Membership and Subscription Growth

Discover how to grow your subscription business from the explosive growth of the subscription box industry. Subscription boxes have become the single fastest segment of the subscription industry over the last 12 months, as have the number of offerings. What leads to fast growth within subscription boxes can help you grow your own subscription economy business. At the center of the subscription box industry is my recent guest on Membership and Subscription Growth podcast, Amir Elaguizy, the co-founder and CEO of Cratejoy. More than 4000 subscription boxes rely on the Cratejoy platform for marketing and fulfillment. Amir has seen what works within the subscription box industry and what leads some subscription companies to fail. Membership retention comes down to subscription fundamentals, understanding what your customer wants, delivering tangible value and delivering a terrific unboxing experience. Understanding your customer and knowing what excites them is the first key. Some subscription boxes create their product by discovering products that are available from sponsors or at low wholesale prices. However, successful subscription boxes instead focus on what customers want. Amir said, “True North is whatever consumers want to get. Then over time, as they start to achieve scale, they're able to cut deals with advertisers and run all sorts of specials and sometimes those products that their advertisers sell actually make sense inside the box.” When asked if he sees some commonalities among the most successful clients, he responds “it’s really clear that, over the long term, the people that win are the ones that are hyper-fixated on product quality and product value. They're obsessed with the product quality. So, they are actually into the products that they're selling, they know what good looks like, they know what bad looks like. They know how to curate them in a way that tells a cohesive story.” Why are product quality and value the two areas that Amir advises you to focus on? According to Cratejoy’s client statistics for subscription box purchases, Amir shares that “about 70% of people are buying for themselves, and about 30% of people are gifting it to others. The people that are buying it for themselves, it's mostly, ‘I love this thing and of course I would like to get more of it on a recurring basis.’ So, it's not a straight discounting or a straight value purchase, it's an emotional purchase. That said, the value is where membership retention comes in. So, if they look at the products when they show up after the first purchase, and then do the mental math on how much it all costs, and they say this doesn't look like I got much or any of a discount on this at all ...they're not going to stay subscribed. Whatever it is, the initial purchase is an emotional one, but the subsequent retention is largely tied to perceived value.” Making that unboxing experience an amazing one is vital to membership retention. To know what that experience is like, Amir suggests that you purchase other subscription boxes for yourself. “You need to have them show up at your house. You need to experience what it's like to open them, and you need to see the difference between bad and good. You need to understand the content that's coming along with the products itself. It's not just about the products. You need to see how they make you feel - the value and the sort of hand-picked and personalized effort that's gone into each box, or they don't, and then you cancel, right? You need to actually experience that, so I always urge people to have subscriptions. At any given time, I have 20+ active subscriptions.” A keen focus on quality and value - These are the things that the best of the best in the subscription box industry do.

