A crisis like the current pandemic is a time when customers have a break in habits (so they might pick a up a new one), when some content areas like sports and entertainment have disappeared (so the newsroom must be more creative than usual), when consumers are being careful with their money (so providing a valuable product is vital), and when readers are looking for information and relationships they can trust (so be both).
Strategy consultant Robbie Kellman Baxter has spent the past decade at the centre of the subscription and membership revolution that has transformed news media companies. Known for her work on “the membership economy,” a new book by Baxter called The Forever Transaction looks at how to build long-term relationships with customers.
In an exclusive INMA Webinar on Wednesday, Baxter presented to members about how leading companies like Microsoft and Netflix have created an ever-expanding customer base of loyal subscribers — and kept them coming back. INMA is one of the first organisations worldwide to learn about the book’s findings since its release.
Baxter opened the Webinar by saying the talk was not the one she planned to give. When she first committed to the presentation based on her new book, she planned it to be something of a celebration of new ideas. The current situation with the COVID-19 epidemic may have dimmed the celebratory nature, but Baxter said that, in fact, the tactical information presented in The Forever Transaction is actually quite applicable to this moment in time.
“Keeping customers forever has never been more important and has never felt more challenging,” she said.
With people so uncertain about what the future holds, they are holding back more as consumers, which presents a challenge for almost all industries — including media.
“I’m going to talk about the book, but I’m also going to share some thoughts that are particularly relevant to the situation right now,” she told INMA members.
New world = new challenges
With new social distancing in place, content is more important than ever, for both news and connection, Baxter said.
“What I want to focus on is that it’s not just about the articles, it’s about what the content does for the recipient,” she said. “It’s about providing them with information, but also inspiration and connection.”
While some content areas have temporarily gone away, such as live entertainment and sporting events, other areas present new opportunities for publishers to reach and engage with their subscribers. News — along with other business sectors such as gaming, streaming TV and movies, etc. — is experiencing a spike in customers.
This potential new audience comes with a lot of change, and publishers need agility when addressing it, Baxter said.
“We’re all trying to navigate this new reality, with rules that seem to be changing every half day. The bad news is bad ... people are trying to understand what’s happening and what’s going to happen. People are cancelling non-essential spending, even when their income is steady.”
But there’s a lot of good news, too, Baxter added: “Consumers accept the subscription model. There’s tremendous potential right now to take a step back, think about what you can do differently right now to help your members, community, and future members.”
Times of crisis are also great moments for creativity, she pointed out. The constraints publishers are facing right now are prompting new ways of creating value for their customers.
It’s also important to remember that in times of crisis, people are more vulnerable. “They’re more willing to build and accelerate relationships with organisations. Consumers are looking for organisations they can trust, and they’re quick to make decisions.”
Consumers’ habits are also interrupted, which means they are looking for new ways of doing things. Once someone has formed a habit, it can be hard to get them to try something new. But during a time of crisis, that acquisition through interruption of habit to create new habits becomes easier.
“It’s also a moment when existing customers are willing to try different features,” Baxter said. Whether that is moving from print to digital or engaging in communities, this is a good opportunity for publishers to bring existing subscribers into new offerings.
“Consumers are actually trying new ways of engaging with companies that they trust and know. So you have a moment right now to move the needle a lot — both in terms of new features on your existing offerings — and to bring in new people who may not have considered you as an alternative.”
The forever promise
At the heart of Baxter’s books is the concept of a “forever promise.” This is the reason that justifies your subscription, built largely on trust and value.
Some potential forever promises might be:
- To deliver factual news.
- To help you understand the world around you.
- To provide news worth paying for.
The way a news publisher delivers on those promises might change throughout the years (print, digital, podcasts, etc.), but the promise remains the same.
“Now is a really good time to take a step back and ask, what is that promise? What tools do I have at my disposal to deliver on that promise? And what are the best ways I can deliver right now?”
This is a moment in time when customers are really looking for assurances and for companies to light the way for them, she said. “There’s never been a time when people are more worried about the future, and need someone to be a guide to lead the way.”
The membership economy
Baxter’s first book, written about five years ago, came because at the time, people weren’t seeing the value of what was happening with companies like Netflix and Spotify.
Those membership business models were built on subscriptions, and putting customers at the heart of everything the company does. The same principles can apply to any business of any size or age, but a company must continually evolve the offering to stay relevant.
“Out of that came The Forever Transaction,” Baxter said. “I wrote the second book because five years ago, people didn’t understand the value of the concept. Today, everyone knows the value of subscription.”
Subscriptions are everywhere these days. Why? Because the model works. Baxter described it as the “holy grail” of revenue. “Subscriptions are simply a more resilient business model than a standard transactional one.”
The challenges companies are finding, however, is that putting a subscription model on the same old product doesn’t work.
“You need to change the product itself,” she said. “In the case of news, that’s about the kind of content that drives subscription, versus the content that drives readers, eyeballs, and volume. It’s a very different kind of model.”
