Membership subscription businesses are a Utopian business model where your revenue grows every month, we all get fat bonuses, and everyone lives happily ever after.
Of course, this is crap, but that’s what some appear to promise and many believe.
I had a long conversation with a company analyst and business newspaper reporter about a number of subscription businesses and their churn rates. I was able to forecast revenue and demonstrate that the company’s revenue targets are overstated unless the company doubles new customer acquisition rates or cuts their churn rate by 75 percent. Neither of those is likely. (P.S. I have a hot tip if you like to trade options or ever short sell a stock.)
The problem is in the approach. What are memberships and subscriptions for?
Is the goal of creating them to get rich? If that’s your approach, then the membership model isn’t going to work for you, sorry.
If your subscription membership is to enable customers to access a product or service they want and couldn’t access in any other way, well, then, maybe you are onto something.
Big emphasis here on “they want.” They don’t want it just because you created it. I know it’s precious to you, but that doesn’t mean anything to your customer. He’s in his own world, thinking about his own problems. He works hard to ignore as many distractions as he can.
If he doesn’t ardently want what you have, canceling your subscription doesn’t feel like a loss; it’s a relief.
The biggest key here is that your members don’t buy the product you are delivering. They are buying how the product makes them feel.
Both Powerball and Mega Millions lotteries implemented changes to reduce the chance you’ll win. Thus, each ticket has less real value than it did before because there’s a much lower chance it will be the winner.
Yet the value to the buyer is the same as ever. Lottery ticket buyers are buying hope. They are buying a few hours to daydream of what they’ll do with the money when they win the big prize.
A few weeks ago, I was the guest on a podcast hosted by Agora Integrated Marketing, an internal marketing agency serving several divisions of the billion-dollar publishing company called The Agora. Many of these publishers within The Agora have financial newsletters that deliver investing advice.
Grant Perry, one of the podcast hosts, made the comment “They aren’t buying you, they are buying your promo.”
This is critical to keep in mind. They don’t know what your product is like when they are making the decision to join. They hope your product could be the solution to a problem they face. And based on that hope, they join.
Now you deliver your product. It’s essential that you see this window of time between when your customer buys and when she experiences your product as THE opportunity to turn a one-time buyer into a lifelong member.
The most common mistake I see subscription marketers make is the flip into delivery machines. They create what they think are creative, engaging onboarding email sequences that focus on what they are delivering.
Instead, focus on the hope that your customer purchased in the first place. Continue that hope into the delivery of your product.
Go buy a lottery ticket today. Yes, buy one. Now, think about what you’d do with the money should you win. How are you going to spend it? Or how will you invest the money? How does that feel?
THIS feeling is what we must deliver to our newest members immediately after they join. Help your member feel what life is like after these problems are solved.
Continue your promo into your onboarding and your product. There’s an entire template for what to deliver to your members during this critical window in my book Retention Point: The Single Biggest Secret to Membership and Subscription Growth. Look out for my posts over the next three weeks as I’ll provide you with several additional examples.