MBA2336 How To Sell Subscriptions in Any Business in 2023 + Free Ride Friday

0:09Heyo! Welcome to the$100 MBA show, practical business lessons for the real world. I'm your host, your coach, your teacher, Omar Zinhome. I'm also the co-founder of Webinar Ninja, an independent software company I started back in 2014. And today's episode is Free Ride Friday. On Free Ride Fridays, we give away a lifetime membership to the$100 MBA program. If you want to win a free ride to our six-part program, showing you how to become a better entrepreneur, 100 % guaranteed, leave us an Apple Podcast rating and review and you enter our weekly random draw. We call Free Ride Friday. Listen in on Friday, just like today, to see if you won.

0:43we announce this week's winner a little bit later in the episode. In today's lesson, you will learn how to sell subscriptions in any business in 2023. Subscriptions are a great business model or pricing model that gives continuous value to your customers and gives you that reoccurring income we all are looking for. It doesn't matter if you sell a physical product or a service or a course or a coaching program, you can install a subscription offering for your customers that can give you more stable income, but more importantly, raving fans and customers that love what you offer day in and day out.

1:22As consumers, we're part of the subscription world all the time, whether we're subscribed to Netflix or Spotify or Amazon Prime or our local gym. But how do you create a subscription service for your customers regardless of your business? Well, we're going to break it down in today's lesson. We're going to talk about what are some of the best subscription models, how to introduce it into your pricing or value metrics, and how to test and experiment on price to make sure you hit that sweet spot where you're making the max amount of revenue for the max amount of value that you offer your customers.

1:54Let's get into it. Let's get down to business. Subscriptions are nothing new. They've been around for a very long time. In fact, since the early 1940s, media companies like newspapers started selling subscriptions instead of just selling one newspaper at the newsstand. They started to realize that people that read the newspaper, they actually read it every day and would like the convenience of it delivered to their house and would love to be incentivized by a discount by subscribing for the month or year. This model of business started to catch on. Magazines and cable TV and gyms and other brick and mortar businesses.

2:31And today, subscription services are bigger than ever. Whether it's streaming services or Uber Eats asking you to join their subscription service to get discounted delivery or even office space, like we mentioned yesterday, in co-working spaces, it's a subscription. And the reason why this has been a trend that's been catching on for decades now is because it's good for business and it's good for the customer. Whenever it's a win-win, this becomes a staple and a winning product and offering for the marketplace. But not all subscription services are created equal. The top of the line, the best of the best subscription services out there for a business to offer is a subscription to a shared resource.

3:11What does this mean? That means that you produce something once and then you give access to it to other people for a fee, a monthly or annual fee. A good example of this is Netflix. They don't create specific movies for each subscriber, They have a bunch of movies, a bunch of shows. They license a bunch of shows. They put it in their library, and then they sell access to that library, a shared resource. This is very similar to a gym. The gym has a building and equipment and facilities, and you pay to access these shared facilities. The reason why this is such a great model for the business is that they don't need to spend any extra money every time they bring in a customer.

3:48Their costs are fixed for the most part. Yeah, Netflix has to pay a little bit of money every time they bring in a customer for server costs, but it's not really a big deal compared to how much they're spending to produce a show. So shared resource subscriptions are great. This is a little bit different from what we mentioned with newspapers and magazines because it does cost money to print those things every time somebody subscribes. but the cost does go down in bulk. So the more subscribers you have, the more of a deal you can get with your suppliers when it comes to printing these magazines or newspapers.

4:20So in your business right now, is there anything that you can create that's a shared resource that doesn't actually require you to give up extra time or money every time a customer joins that subscription? One that comes to mind is a paid newsletter. Yep, paid newsletters are very, very popular, especially in 2023. Many brands will have a free newsletter that has advertising in it, and then a paid newsletter with no advertising that gives them in-depth access to special articles or videos. And it's pretty inexpensive for these newsletter subscriptions. $5 or$10 a month, but en masse, this is a great model for the business.

4:59It's a great little add-on. They create that paid newsletter once, and whoever signs up for that paid subscription gets access. Shared resource. Another example of this is a library of training. similar to Netflix, but for courses. Again, no extra overhead. You're creating these courses anyway. It doesn't matter if you have five people or 500 people. It's a shared resource. But you might say, oh, I sell a physical product. I have an e-commerce store. How do I have a shared resource and a subscription model here? Well, what is the biggest e-commerce store in the world? Amazon. Now, Amazon does subscriptions in two big ways.

5:28The first one is Amazon Prime. You pay a monthly fee or an annual fee and you get benefits like two-day free shipping, access to, you guessed it, a library of resources like Prime movies and music. Their main game is selling physical products, but they have this little subscription thing that makes them a ton of money. Another way they do subscriptions is through reoccurring sales. So say, for example, you're buying a tube of toothpaste. They will suggest to you, hey, instead of just buying this one tube of toothpaste, why don't you subscribe and get this tube of toothpaste automatically once a month?

