Question of the day: Are memberships one variation of the Subscription Economy (as suggested in John Warrillow’s The Automatic Customer, which I reviewed here)? Or are we really experiencing the growth of a Membership Economy, for which subscriptions are merely one revenue model?
Which is a subset of which? Or does the reality look something like this instead?
The question arises after reading Robbie Kellman Baxter’s book The Membership Economy. The book takes the position that subscriptions are one revenue model within the broader Membership Economy.
The terms Membership Economy and Subscription Economy are different filters into the same set of trends and businesses. When you’re looking at these trends from a revenue perspective, you’re likely to think about subscriptions. If you focus on human behavior, as this book does, membership is a more interesting angle.
Here’s a quote from this discussion in the book:
“What makes a membership organization is the attitude of the organization and the feelings of its members—not whether members subscribe. Companies’ failure to see themselves as part of this bigger trend can limit their potential to build relationships and strengthen their models.” (Robbie Kellman Baxter, The Membership Economy.)
My own book (Subscription Marketing) speaks of the Subscription Economy, but I love the emphasis on human relationships that is inherent in the term Membership Economy.
Enough about terminology, let’s get to the book.
In The Membership Economy, Robbie shares her insider’s perspective into the challenges and opportunities of building a membership-based business. After the necessary discussion of terminology and trends, she dives into seven key strategies and tactics for membership businesses, including onboarding, pricing and technology. I’m particularly interested in the customer retention strategies. I love that in addition to retention, she stresses the importance of letting customers go gracefully.
The third section of the book digs deeper into different types of subscription companies (online communities, online subscriptions, loyalty programs, etc.), with case studies of each. The fourth section offers guidance on making the transition to one of these models within your own business.
The book is well written and engaging, with interesting stories and examples. If you’re considering making a transition and want a thoughtful discussion on topics such as the uses of freemium or risks of different pricing models, this is a terrific resource.
If there’s a fan club for Robbie Kellman Baxter, I’ll be a member.
And if you’re interested in this topic, sign up for my monthly newsletter, exploring the subject of marketing for businesses with recurring customers.
Have you ever heard of the Blue Car Syndrome? It’s the non-scientific name for what happens when you buy a blue car, then start seeing blue cars everywhere. I’ve been experiencing the effect lately when it comes to subscription businesses.
While working on a book about the implications of subscription models on marketing, I started seeing subscriptions everywhere. My Safeway club card? That’s a subscription paid with data. Amazon Prime? Subscription. Insurance policies? Check. The more I thought about them, the more variations I found on the subscription model.
John Warrillow has done the work of describing, labeling and analyzing those different models in his new book The Automatic Customer: Creating a Subscription Business in Any Industry.
The book identifies and labels nine distinct variations on the business model.
The book discusses the differences in these variations, as well as their fit for different industries and businesses. It does a great job of describing the overall benefits of a subscription model. Warrillow clearly explains the revenue metrics that businesses should track in a recurring revenue environment.
I loved learning about new subscription businesses I hadn’t encountered in my own searches, including Standard Cocoa and Conscious Box.
Key takeaway: If you’re not sure about how a subscription model might fit in your business, or if you’re starting up a new business and debating revenue models, this is your go-to resource.
What do socks, industrial chemicals, and Emmy-award winning television programming have in common?
They’re all available by subscription. Foot Cardigan (among several subscription sock contenders), Dow Chemical, and Netflix are all rocking the subscription model.
Subscriptions are working their way into many industries as businesses realize the financial benefits of recurring revenue streams. Some subscriptions replace traditional business models, such as cloud computing eating into packaged software sales. Subscriptions also complement or enhance existing models. Amazon Prime is highly effective at increasing traditional sales on Amazon.
Subscriptions change how and when people buy from a business. The subscription customer must decide, repeatedly, to remain a customer. Revenues come not from the one-time sale, but from the ongoing loyalty of the customer. These facts have major implications for marketing.
Marketing in the Subscription Economy
Some marketing practices don’t work well in the subscription model and may need to be abandoned. For example:
More often, marketing organizations need to shift their focus from simply getting more leads to nurturing customers beyond the sale. If existing customers are responsible for most of your revenues going forward, then they should be a central to your marketing strategies.
Value: The Key to Long-Term Relationships
You’re only getting started marketing when the subscription customer signs up.
Before the sale, the marketing organization sets customer expectations for the value that they will achieve through a subscription. It only makes sense that marketing be responsible for following through on those expectations.
Beyond generating and nurturing leads, marketers need to devote efforts to nurturing existing customers. And the best strategy for keeping customers loyal is to help them realize value in being a customer.
