way we always did it via chat, or we like doing it in person. And so that’s kind of the questions that come into play in that third phase where you have a print newsletter, new members want digital, things like that and the organization becomes so focused on the old members, that they’re completely unattractive to new members.
Ash Roy 7:01
That’s where something really important comes in, which is culture. And I have been fiercely protecting the culture in my membership, the way I’ve done that, as I’ve said that the founding members get grandfathered in for the life of their membership. And I’ve handpicked these founding members, because, to me, they’re going to be the people that protect the culture. But there are also people who will, in my view, be adaptable and open to change, because the membership culture is going to change undoubtedly, but certain things in the culture of the membership will remain the same. Integrity, the desire, and the tendency to help each other not to try and pitch each other inside the membership constantly, things like that. To your point about scaling, something I thought was interesting that occurred to me was Steve Jobs while he was definitely capable of scaling apple and he did to a great extent. It’s interesting to me that Steve Jobs was a builder and he pushed a lot of change into the business on many occasions, whereas Tim Cook has got a background in the supply chain, and he’s a bit more process-driven. And it’s interesting that Apple of late has moved more towards the membership model. Whereas before Tim Cook, it was largely in our products business, which happened to bake in software. What are your thoughts on that?
Robbie Baxter 8:19
Yeah, that’s such an interesting point. I’ve never really thought of it as being a Tim Cook. Steve Jobs changed so much as saturated the market with hardware need a new source of growth, to tap into subscriptions and membership economy. But I think you’re right. I think that to be successful. One of the things that I think I wrote about it in the first book, the difference in culture between Apple and Google, yeah, where Apple is really about perfecting the product and then releasing it with like some hand waving and tadaaaa. You know, look at our beautiful and they are beautiful, right? Look at our magical iPhone or
it’s magical, whereas Google, and a lot of them, were in have digital companies, they put something out, it’s mediocre. They fix it, they fix it, they edit it, they fix it. And eventually, it’s amazing. It’s a very different way to design a product. And part of a subscription is that you’re constantly tinkering with the offering. And at the same time, you’re really, really consistent and deliberate with the delivery, yes, without forever promise. So it does take a different kind of culture and a different kind of leadership for sure.
Ash Roy 9:29
Another interesting question that I have is pricing. Now, one of my members is an HR consultant, and she does a lot of consulting work for companies. And at this time, she’s very busy because there are lots of companies need to make lots of decisions about how to deal with their employees. If she chose to move to a subscription-based model, which we’ve been discussing in the past. How does she decide on a price? Surely one of the things that would come in would be customer lifetime value and tenure of the members. Something else that I also recall, is a conversation I had with Stu McLaren, who’s involved in memberships as well. And I said to him, what’s the difference in your view between a membership-based business and a one-off product? And he said, memberships that charge recurring income, imply delivery of recurring value. So I’d like to bring those two ideas together and ask you, given that a membership typically involves delivering some kind of recurring value in exchange for some recurring fee, presumably a lower fee than it would be if it was sold as a one-off thing, but spread out over a longer period of time because it’s a recurring model. How does one come up with pricing and where do the customer lifetime value and customer lifetime profit come into that decision?
Robbie Baxter 10:48
We could talk about this all day, but I have some thoughts. So the first thing is for your client. There are a lot of different ways she can use a membership or subscription pricing in her model. So For example, the consulting from Bain use has most of their revenue comes from large, fixed price projects, seven-figure, and they’re kind of few and far between. and the company calls and says we need a new strategy for this. So we need to look at that market and it’s a big project. What they’ve done is they still have those, but they also have the bay Net Promoter loyalty forum, which is a community, they pay effectively a subscription fee to be members and it’s for the senior leader in the frontline. So either they run a retail or they run customer success or customer support, and it’s the top person in that part of the organization they meet, I don’t know, every six weeks or three months, it’s much less expensive than a being project, but they charge quite a bit for it. And what it does is it smooths out the relationship. So it means that Bain sees these most valuable clients on a regular basis, and is talking to them all the time about the challenges they’re facing, which of course make it easier to sell to them, you know, to identify what their challenges are and work with them. So your client could build a model like that where the subscription might even just be breakeven or maybe even a loose money or a marketing expense. And, you know, it leads to these big spiky projects that she does. And in that case, she should think about it just the way she thinks about any marketing expense the other way, which is she said, I want to take all of my expertise, and I want to build a community around my expertise. And in that case, she needs to think about what is the value she’s providing, she also needs to think about what’s her investment, and then kind of triangulate the third thing to triangulate with is what is the perceived value for the market. So, what do I need to earn? What is the value that the person will see and what are their other options so that you want to make sure that those things all fit together? That makes sense. So having healthy food for me is priceless, right? If I needed food, I would pay any price. However, there are many options for me that I can get for a lower price than, you know, any price. And so, even though you’re let’s say you’re a chef, and you might say, well, Robbie, you said you would pay anything if you needed food, it’s the most important thing. I’d say yes, but I can get it for you know, I can get a pretty good meal for six bucks. So I’m not going to pay you a million. Yeah. So I think those three you have to know what the market has available. If you’re the only deal in town, it’s very different than if there are substitutes.
