Anne Janzer

Author

Subscription Marketing

The Story Behind The Forever Transaction

An Interview with Robbie Baxter

I first met Robbie Kellman Baxter in 2015, when her book The Membership Economy had just been published. We met at a conference when she delivered a keynote talk on membership. As I had just published Subscription Marketing, we formed an immediate kinship over our commitment to encouraging businesses to take a long-term perspective of their customer relationships.

The Membership Economy had a major impact on businesses adopting subscription and membership models. It also cemented Robbie’s position as an expert in this field.

Her latest book, The Forever Transaction, is released this week. If you’re in a business built on relationships (and most businesses should be), I strongly encourage you to spend part of your “staying home” time reading this book and sharing its ideas with your colleagues.

Robbie generously agreed to chat with me about the book, her writing process, and how she came to be an expert in subscriptions. Listen to the entire interview here.

Here are a few highlights of that conversation that tell the story of how her latest book, The Forever Transaction, came to be.

Her background in membership and subscriptions

I’m always fascinated with how the experts in an area earn their place. Like many of the authors and experts I’ve encountered, Robbie’s answer to that question is nuanced. She chose her area of expertise, but it also chose her.

When she started her consulting career, Robbie wanted to own an area of expertise that was both unique and identifiable. One of her early clients, in 2001, was Netflix. She says, “I fell in love with their business model. I thought to myself, this is something that’s really interesting, that nobody else seems to be looking at in a disciplined or thoughtful way. Maybe this is my thing.”

At the same time, people started calling her because they learned that she had worked with Netflix and wanted to get some of that magic in their own businesses. So the market confirmed the strength of the subject area.

As she worked with clients, she analyzed the overarching principle, exploring how they applied in different settings. She says, “I was learning things that allowed me to come into a new client and predict what their problems and challenges were, and have useful ideas to help them based on my frameworks.”

The story behind The Membership Economy

As her research and expertise grew, people told Robbie to write a book to support her consulting practice. So, with her characteristic diligence, she researched the process, dove into the project, and landed a book deal with McGraw-Hill.

The resulting book was much for than a one-pound business card for her consulting practice. She had a message to share with the world, and the book did so effectively.

She tells me, “I wrote The Membership Economy because people didn’t get what I was saying. I would say, ‘You should really consider subscription pricing, you should consider a membership model. It can work for you to smooth out cash flow, improve your valuation on the public markets, be more attractive for acquisition, learn more about your customer behavior, and better predict what products they’re going to need in the future, if you take this long-term mindset.’ CEO after CEO would say, “Well, Robbie, it’s not really relevant for my business….’”

Her key message was an important one: your success doesn’t depend on the pricing model. It’s all about having the mindset of treating customers as members. According to Robbie, membership “is a metaphor for helping organizations focus on the long term, which justifies the subscription process.”

Membership is a metaphor for helping organizations focus on the long term.”

She shared this message at a pivotal moment—in 2015, when subscriptions were just starting to transform many industries. Delivering the right book at the right moment in time changed her career. She says, “It’s changed the kind of work I do, it’s changed my reputation, it’s changed how I get work, it’s changed how I spend my days.”

Why she wrote The Forever Transaction, her latest book

With the experience of the first book behind her, Robbie knew she would write another one. “Writing a book taught me a lot about how I think and how I come up with ideas. I learned that writing a book forces me to take everything I’ve done and make frameworks and distinctions and rules that can be helpful on an ongoing basis. Having learned that, I knew I would probably write another book.”

Today, in 2020, you don’t have to convince companies to consider a subscription model. Most understand the potential. But in the years since her first book was published, many non-profits and companies have turned to Robbie to help them in their struggles. “Wherever they are in the subscription maturity, there’s a special set of challenges that are different from business-as-usual transactional business challenges.”

And so began the next book. She says, “I wrote The Forever Transaction to help companies that were struggling. I wanted to share what I’d learned in the trenches, working with dozens if not hundreds of subscription companies. This book is more about the how than the why.”

