Achieving Success With A Strong Recurring Revenue From A Subscription Business With Robert Skrob

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Getting people to notice your business and buy is one thing. Enticing them to make regular purchases is another. One can achieve a strong recurring revenue by starting a subscription business, but many are unaware of where and how to start such an endeavor. Mitch Russo talks with marketing expert Robert Skrob to discuss the best and most effective strategies to apply when building a subscription business. They detail the usual glaring mistakes done by entrepreneurs in this type of business, understand the motivation and interests of the target audience, and start engaging subscription offers in an already established company.

Achieving Success With A Strong Recurring Revenue From A Subscription Business With Robert Skrob

If you’re reading and have a business that’s in need of a little love, revenues and profits, I want you to grab my product. It’s called Profit Stacking Secrets. It started out several years ago as a new client assessment but it became more and more detailed as the years rolled forward. Hundreds of clients later, I’ve refined it to be what you need to grow quickly with little investment using strategy instead of cash. Go to ProfitStackingSecrets.com and get your copy. Onto my guest and his incredible story.

What would happen if you launched a membership program and a lot of wonderful people joined? What would happen if after they joined, everybody started to leave all that work and now nothing? That’s not the outcome you wanted but you’re not alone. My guest faces this issue every day and had struggled with it for years until he figured it out. After beginning his career as the leading membership growth expert for nonprofit and political organizations, in 2004, he cracked the code and pioneered monthly continuity subscriptions and subscription programs. His profound understanding of what members want from their membership relationship enables him to help others build connections with members that last for years. We have him to help you with your own membership program. If you have one or planning one, you are going to learn a lot. Take out your notepad and get ready for some breakthrough experiences. Welcome, Robert Skrob to the show.

Mitch, thank you for having me on the program. I’m honored.

This is an interesting niche which you selected. It’s narrow which I love because people would narrow initiatives find the right clients far easier than those who serve everybody. Tell us a little bit more about how this all began for you.

I built subscriptions and sold them. I had been working on subscriptions for years. After I had sold my company, I didn’t feel like checking my brokerage account balance and hitting refresh every day. I felt like I needed something else. I had a great background in the subscription business so I decided to specialize there. While it is narrow, I often struggle that it’s not narrow enough because what I’m doing, if you like follow me around on a day to day basis, I’m 50% marketing strategy, 50% copywriting. I’m creating onboarding emails, sales videos for subscription programs, sales email sequences and the rest is a marketing strategy. By focusing on subscriptions, I certainly have helped get a lot more leverage but at the same time, there are many subscriptions from SaaS to a subscription box to digital access to membership sites to associations. Each of them is in their own little silo and think that they’re different. In some ways, I wish I had niched even further.

Let’s go into that a little bit more deeply. You mentioned several categories. Subscription box was one of the ones you said. Tell us more about those categories and help us figure out where we might fit in with our own products or services.

Adding a subscription to a traditional business is a great way to create recurring revenue. Click To Tweet

Adding a subscription to a traditional business is a great way to create recurring revenue. Some of the types of subscriptions are if you have created accumulated content as part of your marketing campaigns to your customers, you created articles, you created podcasts, maybe you’ve done presentations, you could pull that content together. Similar to Netflix, that’s called digital access where you’ve got a group of content and you are allowing people to access that with a subscription. That’s one way. Another thing is a subscription box where the ideas, there’s a curated box of stuff whether it’s for runners. There’s a box for new moms. There’s a box for cosmetics that has makeup in it. There’s a fishermen box that has lures and things that fishermen might like.

There are about 5,000 different subscription boxes that are available. It’s a great way to generate increased sales because it helps customers become knowledgeable about what you have and the kinds of things that you offer. If you sell some fishing product, if you have even a few hundred people subscribing to your subscription box a month, that’s now a customer base you can sell your products to. Another silo would be consumables every month. There’s a famous Dollar Shave Club example where he created that irreverent video that people paid attention to. If you haven’t seen it, go into YouTube and see the Dollar Shave Club video.

