Membership Economy Expert Robbie Baxter: How to Build a Profitable Subscription Business

0:00What's going to keep them paying month after month, year after year? Well, you don't even have a subscription offering to price. Robbie Kelman Baxter, amazing author and genius at subscriptions and membership. The genius of the forever transaction. Forever promise is actually what your customers say about you. If you want to have a subscription really work, the core of it is trust. We got to almost rethink the business in order to be able to offer that. When somebody comes to you for that short-term goal, how do you establish habits with them so that they keep coming back? When we talk success here on the Big Success Podcast, I like to start by asking, what is success to you?

0:38How do you define success? Success is achieving my goals and living the life that I hoped for. And how does that play out on a day-to-day or week-to-week for you? I'm a very analytical person, and so I'm constantly re-evaluating. I'm constantly looking at what is it that's most important to me? And am I focusing the right level of energy on those areas to achieve what's going to make me happy? What's going to make me feel successful? And so in my case, I feel like I have a checklist in my head all the time saying, you know, are you putting enough time here? Are you putting enough time there? And then I have to remind myself, set that aside.

1:16And, you know, you have time to go through that and reevaluate, but you've done this already and you're in good shape. What's your theory on how success happens? Or what's your formula? What's your methodology for that? For me, it's always been think about where you're going and then work your way backwards. How do you learn from your mistakes? Most of the time, you're still alive after the failure. You can pick yourself up and dust yourself off and move ahead. The other thing is that a lot of times when you fail, it helps you understand yourself a little bit better. I think that kind of reflection is a really good teacher.

1:49Let's think about success overall. What do you think is the difference between someone who does succeed and someone who doesn't? I think part of the difference between a success and not having as great a success is luck. I also think it's about consistency and about focus and about clarity of where you're going. How do people succeed at transitioning or even creating a membership in their business? If you want your customers to behave like members, meaning that they come to you first, that they trust you, if you want to earn that kind of relationship, you have to deliver on an ongoing goal or an ongoing problem that needs to be solved for that customer.

2:32What are the top two or three things we need to think about in structuring our product or our service to be membership oriented, to price it, to get it right for that? One way of thinking about the product itself is what are the acquisition benefits and what are the engagement benefits? So what's the reason someone joins? Oh, I joined to take your course, right? You can only take the course if you're a member of the organization. But why do you stay? I stay because these are my people. I stay for the community. Understanding that, which requires understanding the journey that the member's on and thinking about not just that acquisition benefit that gets them to sign up, but what's going to keep them paying month after month, year after year?

3:12What are the ongoing benefits? In the middle of that is onboarding, which is really about when somebody comes to you for that short-term goal, right? That short-term pain point, how do you establish habits with them so that they keep coming back? If you sign up for Disney Plus because you want to watch Hamilton with your family, it's up to Disney Plus to surface other programming for you. And ideally, you know, get the password to your kids so that, you know, you can never cancel because they're watching their, you know, Star Wars or their princess movies or their National Geographic specials.

3:47That little piece, that onboarding piece makes the biggest difference in retention. Retention is really about how you onboard them so that they don't want to leave. What are some of the keys that people have to understand to build a subscription-based business? Subscription is just a pricing decision, right? Without a membership mindset, regardless of what industry you're in, if you aren't thinking of your customer like a member and optimizing for their goals on an ongoing basis, you're never going to justify subscription pricing. So if you want subscription pricing, which everybody wants, because we all know when you sell your business, you get a higher valuation if your revenue is recurring.

4:27And so everybody wants subscription revenue, but I have, I get people calling me all the time for consulting, you know, advice saying, Hey, we just want to get some subscription revenue so that we can get a higher valuation. How do we do that? What should be our price? Right. And it's like, well, you don't even have a subscription offering to price. And those things really, really go hand in hand. And so, you know, if I have a wedding dress business, right. And all I do is sell wedding dresses. It's going to be very hard for me to have a subscription unless I create some other offerings, like helping you have a successful wedding, which might have a subscription for a year or two, or helping you have a successful marriage, which might have a longer runway.

5:06But helping you get a wedding dress is a very, you know, hopefully for most people, it's a finite, you know, one-time deal. Does not merit, you know, a subscription. And so, you know, if you're in the wedding dress business and you want subscription revenue, you're going to have to think more broadly, what is the bigger issue that brought this person to my store? And how can I build around that. So let's talk about that forever transaction. How do we get that level of engagement and retention with members? First, the things that we described, right? What is that forever promise that you're making to them that justifies their loyalty?

5:40If you want to have this subscription really work, the core of it is trust. If you're thinking about a subscription for your members, for your best customers, you have to be trustworthy. You've consulted with some amazing memberships that have scaled dramatically and worked with some that have scaled dramatic. What have been the keys to scaling those memberships and going massive with them, not just the big ones, but the massive ones? Two big things, systems and culture. When you're starting a membership, when you're starting anything, the skills that you need, you need to be entrepreneurial, you need to be scrappy, You need to be thick skinned and resilient.

6:20You need to turn on a dime, all of that until you kind of get product market fit and you start seeing evidence that the membership is working. And at that point, when it's time to scale, you need different skills. If you don't have the right team and you don't have the right mindset for that, it's very hard. And I think a lot of entrepreneurs, honestly, they find that part of the job really boring. They'll say, oh, you know, I don't like that day to day when everything is the same. But that is exactly what it takes to scale. It's consistency and, you know, it's structure. So that's what I would say is, you know, know the right time to move to that phase.

7:00Yeah, I guess when you're surrounded by those big thinkers, it's easy to think big. And a lot of people aren't surrounded by them though. So what might they do to get themselves into that massive thinking? Having a mission is sometimes an easy way to kind of backdoor into vision. So it's like, think about what can you really do for the world? And then you go all the way back and say, what are the first three steps to get there? I always think about learning and leverage goals. So learning goal is, what do I need to learn so that I'm confident enough to have a bigger vision? And that's a big success podcast for today.

7:33Hopefully you took a lot of notes, learned a whole bunch. And if you need to go re-listen to it, we dropped a lot of information right there today. Big success is what it's all about. And by the way, if you haven't subscribed, hit that subscribe button so you're here with us every single week on the Big Success Podcast. I'm Brad Sugars. That's BS. Big success is what we're shooting for. Check the show notes for all the links. Make sure you follow through. Keep learning. Keep coming back. Oh, and by the way, share this with any of your friends who you know are up for success. I'll see you next week on the Big Success Podcast.

8:06You've been listening to the Big Success Podcast with the number one business coach in the world, Brad Sugars. To learn more about how to achieve business and personal success, as well as how to level up or listen to past episodes, visit www.bradsugars.com.