Having seen the book as it came into being, I can testify to its success. The Forever Transaction is filled with practical advice for doing the hard work of transforming a business, delivered with clarity and engaging storytelling.

You might think that launching a book into this pandemic is tough timing. Obviously, the many in-person events scheduled for the book launch have been canceled.

But in many ways, this is exactly the moment that non-profits and corporations alike need the advice in this book. Because the most resilient organizations are those with strong relationships with their customers—the ones that treat their customers as members.

To learn what keeps authors like Robbie up at night or to hear our thoughts on what constitutes a good business book, listen to or read the rest of the interview here.

Find The Forever Transaction on Amazon. Or, support your indie bookstore and order from BookShop.

Katie Martell and Cause-Based Marketing

The word CAUSE in wooden blocksBlack History month has just wrapped up, and Women’s History Month (aka March) is upon us. Cue the well-intentioned marketing campaigns that align brands with social causes.

Brands do have the ability to influence cultural change. But cause-based marketing is challenging to do well. In a recent example from the world of publishing, Barnes and Noble thought it would be a good idea to reissue classics like Romeo and Juliet, Frankenstein, and Moby Dick with new cover art representing people of cover.

They quickly pulled the “Diverse Editions” campaign after the universe pointed out the obvious: Changing the cover doesn’t change the canon.

(Hear from author L.L. McKinney on NPR’s website.)

I can hardly wait to see what’s coming up for Women’s History Month.

That’s why it’s a perfect time to check in with Katie Martell, an unapologetic truth-teller about the marketing industry in which she works as a freelance consultant and speaker.

Katie helped me immeasurably with the chapter on values-based marketing in the third edition of Subscription Marketing. She is working on a book and documentary about the intersection of marketing and social movements.

Our conversation covered much more than can fit in that much-expanded chapter. Here are a few nuggets of wisdom from her interview for Subscription Marketing.

The explosion in social cause or values-based marketing

Anne: Several years ago, brands’ “social” or cause-based marketing campaigns were pretty safe. Businesses donated goods or money to unobjectionable causes like disaster relief and saving wildlife. Now we’re seeing many marketing campaigns lining up with larger social values. Why is that?

Katie: Brands adopt values-based marketing for many reasons. Competitive differentiation is one of the largest drivers today. When everything around you is a commodity, you could try to differentiate on values.

From a tactical perspective, taking a stand generates “earned media,” or press that you don’t have to buy. Over the years, Dove’s Real Women, Real Beauty campaign has generated way more media exposure than any paid advertising placement.

One of the important reasons is trust. Human beings make decisions emotionally, then justify them logically. Appealing to someone’s values accelerates that emotional connection. The brand becomes part of your personal set of values and identity in a meaningful way.

The Edelman Trust Barometer research suggests that few people know which companies to trust, and many distrust the marketing industry as a whole. In my opinion this is partly due to the lip-service that many companies are giving to social causes and broader purpose.

Lip service, pandering, or true alignment

Anne: Let’s talk about that lip-service, because one of the things you do is call brands out when their “marketing” values don’t match their actions. What kinds of values should brands align themselves with?

Katie: Global Strategy Group conducts an annual survey on business and politics, including questions in which people ranked their opinion of which issues businesses should get involved in.

At the top of the list are those issues that affect the core business, which may include fair labor standards, environmental issues, and industry-specific policies. For buyers, anything aligned with your core business is fair game.

At the bottom of the list, the ones that people are less tolerant of brands voicing an opinion on, you’ll find societal issues like the legalization of marijuana, transgender issues, and more.

I believe that brands cannot afford to be passive about the issues that they themselves can own and that their buyers care passionately about.

I’m not suggesting that every brand take a political stance. Values don’t have to be inherently controversial. Your values might be embedded in how you do business. For Salesforce, proclaiming “No software” was a stance. For Buffer, complete transparency is part of the brand value that they express in nearly every communication with customers.