He launched that business in a warehouse and he sold that to Unilever for a billion dollars. For your company, are there products that customers buy every single month or should they be buying? Can you package them into a consumable subscription where they pay once a year or once a month and they have that auto shipped to them? Another silo of the subscription business are publishers. Lots of newsletters, in-print magazines, certainly online media now are published ongoing periodicals of content that people pay attention to and subscribe to. Those are particularly profitable in a business niche. If you’re selling to customers of a particular type, maybe you’re selling to plumbers, then becoming a publisher to plumbers can be a great way to build a list of potential customers as well as build a media magazine that you can sell separate and apart from your distributing business.

Let’s take the example that is closest to my heart which are people who market information products. I have a show here. We have 250 episodes. I have hundreds of interviews I’ve conducted in written format. I have another 100 blog posts that I’ve written on spirituality, photography and mostly business. If I were to put those into a membership site and then offer it to my list, what are the chances people would say yes and want to buy that stuff? What is the motivation for somebody wanting to be part of a membership site like that?

Libraries of content are not particularly popular. You probably have a library there in your city. How often do you go to the library? The library is where homeless people hang out. It’s not doing much for them. For the sake of having, “We have all this stuff. Would you like it?” It’s not a great model. Even if you look at the advertising for Netflix or Prime, they will usually come out with a particular program that they’re promoting. The Netflix show, Hillbilly Elegy, was a huge best-selling book many years ago. Now, there are all these ads online and our billboards to go watch Hillbilly Elegy and you subscribe to the service and you go watch it.

Prime did this with The Marvelous Mrs. Maisel. Netflix has done it with Orange Is The New Black. For three years, you couldn’t go anywhere without seeing an Orange Is The New Black billboard. They promote a particular piece of content as the lever to get people to want to join the subscription. The other content that’s there is about retention. That’s the entertainment model. For business, I would focus on solving a particular problem. Looking at your piece of content that you have, similar to the product that you described at the top.

FTC Robert | Subscription Business
Subscription Business: Using subscriptions as an upsell to a frontend sale makes it easier to scale the business because the cost per acquisition and lifetime value of selling a subscription business on its own can be challenging.

 

For anybody who is a speaker or has an expertise, maybe they’re a consultant that can’t travel anymore, and now they want to take what they know and try to package it into a product that they can make available and get their best prospects on the phone, that program solves an important problem. A business mentor of mine named Bill Glazer, in about 2005 he’s like, “Most business people figure out how to go get a transaction. The smartest business people figure out how to make a sale that’s a series of transactions.” Rather than having that position as a one-off sale, how can we make that product a subscription where they are getting a package of services on an ongoing basis?

Bill is an incredible guy. I have spent some time with him. He’s awesome. Let’s take the example that you used which is my little giveaway called Profit Stacking Secrets. That’s a part of a much bigger library of marketing strategies which is the second sale. When someone gets and downloads for free the free publicity guide that I talked about, the next thing they get is a paid offer to buy the whole marketing guide and then an upsell to a spreadsheet system that tracks all of your activity and financials. It goes much deeper into many of the strategies that we talked about in the guide, but then it ends. At that point, the reason I do this and the purpose of me having created that was to queue people up who want to work with me as a one-on-one coach. How would I take that and turn it into a subscription business?

It’s common for people to have ongoing coaching where maybe it’s a group coaching call, where individuals that are looking to implement what you are delivering could get on a group call on a monthly basis and so that they can participate. The other would be a newsletter where you are coming out with new examples. Within your product, you have certain principles that you are presenting, that you’re helping them understand how business works, how publishing works and how podcasting works. It would make a lot of sense to have a subscription where they can get additional examples of that on an ongoing basis.

The secret is that most people focus on more teaching, “I need to give more lessons.” That’s what content is but as much content is helping inspire them that they believe that it’s possible to do this? That it’s impossible for them to accomplish this? That this is the right time for this activity? That you are the right guru in order to help them achieve this outcome? That other people like them are doing this? Those types of things are as much the content as a lesson of getting into one more little detailed nuance of how to make this work.

Readers, I bet you’re enjoying this because I know I am and it’s valuable to me. I’m hoping it is for you too. Robert, let’s go out of the box here. Let’s say I sell a product. There are 5,000 different product boxes out there. What happens if I sell a service? One of my client’s name of the company is Maxsold. What they do is they turn your home contents into cash when you’re downsizing or if a loved one passes away. It’s an incredible business. They do well, but once they make the sale, they clean out your home, they’re happy and you’re happy, what do they sell you next? Where do you see the possibility of some form of a subscription or a continued relationship with that individual customer?

