Episode 48: On the Growth of the Subscription Industry with Robbie Kellman Baxter, Founder of Peninsula Strategies LLC

In this week’s episode of Subscriptions: Scaled, we discuss the subscription industry with Robbie Kellman Baxter, founder of Peninsula Strategies LLC and author of The Membership Economy.

In the episode, we learn everything from how the subscription industry has changed over the years to best practices for developing a subscription model.

Keep reading to learn all about the subscription industry, plus a whole lot more.

Who is Robbie Kellman Baxter?

Robbie is an industry expert, speaker, author, and consultant on subscriptions. 

She brings over 20 years of strategy consulting and marketing experience to her strategy consulting firm, Peninsula Strategies. With the firm, she helps brands with subscription pricing, digital community, and freemium to build deeper relationships with customers. 

Robbie’s clients have included industry leaders like Netflix, Oracle, Electronic Arts, and eBay. Robbie also works with start-ups and mid-sized venture-backed companies.

Throughout the episode, we learn about Robbie’s experience in the sector. She also shares her advice for brands currently using or those hoping to use a subscription model.

Why are subscriptions relevant today?

The episode begins with Robbie sharing why she believes subscriptions are so relevant today. She also discusses why many businesses are deciding to turn to subscriptions. 

Robbie explains that subscriptions have been around forever. Even Charles Dickens wrote his books with a subscription model!

What keeps subscription models popular is their recurring revenue. They also help brands get closer to the customer. Many consumers stop considering alternatives and start behaving like a member where they trust a brand to solve an ongoing problem.

The combination of recurring revenue and customer loyalty is very powerful for a company.

Subscription technology

Robbie also talks about the growth of subscription technology.

She discusses how the subscription industry has changed over the past five to ten years, and how she believes that there’s been a gold rush mentality to subscription technology. She also explains that thanks to new technology, creating a subscription model is now easier than ever.

She explains that technology is extending the infrastructure that enables trusted relationships. Now, it’s easier for an organization to build and implement a subscription without creating all the technology from scratch, like brands used to have to do.

Today, both public and private markets have higher subscription revenue than transactional revenue.

The growth of the subscription industry

When Robbie first started working in the subscription industry, she saw how powerful these could be in building deeper relationships with customers. But when she spoke to companies, many didn’t necessarily see themselves following the subscription trend.

Robbie believes this was partly because it used to be challenging to create a subscription model, mainly due to the lack of technology developed for the industry.

In the past, Robbie felt she had to explain the benefits of subscription models to businesses. But today, she doesn’t have to explain it to anybody anymore. Everyone wants subscription revenue, and it feels almost easy for them to get it. Many businesses simply package the services they already have as a subscription.

Advice for businesses starting a subscription

Throughout the episode, Robbie advises businesses on the best practices for creating a subscription model. She also discusses the different types of subscriptions available, including models she doesn’t believe work particularly well.

Robbie advises organizations to start simple early on. She suggests they think about the path that their customer is going to take — and more importantly, the journey they want to take their customers on. Then they should consider some of the different behaviors or decisions that they, as a brand, may make down the road.

Robbie thinks of developing a subscription in three stages: launch, scale, and lead. 

When organizations are in the launch phase, they often create their subscription with what they already have and fill in the gaps.

Then the more they develop the service, the more they figure out what works and the model people like. She explains that throughout the process, it’s often different teams that are working at different stages.

Robbie notes that she sees many companies developing a subscription with a lack of metrics. She says it’s important to track metrics to register behaviors in customers. For example, there could be a team responsible for acquisition and another in charge of retention.

She shares that she worked with one company where the acquisition team had great numbers while the retention team did a terrible job. They invited the entire team into one room, including the tech, product, acquisition, content, and retention teams, to discuss.

When the whole team could discuss the problem and align together, it made the team stronger. They could then move on to improve their subscription. 

Robbie explains that when there’s a problem in one area of the company, it’s a problem with the whole company. 

When you’re trying to build a subscription model, keeping customers happy is especially important because you’re trying to build a strong and healthy ongoing relationship. The customer expects you to understand and recognize them.

Subscription fatigue

Robbie also discusses subscription fatigue. This refers to the potential of consumers becoming tired of signing up for subscriptions.

One of the biggest reasons for subscription fatigue is a lack of product-market fit. Some people require a one-time need to use something and may not want to feel forced to subscribe for ongoing sales.

Another contribution to subscription fatigue is hiding the cancel button.

Robbie shares that there was a time when she’d explain to others that she was in the subscription business, and their eyes would glaze over because it wasn’t relevant to them.

She explains that now people want to share their horror stories with her. Many people have experiences of signing up for a service, then being unable to cancel their subscription. They ended up getting charged for something they did not want, which obviously leads to distaste for the brand.

Everybody seems to have a bad story, and that’s due to the poor subscription models out there.

These models aren’t there to necessarily build ongoing relationships, but to lock customers into a subscription they don’t need. Or, even if the subscription is the right path for customers, companies make it challenging for them to leave.

These types of models contribute to subscription fatigue.

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