Understanding the risks

Anne: What are the risks of aligning marketing with social movements?

Katie: The risks fall into two categories: risks to your brand, and risks to the movement you’re trying to support.

You could get called out for pandering by consumers, employees who are uneasy with the disconnect, or someone like me and journalists with broad reach. Even well-intentioned companies like Dove sometimes make moves that don’t align with the standards they set. That’s fine. But if you are hypocritical, profiting off the values, you will get called out.

You also risk alienating customers or prospects who don’t agree with you. That might be a risk worth taking. As Bill Bernbach once said, “If you stand for something, you will always find some people for you and some against you. If you stand for nothing, you will find nobody against you, and nobody for you.”

Anne: What do you mean by risks to the movement? Surely, it’s a good thing when brands weigh in on important topics like #MeToo?

Katie: I see brands trying to align with three movements that are part of the zeitgeist: women’s rights, LGBTQ rights, and racial injustice. When brands jump on the bandwagon, they can do as much harm as good.

Each of those movements has been built on the backs of real people who have dedicated their time, resources, and sometimes their lives, to progress. When brands jump in without having participated in those campaigns, it’s not only inconsiderate, it shows a brazen disregard for the history of these movements. Any consumer who aligns with these social initiatives is right to be skeptical.

On the surface, it could seem like a good thing if brands elevate the discussion to a national level. Marketing is pervasive and carries enormous power to affect perception, start conversation, and change attitudes. The flip side is that these brand campaigns may create an “illusion of progress” or a sense of false normalcy. I could be watching a world on television that doesn’t reflect the reality I know to be true. The disconnect gets larger as more brands jump on the bandwagon, but the issues themselves aren’t addressed.

I believe profiting from these movements without also doing something tangible is not clever, it’s exploitation. If you’re going to run a feminist campaign on International Women’s Day on March 8th, first take a look at pay inequality in your own organization (for example.) In fact, I created a litmus test for brands considering a campaign like this. If the answers are mostly “no” you’re exposing yourself to the risk of hypocrisy:

Marketing is a tremendously powerful force. It can lift brands from unknown startups to industry leaders, but it also has power to influence change in the world. If this is the “new normal” of marketing, we need new rules of engagement.

Check out Katie’s “Pandermonium” roadshow coming up in Boston, Austin, and Chicago.Katie holding megaphone with word Pandermonium

 

Value Nurturing Defined

A Marketing Term You Should Know

Five years ago, I proposed that marketers add the term value nurturing to their vocabularies and their marketing plans.

Value nurturing is nothing more than enhancing the customer’s experience of value, after the conversion or the sale. It’s a critical marketing practice today because more businesses are basing their success on ongoing customer relations and subscriptions.

Defining a new term is a foolhardy task; no one wants to learn new vocabulary, much less take on new marketing tasks. But it was important enough that I gave it a shot, and for some people it has, indeed, stuck.

The book Subscription Marketing compiles a large number of value nurturing tactics and ideas that businesses of all types can employ. That book is now in its third edition. Value nurturing is taking hold, slowly, in the marketing mindset.

What follows is an excerpt from the chapter in that book defining value nurturing.

Beginning golfers are taught to work on their entire swing, including the follow-through. The follow-through on a golf swing affects where the ball goes once you hit it.

Value nurturing is like the follow-through for marketing and sales, ensuring that customers continue on the course you want them to travel.

Before the initial sale, you find prospects through thought leadership and lead generation. Lead-nurturing activities convince prospects of the potential value they can get from your solution. If you succeed, the prospect becomes a customer.

Value nurturing is the marketing follow-through for that activity.

Value nurturing is the act of supporting the customer’s experience of value.