For that particular one, you have to understand the customer a little bit better. This is somebody who has downsized or maybe they’ve even leave in this town and their parents have either moved on. Now, they’re no longer in the home and they’ve got to liquidate the contents and those individuals. Where I would be focused is what are the types of problems that a person faces? Maybe it is a subscription but it also can be other referrals. Maybe, at that point, where they’re dealing this, they need a different insurance person or accountant or maybe if they’re going from their own home into a nursing home, I would look at, “Maybe they need to protect their assets at this point.”

Subscriptions must focus on helping customers solve their problems. Click To Tweet

That would be the big thing. Also, I am not the biggest advocate that there is a subscription for every business. I’m more of after somebody creates a subscription, how to make it work sort of person because I don’t know that there’s a subscription in every case. For instance, cosmetic dentistry, those are often $25,000 cases in order to do some cosmetic work. In that case, it would be a better time served going and getting the next $25,000 case rather than trying to sign up a portion of the customers into a $99 a month subscription program. It certainly works in some models. I’m not sure it works everywhere but where I would focus on is what are the problems that the customer has that we can help solve.

I like the idea that you’re making it clear that it doesn’t solve every problem. It’s not for every customer, not for every business. However, the thing that you talk about is one of the things that I am a big fan of and I talk about all the time with clients and when I present and that is, “Never sell anything unless you know what you’re going to sell next.” Many people have this entrepreneurial orgasm and it’s gone. Now, “What do we do next?” That’s not useful. That’s fine. It’s better than nothing, but we got to follow it up with, think about the person who bought your product. What did they experience? How did they feel after receiving the benefit? Now, what are they ready for next? That’s the way I think about queuing up the next sale. That’s why I’m interested in speaking with you about this because our subscription is much a possibility of the next sale if it fits the model as you described.

That’s where subscriptions are even more powerful. There’s been a rush to the subscription economy. There’s been a lot of promotion of subscriptions as a superior business model. There are a lot of people are in this subscription-only business. Using subscription as a backend or as an upsell to a frontend sale makes it a lot easier to scale the business because the cost per acquisition and lifetime value of selling a subscription business on its own can be challenging.

What are the mistakes that you see when people begin either a membership site or a subscription type of business? What do you think are some of the glaring mistakes that most people don’t realize they’re making?

The biggest mistake is focusing on the product. The SaaS companies go out and they want to work hard on their software and they’ve got this development timeline of when new features are going to come out trying to wow their customers. Publishers are out there trying to make their content amazing that somebody won’t want to quit. You then got like the digital access. Netflix is spending hundreds of millions of dollars in creating new content. That’s one of the first mistakes is that customers want to be part of a movement. They want to be heard. They want to have a solution to a problem and flooding them with more new stuff isn’t necessarily the solution. I can’t tell you how much time I spend looking at Netflix trying to go from thumbnail to thumbnail to figure out what I might want to watch.

It’s easier when you turned on and had three choices of what was on now versus 1,000 different little thumbnails. More content isn’t the solution. Number two is they focus also on new subscribers that they want growth. In the beginning, you can get a lot of growth over the first year or two with new subscribers. You can’t grow without getting new subscribers, but you can never outrun your turn rate and subscription businesses get to a point where their growth plateaus. I call it a subscription growth ceiling because they’ve only focused on acquiring new customers and they haven’t figured out that their churn rate every month they acquire new customers, they speed up the rate at which they lose customers. Those are the two key mistakes that I see over and over again.

FTC Robert | Subscription Business
Subscription Business: When you’re selling a piece of software, you aren’t only delivering software with features, but you’re also delivering a system.

 

You need to balance acquiring new customers with keeping your existing customers. That’s logical. That makes sense. I love the example you gave because I come from the software industry. I’m still in the software industry and as a creator, as an investor and I’m running another software company too. The question I have is this obsession that I have had most of my life with the product. I fall in love with my products. I am guilty. I pour so much love into the product. The product becomes amazing, it takes a couple of iterations but the product is great and then we face what’s inevitable for many companies which is, “We had a fantastic experience. We launched this product. Now, what do we do? What do we follow this up with?”