Value is a complex concept; marketers can nurture customer value in many ways.
For example, help customers to be successful with your solution. Technology marketers might work with customer success teams and others to get customers using the subscription right away. Marketing might create videos that help new customers learn to use the solution.
Or you can help customers understand the value they get from the subscription, often by doing the math for them. Tell them how many dollars they have saved or reports they have run. You may have data to help quantify the actual value.
Another approach is to add value outside the solution itself. Marketing organizations can do this by creating communities and sharing content. They can add value to the customer relationship, using advocacy programs and customer collaboration to bring customers closer.
Finally – and this is a powerful strategy – subscription businesses can align with their customers’ deeper values. If your business has a compelling story and is committed to its values, you can earn a closer relationship with like-minded customers.
Interested in Subscription Marketing Strategies?
What better way to explore subscription marketing than through a subscription? Subscribe to my monthly newsletter on the topic. Sign up here.
Or, if you want to dive a little deeper into the marketing strategies, check out my book, Subscription Marketing: Strategies for Nurturing Customers in a World of Churn.
Photo credit: Zak Suhar, from stocksnap.io
Subscriptions aren’t just for magazines anymore. Technology companies, retail businesses, industrial services and suppliers, and countless other companies rely on subscriptions to sell goods and services to customers.
Think about it: Amazon AWS is a technology subscription, while Amazon Prime is a content and services subscription that drives retail sales.
If any part of your business relies on returning and renewing customers, you’re in the subscription business. Because business success depends on a long-term relationship with the customer, marketing needs to focus on current customers as well as prospects.
In the subscription business, marketing cannot stop at the point of the sale.
There’s a new book on this topic called Subscription Marketing: Strategies for Nurturing Customers in a World of Churn. I’d review it here, but modesty prevents me, as I wrote it. (Yes, that’s why the blog posts have been sparse lately.)
Instead, you’ll have to read the reviews on Amazon.
For those who are interested in continuing the discussion on this topic, I’ve started a Subscription Marketing newsletter to share resources on the topic. Don’t worry, it won’t flood your inbox because it only comes once a month. You can sign up here.
In this blog you will continue to find articles about technology marketing, content marketing, and subscription marketing (which all overlap), as well as reviews of useful books on marketing and technology. Thanks for reading!
If you’re in marketing, you’ve probably been influenced by David Meerman Scott’s New Rules of Marketing and PR. Originally published in 2006 (and updated several times since), it’s had a lasting impact on the practice of marketing.
Now he’s got a new book out, The New Rules of Sales and Service. Again, it’s a marketing must-read. Although I read last fall and included the book on my list of marketing books last month, I haven’t reviewed it here yet. Until now.
Although the title doesn’t say marketing, I’d suggest you put it on your reading list. Because sales and service interactions should be a continuation of marketing efforts and strategies.
Several of the new rules sound familiar to a marketing professional, but apply as well to sales and service organizations. For example:
Rule #1: “Authentic storytelling sets the tone.” Understanding the business story is critical for anyone engaging with the customer, including sales and service. If marketing is creating stories, we need to share them widely and build consensus throughout the customer-facing business.
Rule #2: “Content is the link between companies and customers.” Stop thinking of content marketing as simply a way to generate leads, and start thinking of it as a way to support and nurture your customers.
And another chapter heading reads: “We’re all in sales and service.” So true. The boundaries between marketing and the other parts of the business are blurring. Sales and service teams tend to own ongoing customer relationships, but that doesn’t mean that marketing’s job sends at the time of the sale.
This is particularly true in businesses that maintain a long-term relationship with the customer. Customer loyalty is the life blood of businesses with subscription-based business models. (That’s the topic of my latest focus, subscription marketing.)
The New Rules includes terrific examples, with instructions on topics such as interviewing customers to create buyer personas, engaging with customers in real time, and using great service to generate more leads.
To sum it up, again in David’s words: “Break down the walls between sales and marketing, and your business will improve.”
Books make great gifts. They’re easy to wrap. You don’t have to worry about peanut allergies or gluten intolerance. And the best of them can have a long-lasting impact – the gift that does, in fact, keep on giving.
With that in mind, here are a few suggestions for books to give people in the marketing profession, based on my own, personal reactions. I’ve reviewed several of them already on this blog.
Branding Basics for Small Businesses by Maria Ross (NorLights Press). I read the book after hearing Maria speak recently. Despite the title, her no-nonsense approach to branding works well for businesses of all sizes. She offers great advice about brand consistency.
The Difference: The One Page Method for Reimagining Your Business and Reinventing Your Marketing by Bernadette Jiwa (The Story Of Telling Press). This book is a fast but inspiring read, calling us to create a real difference in customers’ lives.