Once the sale is complete, other parts of the organization come into play, but marketing still plays a significant role. Marketing can set customers on the path to achieving the functional or financial results they expected from signing up. Marketing can gently nudge customers to recognize that they are succeeding. And creative marketers add value outside the solution, through content, community, additional services, or the quality of the relationship experienced by the customer.

Value nurturing turns customers into loyal or repeat customers, and successful customers into advocates.

There’s nothing revolutionary about the idea of marketing to current customers. You might think that I’m stating the obvious. But in observing the practices of many businesses, I often feel that customers are neglected. Some marketing organizations treat “customer marketing” as a backwater, not where the creative and visible campaigns happen. This mindset must change.

Subscription customers deserve renewed marketing attention. For that reason, I suggest creating a new label—value nurturing—that identifies marketing activities after the sale as being of equal importance to generating and nurturing new leads.

Many business activities belong under the value-nurturing umbrella:

  • Customer success management: Today this term is associated with a function that lives either in support or sales, but rarely in marketing. Yet to scale up customer success efforts across tens of thousands of customers, you have to deploy marketing campaigns. Value nurturing is customer success executed at scale.
  • Customer retention: Most customer retention efforts focus on finding customers at risk of leaving and convincing them to stay. The term typically applies to solving problems rather than creating value.
  • Upselling and cross-selling: These are important results of successful value nurturing, but never mistake selling for creating value.

Value nurturing takes place after lead generation, lead nurturing, and customer conversion. It is the next logical step in marketing for a subscription-based business.

The word value has inherent ambiguity, which works well for our purposes. Consider common meanings of the word:

  1. Value (verb): to consider something or someone as important or useful. (Shakespeare: “I was too young that time to value her, but now I know her.”)
  2. Value (noun): a relative assessment of worth or importance. (“What’s the value of this painting?”)
  3. Value (noun): a principle or standard of behavior. (Gandhi: “Your habits become your values, your values become your destiny.”)

Value nurturing can confirm the customer’s belief that the ongoing subscription is a smart economic decision. Marketing can also increase the customer’s perception of the relative value of a solution over time. These activities reinforce the first two definitions of value.

Last but not least, marketing may also align the solution with the customer’s personal values (definition #3). Many people are interested in doing business with organizations that share their core beliefs. This fact is spurring a growth in purpose-driven marketing related to social or environmental issues.

This third meaning, the alignment of principles or ideals, carries particular weight in the Subscription Economy because the customer maintains an ongoing relationship with the business, and shared values strengthen relationships.

Whose Value Is It, Anyway?

It’s tempting to associate value nurturing with monetary metrics such as customer lifetime value. How much money does the customer contribute to the business during their relationship? How can you optimize that?

Revenue growth is, of course, your objective. But if you approach value nurturing purely with the thought of getting more money from existing customers, you’re likely to get it wrong. We’ve all experienced a poorly executed upsell at least once in our lives and realize that it damages the customer relationship.

Your customers can tell when you’re interested in them only for the money, not the relationship.

Value nurturing is about increasing the customer’s perceived value from the solution, not wringing every dollar out of the customer. The better you are at making your customers successful, the more successful your business will be over the long run.

Revenue growth is the natural result of value nurturing done well.

For more on value nurturing and a large list of examples, see the 3rd edition of Subscription Marketing: Strategies for Nurturing Customers in a World of Churn.

What Is Subscription Marketing, Anyway?

When I first published a book titled Subscription Marketing in 2015, many business marketers didn’t understand how it applied to them. They thought it was only about newspapers, or magazines, or perhaps email marketing.

Even people marketing cloud-based software didn’t see the connection with their own work.

Subscription marketing isn’t only about selling subscriptions. It’s about the practices of marketing when the customer relationship is an enduring one that constantly renews.

A Working Definition

As the years have passed, I’ve struggled to come up with a concise working definition of subscription marketing, partly because marketing itself is such a vague, misunderstood term.

(My mother is convinced it means “sales.”)

