Building a sustainable revenue stream requires two things: A powerful recurring revenue engine and relationships that drive engagement and loyalty. Both key to surviving during these uncertain times.
We recently sat down with Robbie Kellerman Baxter, a leading expert on subscription pricing and membership models and the author of The Membership Economy and The Forever Transaction for a Subscription Session called Expert Tactics & Strategies for Creating a Forever Revenue Stream.
In this Subscription Session, Kellerman Baxter shared how to...
Successfully launch a new recurring revenue stream, even in times of uncertainty
Scale and deliver sustainable, long-term revenue, even now, without cutting corners
Be agile to continuously deliver on value, and consistent, predictable revenue
Optimize for engagement, the leading indicator for retention, and how to win back subscribers after cancellation
In this post, we’ll share a high level recap of the three stages Kellerman Baxter discussed. You can also listen to the full recording here.
How do you know when you are ready to launch a subscription model? If you have competitors and are depending on relationships and building trust with your best customers, a subscription model may be for you.
The benefits of a subscription model can including being able to sell directly to your end customer, getting a 5-7x valuation versus a traditional business, and getting dependable recurring revenue that comes from a subscription model.
Steps in the launch stage include:
Set Expectations and Build Support
Define a Forever Promise
Make this big enough and compelling enough
Identify Your Best Member
The subscriber that has the most lifetime value. Who are you creating your product or service for?Need to think about them and their journey and what their goal is. Who is it for and who isn’t it for.
Make sure it delivers value and is different from your competitors
In this stage, you've launched your subscription business and it’s working. What next? Steps in the scale phase include:
Transform Culture - need to have a customer-centric approach
Build Infrastructure- what are the processes that the organization needs to invest in to support it?What tech stack do you need?
Define Pricing & Metrics
Continually Evolve Your Offering
Consider the Occasional Acquisition- would you benefit from acquiring a company that is already doing subscriptions versus building from scratch.
In this stage you'll also likely be focusing on customer acquisition. So how do you optimize customer acquisition? Kellerman Baxter advises, that there needs to be a balance between acquisition and retention. Don’t crank up acquisition until you know retention works. Track your acquisition efforts by cohort and compare them. Ensure you look at your customer acquisition costs and track customer lifetime value and what is the expected lifetime of a customer. How long will they stay? Metrics like churn, monthly recurring revenue, annual revenue, feature use and adoption, and engagement amongst others are all very important to keep track of.
In this stage it's all about not resting on your laurels or falling behind the competition or new players in the space. It's time to take the lead.
Stay Forever Young - make sure tomorrow’s subscribers find as much value as today’s (keep pace with the promise you set in the launch stage)
Inoculate Yourself from Subscription Fatigue - continually provide value to subscribers to mitigate churn
Keep Global Perspective - Should you focus on new markets and new currencies? How do you expand globally?
Use Your Microscope and Telescope- zoom in on what’s happening now but zoom out stay ahead of what’s going to happen in the future
Kellerman Baxter closed the session by sharing that being proactive is the key to becoming disruption-proof and relevant and that it’s imperative to drive engagement at every stage to increase loyalty and reduce churn. Regardless of the maturity of your subscription business—whether you’re launching, scaling, or optimizing—you are not immune or disruption-proof. But you can be. Make the most of this opportunity to (re)evaluate how you can adapt your business to meet consumer needs now and moving forward.
Get the full Subscription Session here.