Ash Roy 13:38
That’s a very good framework, actually, to come up with some kind of a, an idea around pricing. Something that I thought of, as you were talking was something Ryan Deiss talked about in Episode 170, about this conversion funnel, and he talked about starting off with a low price to offer. And I sometimes think of the membership charge that you described the Bain has as sort of an entry point offer that preserves that monetary relationship with the customer that can then be ratcheted up into a higher-level transaction, which is somewhat balanced off by that recurring charge, which means that the one-off charges won’t be as spiky because you’re charging them a retainer.
Robbie Baxter 14:25
Yeah, exactly. And it’s also the model that a lot of retailers are using right now started by Amazon Prime, but also Costco where you pay an annual fee for access to benefits that make it less expensive and a better experience. Yes. So there’s, I think the important thing for for our audience to take away is that you can use you can create a lot of different packaging for value using principles of subscription community membership, but the important thing is what is that forever Promise, what’s the long term value your chart you want to provide to your client? And then what’s the best way to deliver it?
Ash Roy 15:06
Yes. Something that I’ve recently brought to bear in the membership is tiered pricing. So currently, for my founding members, I have a $99 monthly fee. And they get a whole tonne of value, including when they first joined, they get to face to face calls. The first one’s diagnostic. The second one’s a prescriptive call, they get access to a private Facebook group, they get access to a whole bunch of content to a cause to these Sprint’s that we do most Tuesdays and Thursdays, where we do 325-minute Pomodoro Sprint’s and we work for 25 minutes together on a Zoom Room, and then we break after the 25 minutes and we quickly evaluate ourselves on a scale of one to 10 in terms of our focus levels, and then we say okay, for the next 25 minutes, I’m going to work on X and it can be on anything, there’s no agenda for that. So people really get through a lot of work in that one and a half hours, sometimes more than they do on a day. And that’s working great guns. Now, that’s all included in the $99 package. But a lot of my members have been saying to me, you’re charging too little for this. So because they supported me when I started, they keep the grandfathered pricing. But when we do roll out the new prices the Sprint’s and the Facebook group are going to be at 299 a month. And then for 349 a month, the early access to interviews, early access to certain kinds of content, direct access to me via private discussion thread that goes into the top level. So we go the three levels one, two, and three. And the third level includes the two face to face calls and private discussion threads with access to me and so on and so forth. So there’s that as well. It can have a tiered pricing approach to
Robbie Baxter 16:51
Yeah, absolutely. So here’s what I would say about tiered pricing. I think you did it right to start with just one price for your subscription because the more Complicated your pricing, the less your customers are going to trust you. Because you’re asking them, you’re asking them to understand your pricing. And so they have to become experts on your pricing. And the minute that you’re telling somebody, you have to figure out my pricing to decide what’s best for you. They think, Oh, well, I better have my wits about me. Because if I don’t pick correctly, I’m going to overpay. So you always want to start with the simplest pricing. And then it sounds like sort of two things is going on with what you just described. One of them is. You basically had a beta, a beta test where you priced it deliberately low in order to learn a lot, and also to lead your community. So that’s not here. That’s a beta. That’s because that’s not available forever. I couldn’t come in right now and say, okay, Ash I want. I want that one. I want the $99. Well, you’d say well, no, that’s not a tear. That was a little At a time offer that was a beta test for a select group of people. So so then you have two tiers of pricing after that, and what I would say, and we don’t have to get into you know, your whole business unless you want to. But if it were me, I would want to be really clear about who would want one and who would want the other. Because, again, you want to make it easy for your buyer to buy, you want to be able to say, if you’re this kind of person, the cheaper option is perfect for you if you’re that kind of person. But you don’t want to say, you know, I put in less value here and there’s more value there. That becomes hard for someone to understand.