The Forever Transaction is a how-to book that teaches how to launch, scale, and lead in the membership economy in a very tactical way. Because subscriptions are so prevalent and such big business now, consumers have a high level of sophistication and experience with them — and therefore high expectations.
How to launch, scale, and lead in the membership economy
There are a number of different activities that should be conducted in the three distinct phases of a membership or subscription business.
Stage one: Launch
- Gather resources (people, money, time, and support).
- Set expectations and build support
- Define a forever promise.
- Identify your best member.
- Find a product and market fit.
Stage two: Scale
- Transform culture.
- Build infrastructure.
- Define pricing and metrics.
- Continually evolve the offering.
- Consider the occasional acquisition.
Stage three: Lead
- Resist shortcuts.
- Stay forever young.
- Inoculate yourself against subscription fatigue.
- Keep a global perspective.
- Use your microscope and your telescope.
Because many news organisations are at the third stage of subscriptions, the “lead” phase would be the one she would focus on, Baxter said.
“Organisations that have been leading for a long time are almost the victims of their own success. You bring in new members, they become very loyal, you learn what they like, and you stick with that.” She called that looking with a microscope.
Those existing members/subscribers have established a habit and are unlikely to be comparing a company’s offerings with others on the marketplace. However, when it comes to prospective subscribers, that’s a different story.
“They’re looking for lots of different alternatives. They’re looking with a telescope to see all of the different opportunities available to them to solve their problem.” This creates a large comparison and competition that publishers face when trying to attract new subscribers.
“It’s very important to balance acquisition with engagement and retention,” Baxter continued.
Customer product/market fit
Next, Baxter broke down seven key elements news publishers could tinker with to create better engagement among existing customers. They should take a close look at product/market fit and optimise their offering for the people they’re trying to serve.
- Organisation. The entire organisation must be working toward the same metrics.
- Onboarding. Show new subscribers why they want to stay, reinforce their decision, give them value, expose them to all your offerings, and help create new habits.
- Customer success. Don’t focus on new customers to the detriment of valuing and addressing existing customers.
“Right now is an opportunity to make an investment in onboarding all the new members that are coming in,” Baxter said. “It’s not enough to wait until your customer has a problem and complains. It’s not enough to wait until they cancel. You want to be proactively ensuring that they are getting the value that they pay for throughout the lifetime of the relationship.”
This too shall pass
Things always move forward, and the COVID-19 pandemic is no different.
“You want to start with a vision of where you want to end up when things move to the new normal,” Baxter said. Think about the opportunity right now of how to serve your best members, deepen the relationship, and identify trigger benefits to drive engagement with tomorrow’s members.
She encouraged INMA members to look both with their microscope, at current customers and product offerings, as well as their telescope, to look out at what’s coming over the horizon and future opportunities.
“You have a moment right now to change the behaviour of long-time subscribers and to gain trial and engagement from new visitors,” Baxter said. “Look at the tools and models that are available that you might use right now to better help your subscribers achieve their goals and mitigate their problems. Use the goals and ambitions of your members as your North Star.”
The secret to the forever transaction, she concluded, is that a company has to love its customers and their mission — not just the company’s own product, people, and processes.
“Now is the best time, if you have any resources to invest, to invest in relationships and in building trust with today’s members and tomorrow’s as well.”
Baxter offered several freebies to INMA members, including the slides from the presentation, membership manifesto, and sample chapters from the book. These can be obtained at robbiekellmanbaxter.com/audience.
INMA: What is your advice for publishers that haven’t introduced a subscription model yet? Is now a good time to introduce it?
Baxter: This can be a rough time to introduce a paywall. There are exceptions. If you have really unique and insightful content for a specific audience that has the ability to pay, this might be an OK time to introduce the pricing. It’s also potentially a good time to see if your content is indeed worth paying for. The risk right now is the perception of taking advantage of the customers. It’s not like people aren’t able or willing to pay, but it depends on what you’re trying to accomplish. If this is the first time you’re introducing it, this may not be the best time.
INMA: Is there an optimal frequency to communicate during onboarding?
Baxter: I’ve seen a lot of organisations do once a day, for the first week or so. I think a lot of this can also be signposting in the product itself. You can onboard through e-mails but also by making discovery within the product. Thinking about how people are exposed to content is as important as the content itself.
INMA: In the newspaper subscription model, do you have any thoughts on how you can balance the loss of print newspaper with the sales of digital subscriptions?
Baxter: From a news organisation’s perspective, there are real legacy costs associated with having print capability. From a consumer perspective, they may actually find the digital one more valuable, but they may or may not be willing to pay for it. However, you may still have these legacy costs.
You have to come up with value that the consumer finds worth paying for. It’s dangerous to just say, “We’re going to charge the same thing.” The best thing you can do is focus on the value you’re providing. If you create high enough value, people will pay for it.
INMA: If we are looking at building retention for digital customers, what are some of the things we should be looking at?
Baxter: The first thing is how they’re accessing your content, through Web interface or the app. With a digital experience, you’re much more able to track how they use your product. What is the first thing that your best members do when they download your app? You want to understand what are the leading indicators of cancellation and have interventions as early as you can.