Then I heard Douglas Burdett interview Jill Soley on his excellent Marketing Book Podcast. Soley is a strategic product and marketing leader and coauthor of Beyond Product. What caught my attention was her definition of marketing as “two-way communication between your company and your customers.”

Brilliant!

So, with Jill’s permission, I’m using that as the heart of my definition of subscription marketing:

Subscription Marketing is two-way communication between your company and customers in a subscription relationship, with the purpose of sustaining the value of that relationship for both parties.

My book of the same name focuses primarily on marketing practices that need to happen after the sale (which I call value nurturing). But that’s only part of the story.

Subscription marketing is marketing with a long-term perspective. It’s changing your mindset to focus on the relationship rather than revenue alone. It’s looking beyond lead generation to cultivating both trust and value, before and after the point of conversion.

Subscription marketing resets fundamental ideas you may have about marketing. For example, as a subscription marketer:

  • Leads are fine. Relationships are better.
  • Large marketing budgets are helpful. Creativity is priceless.
  • Interrupt-driven tactics like advertising deliver inconsistent results. Adding value always works.
  • Chasing sales is exhausting. Creating value is energizing.

Subscription marketing doesn’t technically require a subscription revenue model—all you need is a shift in mindset. But if you have a subscription model and want to achieve long-term success, you need to adopt the practices of subscription marketing.

Related Content

Subscription Marketing, 3rd Edition is now available! Learn more.

Listen to me talk about Subscription Marketing on the Marketing Book Podcast here.

Fanocracy: A Book Review

Reading Fanocracy by David Meerman Scott and Reiko Scott will change the way you think about being a fan in your own life and cultivating fans for your business. Marketers everywhere should read this book to transform the way they think about supporting customers.

The Full Review

One thing I enjoy about David Meerman Scott’s writing is how he observes from the world around him and then synthesizes its lessons for business and marketing. In his latest book, Fanocracy, that perspective is expanded by that of his daughter, Rieko. In addition to being a physician by training, she appears to be observant and thoughtful—and a skilled writer.

The book looks at fandom from both sides: the experiences of the fans themselves, and the practices of those businesses, institutions, and artists that develop and nurture their fans—fanocracies in the book’s terminology.

The Scott’s define a fanocracy as “an organization or person that honors fans and consciously fosters meaningful connection among them.”

The fan’s perspective

The multi-generational perspective from the father-daughter author team makes the book particularly useful as it explores what it means to be a fan, and its importance in our lives. The book includes examples from the world of medicine, cosplay, fan fiction, live music, professional sports, and much more.

Fandom forges connections, helping us create shared identities with people who would otherwise be strangers or colleagues we know only in passing. It brings us together in times of alienation and division.

In other words, fandom connects and unites us in healthy and productive ways. This book made me realize the importance and joy of being an unabashed fan of something.

The business perspective

In this light, building a “fanocracy” business isn’t just about getting more sales or dominating your competition. Those things may happen, but as a side effect of nurturing fandom.

Creating a fanocracy is about adding value to your product or service through a sense of community, involvement, and identity. The Scotts write:

People are going to be most invested in that which creates a sense of intimacy, warmth, and shared meaning in a world that would otherwise relegate them to a statistic.”

Turning your business into a fanocracy isn’t necessarily easy. Part Two of the book includes nine steps for building a fanocracy, including:

  • Getting closer to your customers
  • Letting go of control of your creations
  • Giving more than you have to

The book includes a wide range of examples from traditional fan domains as well as businesses. A few of my favorites include MeUndies (subscription underwear!) and Grain Surfboards.

The book will get you thinking:

  • What are you a fan of?
  • How does that experience enrich your personal life?
  • How can you encourage these kinds of feelings in your most loyal customers?

Building a fanocracy isn’t necessarily easy, but it’s generous and meaningful. And in a world filled with big data, artificial intelligence, and subscription fatigue, cultivating and nurturing true fans is a great business strategy.