Ash Roy 18:38
I see. Right. So
Robbie Baxter 18:39
I would just be thinking about, you know, is it because there are more features, it’s more there’s more service, more volume?
Ash Roy 18:47
That’s great advice. So maybe that to one can be for startups with a limited budget. Maybe tier two can be for established businesses that are looking for early access. To premium content, and then maybe tier-three can be for successful businesses who are looking for personalized one on one.
Robbie Baxter 19:09
Okay? You may not need more tiers, right? Unless you have a reason. This is what I would say. And I’m not just saying this to you, I’m saying this sort of more for the audience. Don’t create multiple tiers just to have multiple tiers. If you have one option that you believe is in the best interest for most of the people that you want to serve, just offer that say, look, this is my membership for startups. I serve startups, I provide them with this range. These are the best features that I’ve been able to come up with to help you achieve your goals. If I come up with a new feature that will also help I will slot it in. If I decide that one of these features actually isn’t good, I will pull it out. But what I’m promising you my forever promise is that I am going to do everything I can to help you be successful with your startup.
Ash Roy 19:57
Okay, so don’t add additional complexity to your pricing. You need to
Robbie Baxter 20:01
write. And here’s one other example that I had in my first book SurveyMonkey, which was, you know, subscription to allow people to do online surveys. And for a long time, they only had one model, if you went over a certain volume of number of people that you were sending your subscription, your survey out to, or a number of questions, one of those two things, you paid a premium, and then they wanted to have more levels because they were finding that large enterprise companies like, you know, Unilever, or Procter and Gamble, were using there, you know, whatever it was $300 a year solution or $100, a year solution. They said, Wait, that doesn’t make any sense. They should pay more. And we should provide them more sophisticated services like a dashboard, like back-office support. And so they came up with you know, there are the basics, there’s free, which is for like your book club or whatever. Then there’s the basic model, and then there’s one for small businesses. So individually And then professional researchers. And then the last one is for the enterprise if this, you know, and so the features, you start to think, Okay, well, there are different features at each level, because it’s a very different use case, what I’m going to do as a solopreneur is really different than if Coca Cola is out doing surveys of all of their different kinds of customers, for all of their different products, they’re going to need to manage the logos, they’re going to need, you know, enterprise support, they’re going to need back-office integration with their list, very different model. Okay,
Ash Roy 21:30
so the feature has corresponded to the use cases. And that’s a good takeaway for me, you know, think about the use cases when you’re coming up with your product strategy and your features and your pricing and so on. Let’s talk a bit about how you think the COVID-19 situation has impacted the membership economy.
Robbie Baxter 21:49
Yeah, well, the first thing is subscription businesses are proven to be much more resilient, and sustainable and other business models. So there was some data that came out from Zurich. Last week, 89% of the subscription businesses on their platform are either growing number of numbers or staying flat relative to last year. So first quarter of 2020 is flat or growing at 9% of their subscribers, so that you know kind of mind boggling if you’re thinking about subscription, it’s it’s a more resilient model for a bunch of reasons. One is, of course, the recurring revenue, it’s a habit, it’s it’s the way that they get their job done. So they’re not going to look for alternatives, as opposed to something transactional, where I can just choose not to buy again. Here, I have to choose to leave them. The other thing is that many subscription businesses have this forever promise where they’re very aligned with the customers goals. That’s their Northstar, what is it that I’m doing for the customer and they continue to evolve and they’re structured to be agile, to continue to change their offering. So just that mindset and the kind of culture that subscription businesses require makes the organisation more More customer centric, more relationship oriented, more long term oriented, which of course maximises your chances of retention. The one other thing I would add, which is super interesting to me is that this is actually a time a moment when people are looking for new habits. Because we’ve had we’ve been forced to change our habits, right? We can’t see people in person that we use zoom. We can’t go to our exercise class and we get a peloton or we do online streaming of classes.
