Recurring revenue is the single biggest growth factor and stability for businesses today. Rather than having a revenue that is dependent on individual transactions, subscription revenue grows as you add new subscribers to the continuing revenue from subscribers that were added last month, and the month before. Yet, many subscription businesses struggle and fail.
Perry Marshall, one of the world’s most expensive and sought-after business consultants, endorsed by FORBES, INC Magazine, and the most respected marketers in the world, recently interviewed Robert Skrob about the subscription economy. In addition to a wealth of information and advice for the subscription economy, Robert revealed what subscription businesses must do to grow recurring revenue including: how to launch a new subscription business to generate recurring revenue, how to generate new subscribers, and how to onboard new members to increase lifetime customer value.
The Single Most Important Ingredient for New Subscription Businesses
The best way to start a subscription business is with an existing customer base if you’re already in business, or with a well-defined group sharing a common interest or need. Robert states that “studies show it’s five to seven times cheaper to sell to an existing customer than to get a new customer.” So, for businesses that already have a well-defined audience and an established reputation with them, you have a leg up on getting a subscription business started.
Once you’ve identified your target audience and their common need, passion or problem, it’s important that your subscription product or service is a solution or a transformation they’re looking for. “Rather than focus on the thing that you’re selling, instead sell the emotional outcome of implementing the thing that you’re delivering and how the customer is going to feel when they have it implemented. It all begins with that key. If you begin the relationship on ‘I got this stuff and I’ll give it to you as part of this membership,’ then you’ll never have the relationship. It’s what I call a series of one-night stands instead of a relationship that you can build on where you’re helping them accomplish these goals and dreams in their life.” Robert adds, “the leading cause of stagnant membership growth is a transactional membership model versus a transformational one.”
How to Attract New Members and Grow
Once you’ve identified your target customer and the transformational product or service you have to offer them, it’s time to sell. “One of the key things is there has to be a sales system. So many subscription businesses work on creating the best website in the world but they never spend enough time attracting new customers to it. You need to have lead attraction and lead conversion systems in place that are creating a steady flow of new members without the owner or management having to perform,” says Robert.
He adds, “Your paid advertising, partnerships with influencers, social media content, and other methods of outreach should all be focused on generating leads. What customers want is a transformation – to have a problem solved, to have fewer worries and less anxiety.” That’s your sales message in every sales method you use.
Whether you have a sales team or not, it helps to have an automated process in place that attracts leads. Robert calls it the ‘Wheel of Attraction.’ You need a system that is designed to optimize leads and convert them to customers on an ongoing basis. Your membership growth requires an outreach to bring in the unconverted and welcome them into the group.
Improve Retention and Subscription Growth by Implementing an Onboarding and Customer Success System
A subscription business needs to continually add new members to grow, but the essential ingredient to the predictability and the growth of recurring revenue is member retention Your work to grow your business will be in vain, even if you continue to gain new members, if your back door for members quitting is wide open.
Customers quickly lose interest when they don’t know where to start or what is important. According to Robert, “The real key is, just like college, to have a curriculum. Present them with the outcome they want and the process that you’re going to use to help them go through it. Just like in college, the professor is really on the hook. It’s his responsibility to help you and give you information. It’s really more of a learning environment than just a dumping of tools environment. We want to think of our onboarding like that. So, what is the outcome that they want and then let’s create a curriculum that’s going to help them achieve it.”
“The curriculum should include a fast win. What we want to do is help them find a magic benefit and experience some quick victory by implementing something,” Robert adds.
Another element keeping members onboard is when they feel like they are part of a community, all working towards the same goal or the same passion for something. Implementing ways for your members to interact with each other is another way to strengthen your membership retention. Social media is a terrific resource. Create a group page, or start conversations on other pages. Get your members involved and excited about their community.
When you have a healthy start, effective sales process in place, and an onboarding process that sets the member up for success, you will get the maximum benefit of recurring revenue. Your subscription business will have the groundwork to grow.
Discover more about how to improve member acquisition and membership retention by listening to the full Perry Marshall interview with Robert Skrob. You can click on the links below to listen to the podcast or download the transcript.
To continue to get updated and useful information as well as advice from some of the most successful entrepreneurs in the subscription economy, subscribe to Robert’s podcast: Membership and Subscription Growth.