Every group exhibits language and behaviors that are unique to them. What makes certain cultures so effective at innovating change, while others are a misery to everyone who participate? How can you change a culture to unleash your group’s potential, grow your company and increase your membership retention? I talked with Dave Logan, co-author of Tribal Leadership, about what the beliefs, attitudes and loyalties of a group can reveal about its culture, and how to improve that culture for better results. Dave is a bestselling author, management consultant, and faculty member at the USC Marshall School of Business. Dave co-founded CultureSync in 1997, a management consulting firm specializing in cultural change, executive coaching, and strategy. CultureSync’s clients dozens of Fortune 500 companies, major nonprofits, and governments around the world. Logan’s insights will lead you to breakout performances within your corporate team and to greater satisfaction and membership retention for your association, training program, or any other type of subscription organization where members interact with one another. How Diagnosing Your Tribe’s Culture Can Lead to TransformationThe basic building blocks of any culture is the tribe— a group of 20 to 150 people focused on making an idea successful, Logan says. Big organizations are made up of smaller tribes that join to form a larger tribe of tribes. If you measure a tribe’s culture on a scale of one to five, and then elevate that culture just one level, performance can increase by 300 to 500 percent, he says. “It’s the most important thing you can focus on,” Logan says. “Culture eats strategy for breakfast.” To identify a tribe’s stage, look at what the people in the tribe say and do: Stage One – This tribe believes “life sucks.” Life is unfair, and God just messed this up. People in Stage One steal, commit fraud, punch each other in the face and worse. Stage Two – This tribe believes “my life sucks.” They behave passively and avoid accountability. They spend their time griping and complaining and do just enough work to not get fired. Stage Three – This tribe believes “I’m great (and you’re not).” People in this stage are busy self-promoting and competing with one another. They get very little done. Stage Four – This tribe believes “We’re great (and they’re not).” Think of sports. There’s usually a common vision and a common adversary. The team sets aside individual egos and takes ownership of group goals. Stage Five – This tribe believes “Life is great.” There is no “us” and “them.” Stage Five tribes are driven purely by values, and that produces world-changing innovation. However, they can sound a little crazy and unstable, like the dot com companies which said, “We don’t need revenue, all we need is eyeballs.” How to Move Your Tribe from “My Life Sucks” to “I’m Great”Tribes at Stage Two feel unempowered. To get them inspired, it’s best not to take on the whole group, Logan says. “The negativity is just too great. It'll overwhelm you,” he says. “They'll make sarcastic jokes about you and character assassinate you without you even knowing that it happened.” Instead, find one person in the tribe who wants things to be different and mentor him. Offer specific advice, like “Let’s start by getting organized.” Or, “Let’s start by setting some goals.” “You're not trying to improve the tribe, you're just trying to elevate that one person,” Logan says. After a week or a month, that person moves to stage three and says, “I’m great.” But they look at everyone around them, and they all really suck. “And at that point,

Subscription businesses benefit from the advantage of recurring revenue. Acquire new members and keep your existing ones. Sounds simple, right? We understand it’s not that easy. How do you keep your recurring revenue if your members’ credit card charges are declined? When you charge the credit card that you have on file, send the product or service, and then find out the charge was declined, that’s called involuntary churn. And, it sucks. It sucks out your revenue, and the hassle often sucks out the member’s subscription. I met with Paul Larsen to discuss this challenge. In addition to a lengthy list of credentials and experience, Paul is the owner of PaulLarsenConsulting.com, a company with a focus on helping businesses conquer involuntary churn and increase their recurring revenue. You will discover: • Why “lowest price” merchant services firms can lead to increased credit card declines and decreased recurring revenue from existing members. • Why you are getting so many credit card declines (and it’s not necessarily because your customer doesn’t have available credit) and what to do about it. • Current trends in the credit card industry and how they impact credit card declines. • Auto-updater services that get you credit card data when your customer receives an updated card with a new expiration date. • How to identify a credit card processor that can help you get more charges approved each month and increase your recurring revenue from your existing members. What are the Biggest Causes of Credit Card Declines?You see the recurring revenue of your existing members decreasing at a rate higher than your churn. This is what happens with involuntary churn. The charges on your members’ cards start getting declined. Incorrect card information is the biggest cause. When a member’s card information changes, you are not often notified. There are several unintentional reasons for the change, and the customer often fully intends for you to receive your payment. Card information changes when members are issued new cards. This happens when they lose a card, experience fraudulent charges, change out their card preference for a new rewards program… and the list goes on. An additional disruption in the system is occurring because every card in America is being reissued with chips. Almost all of them are reissued with new expiration dates if not new account numbers. “Because every card has a new piece of information, the old legacy information has been switched out on which the last charge for that subscription took place,” explains Larsen. “So, we've seen overall decline rates steadily rising over the past two years again, in large part because of this mass reissuance.” “The period of great volatility has been about four years now because, even before the chips, there were the massive breaches at Target and Home Depot, so those two breaches alone caused 110 million credit cards to be reissued. Plus, we're all losing our credit cards it seems, at least once a year,” adds Larsen. Companies who have merchant processors who don’t deal with this issue have seen self-involuntary churn triple in the past 18 months. And it’s not over yet. While most credit cards have been reissued with chips, still many hundreds of millions of debit cards are yet to be chipped. At a time when you are doing all you can to keep your members, this problem becomes a huge hassle for them. They have to proactively update their information. It’s giving the member the opportunity to look at their subscription and decide if they want to renew or not. When often, a card that is regularly charged goes without their attention and the subscription continues. In addition to changing card information,