Pay What You Want Pricing – A Book Review

Short Version

The Complete Guide to Pay What You Want Pricing: How You Can Share Your Work and Still Make a Profit by Tom Morkes has inspired me to experiment with this pricing model in my own business. It’s filled with solid, practical advice. Check it out.

The Long Version

There’s an old (really old) joke about the perils of pricing:

Seller: “I’m selling this for less than it cost me.”

Customer: “But how can you afford to do that?”

Seller: “I’ll make it up on volume.”

Pricing challenges every business. For people starting out on consulting, coaching, or online businesses, pricing is a tremendous hurdle.

In The Complete Guide to Pay What You Want Pricing, Tom Morkes offers another pricing option: let customers pay what they feel the service is worth – and what they can afford.

(Let’s save time and call it PWYW for Pay What You Want.)

Although the strategy sounds simple, getting it right takes some thought. This book lays out the psychology and method behind this pricing strategy.

Because I blog for both subscription businesses and authors, let’s look at the book from both angles.

The Subscription Angle

Loss leaders (products sold below cost) work in retail settings if you can cross-sell the customer once they’re in the store. But for subscription businesses in long-term relationships with customers, pricing failures can be fatal.

  • Charge too little, and you gradually bleed to death. Or, you have to course correct, either raising prices or stripping value (or both). And subscribers leave. I refer you to the tale of MoviePass.
  • Charge too much, and the subscribers leave or never subscribe.

A successful subscription business sets prices that match (or fall below) the customer’s experienced value.

But people are different. We value the same products or services differently.

Richard Reisman advocates for a more sophisticated pricing model, FairPay, in which the buyer and seller negotiate for perceived value of a solution. I love this idea. Read about it in his book FairPay: Adaptively Win-Win Customer Relationships. (See my review here.)

For individual consultants, solopreneurs, and small businesses, implementing this negotiated online pricing is a technical challenge to pull off, at least while we’re all using the same standard payment systems. Morkes offers a simpler approach.

It may not make sense to use PWYW pricing for your core subscription offering, but you could try variations on it:

  • Offer bonus material to existing subscribers using this model
  • Try it to test the market for a new offering, for a limited time

For Authors

Many authors I know are really authorpreneurs – people building businesses around their writing. Like all small businesses, we struggle to figure out how to price our offerings. We want to share our ideas and escape the dark cloud of obscurity that surrounds us, yet also need to make a living.

Implementing a PWYW strategy isn’t just about monetizing your products. It’s about building and sustaining relationships with loyal followers, and getting exposure. It’s a marketing strategy, if you already have or are building a loyal audience.

The book includes plenty of examples from authors, bloggers, artists and more to spark your imagination.

What I Love About the Book

The book is grounded in the psychology of this pricing model. For example, it stresses the importance of anchoring the potential price range with suggested prices.

Generosity is another important factor in this equation. Morkes writes of using the PWYW pricing model for something that he had previously given away for free. He realized that by giving the work away, he wasn’t allowing his most loyal fans to support him.

“The most generous thing we can do as human beings is give OTHERS the chance to be generous. Simply by asking for help, accepting a donation, or letting people contribute to our work, we give them the gift of letting others be generous.”

PWYW is powerful marketing strategy if you have a loyal audience.

This pricing strategy won’t apply equally well to every product. The book suggests the five requirements of a successful offering. For example, it works best in situations in which you already have a strong relationship with the buyer. (I’m looking at you, subscription providers.)

The book also offers six steps for successfully pitching the model, including being very clear about the offer and anchoring the price. Examples from businesses as varied as video games, authors, musicians, and consultants show how this works in real life.

It’s not for every solution or every situation. Yet the book has inspired me to implement a pay-what-you-want pricing model for a new online course I’m considering.

Read it and see if if inspires you as well.

Related Posts

Disrupting Subscription Pricing: FairPay

Three Myths about Free Trials