That’s part of why I created the certification business with my Power Tribes System because I know that once people a product that is fantastic, generally, instead of creating a new product, why not create more sales for the existing product using a free Salesforce as opposed to being heavily reinvested in another completely different niche product. With a SaaS company, what are the key elements of a subscription business when you have a functional product that is already working in the marketplace?

That product is built upon a system. I don’t mean the system is in the software you chose to do or the platform, but there was a certain process. When you’re selling a piece of software, you aren’t only delivering software with features but you’re also delivering a system. Before Microsoft Word, you had a typewriter. That system had a piece of paper, you rolled it on the platen and you started typing. Now, we’ve got to teach people that instead of a paper and instead of typing it instantly, you’re going to type it onto this screen and then you’re going to be able to print it out. That’s going to be more efficient. Instead of seeing the words be typed, as you press the key, it’s going to come later and it’s going to be better because you can correct mistakes and you can bold. You can make a lot of revisions to the document before you print it.

There’s this whole philosophy of Microsoft Word versus the typewriter. That’s the same thing. If you’re selling Evernote, this software system that helps you keep track of notes on your phone and it makes notes available on all your different desktops. There’s a philosophy to how to use Evernote and having checklists repopulated and why that’s more efficient thinking in advance of the checklist you want to create and how often you want those checklists to be prompted to you that is a system. What SaaS developers fail to do is they fail to teach the system thinking that underpinned the software. Usually, somebody had some process that they were using in order to accomplish a solution to a problem.

They automated that process by using software and they said, “Everybody would love to have this.” They made the software available without teaching the system thinking and the system process that was behind that actual software that was created. You’ve got to take a couple of steps back because every piece of software was created to solve a particular problem. There has to be a step of what is this system process that now has been automated, that this software helps to implement. You can go deep in that for a long time. It’s a lot cheaper than our developers.

Readers, we are talking to the amazing Robert Skrob. He is an expert at subscription and membership businesses. He is sharing jewels. He is littering the stage with golden jewels. Robert, I think I need to go get a glass of scotch here and chill out because I am grateful to you for sharing this incredible wisdom with me and the readers. I have to give a plug out there to anybody who is not doing a show. This is what you’re missing out on. I get to speak to experts like Robert every day, sometimes 3 or 4 times a week, and become smarter by interviewing these people. You should do the same thing.

Many of us put dogma ahead of the actual results that we're trying to achieve. Click To Tweet

The guide that we send you called Profit Stacking Secrets is going to show you how to get on shows and even how to host your own. Robert, you have covered more incredible material here. At this point, I want to ask you a couple of questions and these are the same questions I ask all my guests and I love the answers. No one answers the same way any one time. Here’s the first question, who in all of space and time would you like to have one hour to enjoy a walk in the park, a quick lunch or an intense conversation with?

I would be fascinated to be able to spend time with Krishnamurti. He was a spiritual leader. He passed away in the 1980s. He was born in India and the people around him identified him as somebody special that they created a church for him. About the time when he was old enough to take over the church, they were having the big reveal of what this was going to be all about. At the big reveal, he gave a big speech in front of everybody that said, “I’m hereby disbanding the church because the moment that you listen to me, you’re not focused on the real path. What you must do instead is to find the path within you, follow it and not listen to a guru or not listen to a particular script or a path. What you’re seeing, it’s that old Buddhist thing is when the finger is pointed to the moon, a lot of people can focus on the finger rather than the moon, which is where you’re going.” That was one of the big precepts of Krishnamurti was that you don’t focus on the dogma. Many of us put dogma ahead of the actual results that we’re trying to achieve. I think he would be a fascinating person. He passed many years ago. There are lots of videos on YouTube and certainly several books, one of which I read every day. It would be amazing to be able to spend some time with him.

I didn’t know him, but I had heard the name before. One of the people that I’ve admired and I’ve read some of his books is a gentleman named Yongey Mingyur Rinpoche. He wrote a book called In Love with the World: A Monk’s Journey Through the Bardos of Living and Dying. I was on my way to Myanmar and had about 30 hours of flight time. I had that book on my Kindle. Kindle has this feature where you could electronically highlight words and phrases. I would use that occasionally. by the time that trip ended, I had almost 200 phrases that I had highlighted.