Why would your company want a member instead of a customer? Studies show the valuation of companies in the membership economy are anywhere from five to 10 times the size of similar companies which use transactions. That’s according to Robbie Kellman Baxter, author of The Membership Economy. Baxter is a Silicon Valley marketing consultant whose clients have included Survey Monkey, Netflix, Yahoo, Oracle and eBay. I recently talked with Robbie about what she calls “the forever transaction,” a customer who sticks with you forever. You will learn insights she’s gained from advising nearly 100 organizations on growth strategy. Why Would A Company Want Members Instead Of Transactions?Long-term members give entrepreneurs a more predictable cash flow, says Baxter. Also, companies are able to invest more time and money to acquire a new member than they could for a one-time sale. “So many transaction-based companies invest in acquisitions, and then don’t retain the customer,” Baxter says. “They’re on a constant treadmill, and it’s like a hamster wheel. You’re always running to keep up with new products or enough offerings, and you have to keep finding new customers.” A membership business lets entrepreneurs get to know one set of customers and continue to serve their evolving needs. Acquisition costs go way down, and profitability goes up. Why Would A Customer Want A Forever Transaction?So why would a customer buy a membership instead of, for example, a course that teaches them a skill one time? It’s because a membership can keep solving their ongoing needs, Baxter says. But, it’s also important to structure a business that does so. For example, if a customer takes an online course teaching him how to draw, once he’s learned all he wants, he doesn’t need the membership anymore. But if the business gets to know its customers, and really understands their challenges, it can continue to expand its offerings. It can teach how to earn a living from drawing, how to use drawing software packages, or how to get into art galleries. “Then they will stay for life,” Baxter says. “Because they want you to solve their problems forever.” How Do You Change A Company’s Culture To Fit The Membership Model?To move from a company based on transactions to one based on memberships demands a different mindset. One that’s focused on the long-term happiness of customers as opposed to short-term revenue, Baxter says. That can mean weening owners away from over-reliance on the metrics found in quarterly reports. “Because the transaction isn't as important as retention,” Baxter says. The company should also evolve to focus more on member satisfaction and engagement. Members will expect better treatment than one-time customers. They’ll expect to have more of a voice. “If I buy a Hershey's candy bar, I don't expect to get Hershey's to listen to me. It’s a completely anonymous transaction,” Baxter says. “But if I own a subscription to the Chocolate Garage, where my membership lets me buy chocolate every month, if I don't like the selection, they're going to hear about it. The company will need to have customer success philosophies in place to manage that feedback.” How Do You Build A Relationship That Keeps Members Long-Term?“Onboarding is one of the most overlooked opportunities to engage and deepen valuable customers relationships,” Baxter states. She lists the following three activities that companies are doing to have effective onboarding. 1. Reinforce the wisdom of the member’s decision. When a customer buys something, he almost immediately wonders whether he did the right thing. “So, if you say right away, ‘Congratulations you're taking the first step toward having the career of your dreams. We're going to help you. You're already better than 99 percent of people who don't even take one step,