6:03And if you do so, you get a bit of a discount. They incentivize people for being part of the subscription. Then you don't have to worry about ordering it every month. They're not doing anything different here. Same tube of toothpaste that people buy, but they're just encouraging people to buy more frequently and regularly. Now, let's say you don't have physical goods or you're not a coach or a consultant or you're not selling courses. What if you have like a restaurant? Well, I've seen this model implemented in restaurants that's brilliant. And it's not something innovative. It actually came from the concept of a country club.

6:34So the way country clubs work is that you pay an annual fee or a monthly fee to be part of this country club and you get access to the club. But you also get some perks like a discount on meals or drinks or priority to throw a party like a birthday party at the country club. So what some restaurants are doing now is they're kind of pulling the country club out of this model and just incentivizing people with the perks. So say, for example, in your local pizzeria that you love going to and sitting down and enjoying a meal with your family after an event or maybe at a graduation or the end of the year or some sort of celebration.

7:09So say, for example, the local restaurant in your neighborhood that you and your family like to frequent sit down and enjoy a meal together. They can offer a annual subscription to their VIP club. Let's say it's$100. And as a subscriber, you get a bunch of perks like 10 % off drinks. Your meal is free on your birthday. Priority to book the private room for celebrations. A free extra topping every time you order a pizza. Whatever. The point here is that you're enhancing the experience that you already have by offering this subscription service. They're frequenting this restaurant anyway. They love it anyway.

7:45Why not get all these great perks? And I've seen this implemented in some really interesting ways in local businesses. It's kind of like people used to reward people for coming to the establishment, whether it's like the restaurant or the laundromat, and they would like punch their card. And after 10 times, they'd give them a free something, right? Well, what they're doing here is that instead of just giving it them for free, they're saying, hey, we'll give you this great perk if you're part of this VIP. And you just pay up front rather than having to come 10 times. And people really see the value of that because they're like, OK, I get it.

8:19I pay this much. I have this VIP access for a year. I get all these great discounts and perks and a free meal. Sounds great. My local movie theater has a VIP club where you pay$30 or$40 a year. And every time you buy a movie ticket, it's discounted. You get the VIP rate. Popcorn is cheaper. You get early screenings. They're not doing anything different in terms of creating a new product or service. They're just packaging their pricing differently for the VIPs and those who paid up front. And to me, it's a no-brainer. It's an awesome offer because I love the movies. I love this particular theater.

8:53And why not save some money and be a VIP? So subscription ideas are abundant, but your job is to choose one that's good for your business, that you feel comfortable with, and you experiment. Listen, these offerings that you're going to be offering are going to be for the best of the best customers, the customers that absolutely love you. They're not going to be for everybody. It's probably going to be for the top 5 % to 10 % of your customers. And that's okay. hey, you don't need to sell this to everybody. Because guess what? As you get more customers and as you grow, the number of subscriptions will grow because that 5 % will equal more people.

9:27And when it comes to value creation and pricing and packaging, it takes some experimentation. So put something out there, try it out, let it run for about two months or so, evaluate, iterate, get feedback from customers, talk to the people that bought, ask them why they bought, talk to the people that maybe saw the email or the offering that you offered this subscription and didn't buy, ask them why they didn't buy and no harm done. You can even give them a little gift for the time they took to speak to you on the phone or on a video call. The point here is that roll up your sleeves and see this as a fun project to start installing subscriptions in your business.

10:05Thanks so much for listening. Today's episode's not over though. It's Free Ride Friday. Let's see who won this week's free ride. And the winner is 543-ME. That's the handle on Apple Podcasts. 543 Me says, great show for new and growing businesses. Omar is great at getting his hands on the subject matter to create a rich listener experience. Wonderful show. Well, thank you so much for that great review. Your mission is to email me over at omar at 100mba.net so I can make sure to hook you up with the lifetime membership to the$100 MBA. Over at 100mba.net, our six-part course showing you step-by-step how to become a better entrepreneur, 100 % guaranteed.

10:42If you want to win a free ride, just leave us an Apple Podcast rating and review and listen in on Friday, just like today to see if you won. It's that easy. It's our way to say thanks for showing us love on Apple Podcasts. Before I go, I want to leave you with this. Don't be afraid to experiment with prices and offers and packaging for your customers. Most of us think that customers are so hyper aware of changes and experiments that they might get annoyed. No, they have their own lives. They're busy. They're not focused on what you're doing. Think of how you feel as a consumer. Do you remember all the prices at the grocery store?

11:13Do you remember all the prices every time you frequent a restaurant or the movies or whatever it might be? And if things change, are you so disgruntled that you don't go? No, you understand that's the nature of business. And you're never going to know for sure what works best for your audience and your customers until you test it. Thanks so much for listening and I'll check you in Monday's episode. I'll see you then. Take care.

11:43Thank you.