Epic Content Marketing by Joe Pulizzi (McGraw-Hill Education). Pulizzi compiles everything you might need to know about content marketing in one place. It’s the modern content marketer’s go-to source. I reviewed it here.
Everybody Writes: Your Go-To Guide for Creating Ridiculously Good Content by Ann Handley (Wiley). If you love Ann Handley’s writing, here’s your chance to find out why it’s so good. This book offers insight into how to make marketing writing both fun and personable. Even if you’re an expert writer, you’ll find things to love in this book. See my blog review here.
The New Rules of Sales and Service by David Meerman Scott (Wiley). David Meerman Scott redefined marketing several years ago with his New Rules of Marketing and PR. In this latest text, he highlights the challenges of ongoing customer engagement after the sale. The topic is relevant for marketing professionals, as the divisions between marketing, sales and service are shrinking.
Thinking Fast and Slow by Daniel Kahneman (Farrar, Straus and Giroux). He may have won the Nobel Prize for Economics, but marketers everywhere should offer thanks to Kahneman for explaining our irrational (or lazy) thought systems. This book reveals the vagaries of human decisions and thoughts.
To Sell is Human by Daniel Pink (Riverhead Books). This book is less about sales and more about human nature, empathy, and persuasion. It’s an entertaining read filled with useful insight for marketing.
True Story: How to Combine Story and Action to Transform Your Business by Ty Montague (Harvard Business Review Press). With all of the buzz about storytelling, this book insists that brands must go further to storydoing. Montague describes how an authentic corporate metastory transcends marketing and informs business actions. See my review here.
Winning the Story Wars by Jonah Sachs (Harvard Business Review Press). This book elevates marketing to another level, calling on Joseph Campbell’s hero’s journey, cultural myths, and Maslow’s hierarchy of needs. Sachs calls for an end to marketing through inadequacy, promoting instead an approach he calls empowerment marketing. See my quick review here.
I still have a long list of books I plan to read, and I’m adding more every day. If you have suggestions to share, let me know. I might review them here.
Okay, I made that statistic up, but reality cannot be far off. Isn’t there enough out there already on the topic?
Indeed there is. There may be too much written about content marketing, and it’s not all helpful.
The Wall Street Journal apparently equated content marketing with native content. Others call it brand journalism. Another blogger called it a glorified term for blogging.
I’ve contributed to the noise myself with this blog post on Content Marketing vs. Marketing with Content. We may be spending more time writing about content marketing than actually doing it.
In his terrific book Epic Content Marketing, Joe Pulizzi of the Content Marketing Institute offers refreshing structure and clarity on the subject, starting with a clear definition and following through with practical advice about implementation.
Whether you’re a content marketing practitioner or trying to make sense of it all, here are five reasons to read the book.
If you believe that attention is valuable currency in today’s world, then advertisements that force themselves on our attention are like people stealing money from our pockets.
Interrupt-driven advertising or marketing is becoming less effective as we find ways of ignoring the messages that don’t interest us. As a business model, interrupt-driven advertising is fading fast. And when advertisers insist on our attention – whether by raising a volume level, disabling fast-forwarding, or other schemes – it can work against the brand image they’re trying to project.
“The web visitor only has to look at the image for 10 seconds before they can click through,” says the advertiser. “We really need the leads, so we have to ask them to fill out a form first,” says the marketer.
The seconds spent on uninvited interruptions are taking our precious attention. If we don’t feel that we received something of value in return, we’ll simply resent the brand.
The talking campaign mailer
Anyone who says thinks print advertising is dead clearly doesn’t work for a political campaign. The number of mailers arriving at our household this campaign cycle was overwhelming.
Aside from its environmental implications, direct mail is a less offensive form of advertising, because you can decide whether to read or recycle at your own pace.
But one campaign earned my resentment by including a recorded speech on a sound disk in the printed mailer. When I opened the piece, a voice started exhorting me about the candidate’s qualities and positions.
From my perspective, that’s on par with a robo-call – and we all know how much we love those. I felt like my attention had forcibly taken from me by the mailer. (Plus, to recycle it we had to strip out the recording device first.) The speech didn’t deliver any information I could not read elsewhere, including on the mailer, nor was I willing to spend the time to listen to it. It had no value to me beyond annoyance.
I was an undecided voter on this local issue, and the mailer made me question the candidate’s good judgment.
The essential practice of content marketing is to consider the message from the audience perspective. If we, as marketers, create content that delivers value in the eyes of our customers, then they will gladly spend their attention on it.