The subscription economy is exploding and everyone is wanting the benefit of recurring revenue. Today the world is awash with subscription options-Netflix, Amazon Prime, SalesForce.com, Dollar Shave Club, and so on. Sure, you offer a dynamite software as a service company, a great training program, a unique product, or vital business intelligence, but how can word of your business cut through all the noise? To gather some insight from an expert in the subscription economy, I talked with John Warrillow, author of bestselling books like Built to Sell - Creating a Business That Can Thrive Without You and The Automatic Customer - Creating a Subscription Business in any Industry. John is also the founder of a subscription-based company called The Value Builder System, where advisors help company owners increase the value of their businesses. Before that, he founded Warrillow & Co., a subscription-based research business dedicated to helping Fortune 500 companies market to small business owners. The lifeblood of every business is repeat customers, says Warrillow. “Automatic customers,” people who buy subscriptions, are the best way to ensure that your recurring revenue continues forever. To give yourself the market edge, you’ll want to pay attention to three numbers: 10, 90 and 3. Make Your Subscription 10x More Valuable Than a Single SaleOnce upon a time, the monthly credit card statement had five or six charges—the utility bill, cable TV, etc. Today, small incremental charges—the Netflix subscription, Microsoft Office 365, Birchbox—fill the pages and stretch on. Consumers are feeling subscription fatigue. They’ve raised the bar on what they’ll buy. How do you compete? Warrillow advises that you consider the 10x versus 10% theory. “Try to develop a 10x value proposition that makes it ten times more valuable to subscribe than to simply buy on a one-off basis; because, nobody is going to subscribe to your product or service to save ten percent,” he explains. California-based information marketer New Masters Academy does this. It developed an online learning library. When you subscribe, you can learn watercolor painting, how to make better pottery, and more. Their competition is the community college, where it might cost $600 or $800 to attend a live training workshop. “For $29.95 to subscribe to New Masters, you can make the case that the customer got 10 times the value they would have gotten from going to a single live workshop,” Warrillow says. Build Subscriber Loyalty Within the First 90 Days You’ve sold a membership, time to move onto the next buyer. Wrong. You’ve got the first 90 days to get your customer to be transformed by, or learn to depend on, your product. Otherwise, the member won’t keep the subscription, and that recurring revenue you counted on decreases. The key is to keep your buyer engaged. “Statistics show if you're able to change their behavior, get them to interact with you, feel good about you in the first 90 days, their likelihood to churn (cancel the subscription) drops off a cliff,” states Warrillow. “They will be subscribers for a very long time.” On the other hand, if you ignore the customer for 90 days, and then see they never used the product you sold to them, you’ve lost them. “There's virtually nothing you can do after the 90-day period that will re-engage them,” he warns. “It’s why companies like Amazon and Netflix have entire teams, boardrooms full of whiteboards choreographing and storyboarding the first 90 days of their relationship. They will go to the point of really looking at whether to send a third email on the sixth day. They even statistically validate whether it's better to send that email on the sixth day or the seventh day.

How would you like to know the secrets of the fastest growing subscription companies? Subscriptions are exploding for everything from information, software, to monthly boxes. This growth has attracted new resources for analytics, software, and marketing to learn what works and how to grow the largest subscription companies today. These tools can give you more visibility, control and monthly recurring revenue for your subscription program. This interview reveals what the largest players in the subscription economy do to attract new customers, understand their subscribers to reduce churn, and grow their monthly recurring revenue. In This Program You'll Discover:• Why subscription businesses are growing nine times faster than t the S&P 500 companies. • Why subscription programs are growing and what you can do to cash in. • Where 50 percent of the revenue growth comes from within a subscription business. • The various ways to charge for a subscription program. • What the advanced analytics reveal about the future of the subscription economy. This program features our special guest: Matt Darrow Matt Darrow is the VP and GM of Product of Zuora. He’s a University of Berkley graduate who has been with Zuora for more than five years. Zuora is one of the top subscription billing platforms, serving clients like Zendesk, Docusign, HBO, Ford, Time, Inc., Zoom, Box, Dell and hundreds of others. 1. What is ZuoraFor starters, Zuora offers products, resources, and cloud technologies to help subscription businesses attract and retain members. Zuora has sophisticated monthly billing systems that increase revenue with better pricing models and international acceptance rates. In Matt’s reply to this question, he states that “companies are using Zuora instead of traditional ERP systems, like an SAP or an Oracle, to drive their business model innovation, to launch new pricing and packaging models, to automate their complex billing and payments, and ultimately get the subscriber analytics they need to improve their business and win in this market. And, it's a really big market. Analysts have estimated the size to be about $100 billion by 2020.” 2. What is Fueling the Growth in the Subscription Economy?“The traditional media companies and print providers have been doing subscriptions for 100+ years. A lot of the new interest in the market that we see is all the ‘software as a service’ or technology vendors, or even traditional hardware manufacturing companies that are connecting their devices to the Cloud and actually providing over the top services and access to any of their physical devices,” replied Matt. “So, I think that the key reason for the growth and why subscription companies are growing nine times faster than the S&P500 is that they're not only focused on delivering outcomes, but they're delivering services that continuously enhance their value over time.” Simply put, customers today “want to own an outcome instead of paying for a physical product and service.” The growth not only comes from the subscription element, but also from the focus on each member’s experience. It’s about transformation rather than transactions. Zuora publishes a Subscription Economy Index report providing a wealth of information about this growing industry. In this report, it is stated that at least half of the subscription growth comes from existing subscribers. This led to my next question. 3. What Advice Can You Offer About Member Retention?Subscriber retention is necessary for a subscription business to remain successful. “When you're running a subscription-based business model, churn really can cause the biggest challenge to that model. If you're not managing churn, and you're not managing your customer retention growth, you'll hit a wall very, very quickly.