Ash Roy 23:29
Yes,
Robbie Baxter 23:30
we can’t go to the restaurant so we get delivery. So for a lot of businesses, this is an opportunity where people are more willing to either try your solution in general, or for people who have longtime customers who resisted going digital. This is an opportunity to move your customers more toward a digital footprint because they can’t come to your conference. They can’t come to your meeting. They have to come to your digital event.
Ash Roy 23:56
Great point, Robbie. I love that. You’re absolutely right. People are Looking to develop new habits. And I do think that in some respects, we are at an inflection point. And we’re going to see new ways of doing business emerge. And yes, like an elastic band, things may snap back to the way they were pre COVID-19, assuming all the lock downs eventually disappear. But there will be a certain proportion of people that are going to say, Well, wait a minute, this online solution to the meetings, for example, works a lot better than meeting in person. We’re not going back to the way we were doing it before. And I, I think that could be innovation, lots of innovation. Another thing in relation to a point you made about subscriptions, is the idea that if you increase pain of disconnect, and this is a phrase I heard from James Schramko, if you increase the pain of disconnect, and you make it so valuable to your members, that it will hurt them more to cancel than it will to continue on then that’s a great thing. And that comes back adding enormous value. And that comes back to my conversation with Seth, where we talked about empathy and generosity. I think as a provider of services, the more generous you are, the more empathetic is an empathetic or empathic. I can’t, I can never get
Robbie Baxter 25:16
Empathetic, yeah.
Ash Roy 25:17
More empathetic you are with your customers, the more likely you are to retain them. So that’s, in my view, probably the most important retention strategy, which is really deeply understand your customers and evolve with them as they evolve through their journeys. The other thing is, as long as you’re doing your job, right, people will eventually, in my experience, start to see your membership as a utility, much like their phone bills or their electricity bills, and they will not consider disconnecting unless you really mess up badly. But the idea is not only to not mess up badly, but to deliver an epic experience and keep raising the bar.
Robbie Baxter 25:54
Yeah, exactly. You nailed it in terms of both the empathy for the customer driving your inner Innovation and the fact that your customer, there’s a moment where your customer takes off their consumer hat puts on a member hat and stops looking for alternatives. And they say, this is how I’m going to solve my problem. And when you get a customer to do that, you have such a valuable relationship with that customer. Yes, that you know, number one, it’s really you know, you monetizes, you actually generate this large recurring revenue, great lifetime value, but also you have an obligation to be ethical and to look the reason their trust. This is what I think people forget. The reason I trust you with my credit card and let you charge me every month is because I have confidence that you have my best interests at heart. Yes. And I don’t need to worry about it. And a lot of times, I hear executives CEOs saying, Oh our customers, they won’t even notice if we slip in an extra charge or if we downgrade the service by 10%. That’s just slowly true. Right? It’s true for the short term. For the long term, when you finally figure it out, you say, wait a minute, I was trusting them, and they were taking advantage of me.
Ash Roy 27:09
This is exactly right. You never take your members trusting you for granted, at any point. And I can say, in my case, the evidence is that the membership is growing a lot by referrals. And if you’re doing the right thing, you’ll probably start getting more and more referrals.
Robbie Baxter 27:27
Yeah, absolutely. Absolutely. It’s another advantage of subscriptions is you really get to know your customers. And if you’re doing a good job, you can see how your net promoter score, how happy your customers are with you. And also refer ability, for sure.
Ash Roy 27:42
Do youhave some kind of a framework that you can recommend to our listener in terms of action steps they can take around switching their business from a transactional model to a membership model?
Robbie Baxter 27:56
Yeah, I mean, that’s what the whole new book is what to do. When you’re Just starting, whether you’re an entrepreneur starting out on your own one person, or you’re working inside a larger organisation, and then how did you know, you know, at that early stage, I’ll just walk you through some of those early steps, you want to first of all, make sure that you have the runway to launch a subscription business. Because as we’ve talked about earlier, you make less money every month, usually, and you make it up by having a long term relationship, that’s fine. So it’ll take a while before the revenue is where let’s say the revenue of the lumpy businesses. So if you’re working in a company that already has a going concern, you need an understanding across the organisation, that this revenue is going to take a little while to pick up.