In Myanmar, I photographed over 100 different Buddhists. I said to myself, “I wonder why I’m doing this. I’m fascinated by these beautiful Buddhists.” It was only when I came back that I realized, “I could pair the quotes from the book with the pictures.” I created a social media series for fun. It was wonderful. To this day, they keep circulating and I keep seeing them over again, which is that wonderful reminder of the wisdom that he shared with the world as well. Thank you for sharing that with Krishnamurti. Now, we get to the last question in my series. The other thing about this is that in most cases, I always know the answer, but I don’t know if I do in your case. Let me ask the question and see what happens. This is called the change the world question. What is it that you were doing or would like to do that truly has the potential to change the world?

I focus on building subscription businesses in a way that helps people set goals and make incremental steps to accomplishing them. I do that because it improves retention. You’re helping people by helping them grow and solve problems in their lives. What I’ve wrapped that all under is I help you build your subscription program by building people up rather than leading by fear and tearing them down. There is so much in our culture now that is about putting people in fear and trying to keep them there in order to control their lives or more than anything, to get their vote or to get their business so that they’ll buy their product instead of the competitor. There is so much leading by fear out there.

What I found is that it’s much more effective particularly in the long-term instead to lead by hope and you can’t lead on hope very long without delivering on it. The nice thing about leading by fear is if the supposed thing that you’re creating fear about doesn’t come, that makes you all the more ominous because it’s even that much more eminent because now we’re due. Whereas on hope, you got to deliver and you got to help them make incremental changes but when you do, it’s an amazing differentiator and it helps you build a community that you’d like to live in with people that appreciate what you’ve been able to accomplish for them. It’s not what I lead with but that’s what’s behind everything I’m doing is teaching people to lead with hope instead of lead with fear.

FTC Robert | Subscription Business
Subscription Business: You can’t grow without getting new subscribers, but you can never outrun your turn rate.

 

I wish you were an advisor to our political parties because they seem to be doing the latter than the former. It’s a great mission and I’m on it with you as well. I resist any fear-based dogma or propaganda because I know where it’s coming from and what it’s for. As you said, it’s a matter of control. It’s much easier to control people when they’re in fear.

It’s a distraction too because we’re talking about these fearful outcomes, we’re not debating policy around things. It’s easier to get people stirred up about some scary thing than it is to have a real conversation about important topics.

It’s almost the basis of most religions, if not all religions. It’s, “If you don’t become a member of our organization then you are doomed to burn in whatever it may be.” It is, unfortunately, part of the way we’ve been taught others lead. That’s a bad thing. I’m glad that you’re changing that paradigm. I promised the readers that you have a free gift. Now you got to deliver, Robert. What do you got for us?

Anybody that has a subscription business or even wants to know more about the subscription business, there are series of three videos that I’ve created that gets into the detail of how to acquire customers, how to increase customer lifetime value and grow a subscription business. The website address is 10XSubscriptionGrowth.com. You’ll see a series of videos where I break down the major problems that subscription businesses face and how to solve them. One of the key things is fixing 90-day retention within a subscription business. There’s a key opportunity to take if want more information about how to improve retention and there’s a program there to be able to help accelerate that. The videos are free. You can check it out and there’s a lot there.

Besides the fact that you’re offering an incredibly generous gift, most people like you and me have some expertise and we say, “We’re going to provide this for free.” For us, it feels like it’s fine. It doesn’t mean much. It’s no big deal, but the value and the years, the decades spent learning what you learned and making the mistakes you made are all inside of the stuff you give away for free. The reason I’m mentioning this is because there’s an immense value in finding the right people to follow and consume their content from. I believe Robert you’re one of those people. Readers, I highly suggest you go over to 10XSubscriptionGrowth.com and watch those videos and let me know if you are inspired by those videos. I think you will be. Robert, thank you for this incredible performance and our session now was wonderful. Thank you for all the free coaching. I loved it.

It was my honor. I can’t wait until next time. Thank you, Mitch.

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