There are a lot of things you can do to try to increase the amount of money you take home from your business; this program reveals the two that are the most effective for you and your business. Here is a summary of what I cover on this program: * The best ways to get your customers to buy from you more frequently * Referral programs to get your customers to refer new customers to you. * How increasing profits can boost your profits faster than any other strategy. * What you can do to increase prices even if you are in a highly competitive industry. * Robert’s strategy for transforming a $400 sale to a $5,200 sale. Business Profits Radio is a weekly radio show dedicated to helping business owners make more money and go home earlier to spend more time with their families. Enter your email address in the box at the right so you are notified when new shows are posted.

Today all business owners have to work harder to generate customers than we did 2 years ago.  This program reveals how you can also work smarter to leverage your time and generate better results from your marketing. Here is a summary of what I cover on this program: * How to use the power of your customer’s habits to get them to choose you, over and over again. * The real reason customers choose someone else other than you. * The single best way to overcome sales objections. * Making your company irresistible in an environment where many customers are afraid to make a purchase decision. * The secret desires your customers have that you may not be addressing. Business Profits Radio is a weekly radio show dedicated to helping business owners make more money and go home earlier to spend more time with their families. Enter your email address in the box at the right so you are notified when new shows are posted.

There is ONE secret to generating enough money in business that you create real wealth.  Not only do I reveal that secret on this program, I show you how to implement it in your own business for yourself. Here is a summary of what I cover on this program: * The truth about waiting on success. * The two ways you can implement the business wealth secret. * Why so many businesses fail and how to avoid it. * Is social media, like Facebook and Twitter a marketing tool or a waste of time. * How to get prospective customers to chase you. Business Profits Radio is a weekly radio show dedicated to helping business owners make more money and go home earlier to spend more time with their families. Enter your email address in the box at the right so you are notified when new shows are posted.

Are the free markets creating hardship within our country or are they the source of innovation and growth?  This program explores that debate. Here is a summary of what I cover on this program: * Commentary on the state of the economy in light of the freedom versus control debate. * Is coaching really a false promise?  Does it really help people? * What should you believe in as you look for answers and advice. * A look at Capitalisms’ greatest cheerleader, Ayn Rand. * How a book written 60 years ago is fueling today’s debate about health care reform. Business Profits Radio is a weekly radio show dedicated to helping business owners make more money and go home earlier to spend more time with their families. Enter your email address in the box at the right so you are notified when new shows are posted.

Many business owners fail because they don’t have the fortitude to stick it out and succeed.  This show reveals how you can turn their failure into your success. Here is a summary of what I cover on this program: * A stern warning for businesses that employ family members. * The essential process to generate new customers for you business * Finance your business for free, with no interest or bank applications * Why everything you’ve heard about “team building” is wrong. * The single most important task you must focus on each and every day. Business Profits Radio is a weekly radio show dedicated to helping business owners make more money and go home earlier to spend more time with their families. Enter your email address in the box at the right so you are notified when new shows are posted.