Ash Roy 28:47
But you can do it simultaneously as long as you address the cannibalization issue.
Robbie Baxter 28:51
Right. So so if you’re starting out and you’re in an organisation or your solopreneur entrepreneur, the first thing you want to do is make sure you under Understand that this is a long term game, right? Second thing you want to do is have resources for a long term game, right? So for example, if you do an experiment like your HR client, right, she doesn’t experiment, it might not work the first time, she’s gonna have to change it. There’s a temptation to say subscription doesn’t work for me, because my very first experiment failed. So you need that right mindset. And then you need to come up with a forever promise for your customers. What is it that’s going to justify subscription pricing? What is the promise I make to them? And then you want to come up with your minimum viable product? What is it that I’ll offer them every month to justify that loyalty? What’s the first step and who is the best customer for that minimum viable product? So you might say, ultimately, I want to serve? You know, I want to serve all entrepreneurs everywhere in the world at every stage, right? But today, the thing I can do really, really well is help startups that are bootstrapped or startup professional services firms, and over time, you can move layer in more value, which justifies broadening your target audience. But in the beginning, you want it for the product that you’re creating the minimum viable product and the best customer, you want to be super clear, and precise and narrow about that. And then you want to continue to tinker until you nail it. And that’s when you start looking at scaling. But that’s those are the things you do in that first phase.
Ash Roy 30:23
Okay, and how do you approach the scaling phase?
Robbie Baxter 30:26
Scaling phase, often, as we discussed earlier, requires a different kind of person to do the scaling not always, and you want it usually the first thing that people are driven by is either they need to hire more people to do it, they need to operationalize it, and they need to create technology infrastructure to support it. So when you’re starting out, for example, you might be you know, sending out your updates via email where you put all the names into your into the you know, to box and you send it out, and then you say no, you know, actually I need a CRM. Oh, actually, you know, maybe you’re getting your payment. minutes are being delivered via Venmo on your phone. Now that doesn’t really work, I think I need a billing system. And so that’s usually, you know, and then you need more people to help you. So those two things, culture and infrastructure are usually what drives that next phase. And the questions, they’re really about consistency, scalability, having all the pieces work together. And in a bigger organisation, you often have the problem that the rest of the company is very transactional. Yes. And so they don’t understand all the pieces. They’re like, Well, yeah, you have this subscription thing, but I’m going to keep building products the way I always did.
So like newspapers, for example, or software, if you want to sell subscription software, it requires a different kind of architecture, a different kind of product management.
Ash Roy 31:46
And I would imagine that as you’re scaling your member numbers, certain things will also need to change as you grow. Right. So first hundred members, you may find that a certain strategy works and certain fulfillment methods work. But then when you scale from 100 to 1000, your acquisition strategies may have to change and your delivery and fulfilment strategies may have to change. Because the tools that were working before may not be working for that.
Robbie Baxter 32:13
Exactly. One of the stories I have in the forever transaction is about a subscription box entrepreneur who started on our kitchen table. Yeah, that only lasts for so long, right?
Ash Roy 32:24
Where you boxing the deliveries on your, you know, on your little kitchen table, and then bringing them to the neighbourhood post office. Is there any particular software that you find really lends itself like I’ve heard Kajabi is venturing into the subscription business, and they apparently are fairly good. Any other software that you’re aware of that really allows somebody to go from zero to 1000 without suffering too much in the way of growing pains.
Robbie Baxter 32:49
You know? So first of all, everybody has growing pains. It’s a painful process to grow. So anybody who tells you they’re going to help you not have Growing Pains as lying they can help mitigate And they can help hold your hand while you’re going through it, but you will go through it. In terms of technology, what I found is there’s actually an explosion of technology available. And that it’s both vertical and horizontal. So it’s by industry. So there’s subscription billing software, subscription content management, subscription CRM, that comes out of industry, so out of newspaper out of telco out of, you know, content media. But then there’s also solutions that are, you know, horizontal, where it’s like we’re a billing platform, we’re a CRM system and better extending into subscription. So they’re kind of coming at it both ways. And then they’re the ones that say we’re all things for a small organisation. So for a small association or a solopreneur, we’re a membership platform. And then as they get bigger, there’s a whole different set so hard to I don’t want to say one over the others because just
Because there are so many. There are tonnes.
Ash Roy 33:59
I’ll summarise the key action steps and then we’ll talk a bit more about the forever transaction. So we started off by talking about things that have changed since we last spoke in Episode 43. And you explain that people have started to really understand almost emotionally understand the concept of memberships, where before it was kind of more of an intellectual awareness now, they’re starting to see it, and they’re embracing it more as a culture and as a business society. We talked about scaling and a bit about how Steve Jobs really built the product side of the business and Tim Cook who interestingly has a background in supply chain and is more of a process dude, we’ve seen an increase in Apple’s embracing the membership model through the games, arcade membership and the music membership. And now more recently, the Apple TV plus, which is also incidentally, helping them to plug some fairly deep losses in revenue because of market saturation around their products. We talked about pricing, and how can use your triangulation approach that was about 15 minutes of the conversation, I recommend going back and having a listen to that that was very useful. And you explained that the more complex the pricing is, the less your customers trust you so don’t create additional complexity in pricing unless you absolutely need to. And a good way to think about features and presumably pricing is to think about use cases when you’re coming up with those tiers or features and therefore prices. You explain that COVID-19 situation the debacle has shown that subscription businesses turn out to be more resilient than most. And according to one of the studies, 89% of the businesses remained largely unaffected, despite this crisis, and then we talked about the importance of empathy and being aligned with your customer’s goals, and never taking your customer for granted when you have a membership business, because even if your customer doesn’t notice in the short term, they will eventually notice, and hey, even if they don’t notice, it’s just not ethical to do it any other way. So the key is to keep your customers’ best interests at heart. Don’t try and stick your hand to the tool just because you can. You’re the trustee of the tool. It’s not your tool. Yeah. And that’s an interesting way I suppose to think about it. You also talked about people looking for new habits around this time. And by the way, Episode 175, with James clear was all about atomic habits, which was a good episode. If you haven’t checked it out, I recommend you check it out. Oh, yeah. And then we talked about the framework that you would use to launch a membership model and key action steps you can take. Is there anything else you’d like to add?
Robbie Baxter 36:36
No, I think we covered a huge amount. This is great. You’re very good. Interviewer.
Ash Roy 36:40
Yeah. Thank you. That’s very kind. I appreciate it. So where can our listeners find out more about the forever transaction? Where can they get it? I know it’s been fairly recently released.
Robbie Baxter 36:51
Absolutely. It’s available on Amazon in Kindle print and audio and it’s available at all. Have your independent books, booksellers as well and Barnes and Noble and pretty much anywhere books are sold.
Ash Roy 37:06
Is there a URL or something you can point us to where they can go to download it any information you can share with us where our listeners can find out more about you?
Robbie Baxter 37:14
Yeah, absolutely. RobbieKellmanBaxter.com or the book name forevertransaction.com are good places to go. You can find me on LinkedIn, Facebook, Twitter, Instagram, YouTube. And you know, I love to offer your listeners chapter eight, the one about culture.
Ash Roy 37:32
So yes. Oh, great.
Robbie Baxter 37:35
I’ll make that available. I’ll send that to you.
Ash Roy 37:37
Thank you, that would be wonderful. So if you’re sending it to me as a PDF or something, I can link to it in the show notes in this episode, which will be available at productiveinsights.com/196. Be sure to visit productiveinsights.com/196 to access chapter eight. I think culture is super important in any business but particularly in memberships. I think Robbie, you’ve done an MBA yourself. Is that right?
Robbie Baxter 38:03
Yeah. from Stanford. I did.
Ash Roy 38:05
Yeah. So you did your MBA from Stanford, and I’m sure you studied all about culture and the importance of culture and organization, it’s one of the things that are hardest to change takes between eight to 10 years to change the culture of an organization. But it’s one of those invisible things that an organization lives or dies by if you have a very poor culture, you’re not going to have a very successful organization. And if you have a strong culture that is built on strong values, which often is influenced heavily by the CEO, you’re going to end up with a great successful organization. And I believe that applies to memberships as well. Well, thank you so much for being on the show, Robbie. And man I look forward to speaking to you again soon when your next book is out.
Robbie Baxter 38:44
Yeah. Hopefully before then.
Ash Roy 38:47
All right. Talk to you soon. Thanks for being on the show.
