Robbie Kellman Baxter, founder of Peninsula Strategies, is a strategy and marketing expert with more than two decades of experience and an extensive list of blue chip clients. She is also a sought after keynote speaker and author of the bestselling book, The Membership Economy (which we interviewed her about in a previous podcast episode), as well as the recently released, The Forever Transaction: How to Build a Subscription Model So Compelling, Your Customers Will Never Want to Leave.
In this episode of the Leading Learning Podcast, Robbie is back to discuss what has changed since her last book related to the membership economy and key concepts behind her new book related to building forever transactions. She and Jeff explore ideas related to launching, scaling, and leading a membership-oriented business over time, as well as her thoughts on pricing and the powerful relationship between community and subscription.
To tune in, just click below. To make sure you catch all of the future episodes, be sure to subscribe by RSS, Apple Podcasts, Spotify, Stitcher Radio, iHeartRadio, PodBean, or any podcatcher service you may use (e.g., Overcast). And, if you like the podcast, be sure to give it a tweet!
Listen to the Show
Read the Show Notes
[00:18] – A preview of what will be covered in this episode where Jeff interviews Robbie Kellman Baxter, author of The Forever Transaction: How to Build a Subscription Model So Compelling, Your Customers Will Never Want to Leave.
[02:01] – You might consider the reflection questions below on your own after listening to an episode, and/or you might pull the team together, using part or all of the podcast episode for a group discussion.
- At the heart of the “forever transaction” concept is the “forever promise.” As you are listening, put some focused thought into what your forever promise is. What is it your members or customers really wish you would do—and keep doing—and are you using the right “headline benefits” to attract those people to you?
- As we discuss the Scale and Lead sections of the book, we focus in on LinkedIn as an example. Take some time to really study how LinkedIn works and then ask: what lessons from LinkedIn’s model can we apply to our learning business?
[03:14] – Introduction to Robbie and some additional information about her background and work.
The Membership Economy
[05:17] –The membership economy you refer to (and also wrote about) is more than just a business model, it’s a whole economy. Can you give an overview of why we are now in a period where membership is such an integral part of business and really represents an economy?
Robbie highlights that we’ve always wanted connection, which is basic human nature. She refers to Maslow who said that once our basic physiological needs are met, we want to reduce risk, increase our sense of belonging, be held in high regard by our peers and recognized for our contributions. And ultimately, we want to be freed from those more mundane tasks so that we can achieve our full potential.
So what better way to relieve people from their more mundane tasks than by promising them that you’re going to handle those problems or challenges for them on an ongoing basis.
And a business model that has “forever” in it and that treats the customers as members—known entities that are engaged for the long term and to whom you have a higher obligation of trust—is going to change the kind of relationship. And it’s the kind of relationship that human beings want.
So being known, being recognized, and having our needs met on an ongoing basis and the kind of trust that’s required for that kind of ongoing relationship.
Robbie points out this is why we like it as consumers but that businesses like it because of the recurring revenue, the predictability, and the ability to gather data. And the reason it’s happening right now, when both sides would have always wanted it, is because there’s an enabling infrastructure now—there’s technology that enables these kinds of trusted relationships digitally. (See, for example, our Learning Revolution post on membership site platforms.)
There’s also an understanding and acceptance in the market of recurring revenue payments, which has created an explosion in how companies are connecting with the people they serve, how associations are rethinking their models, and what the expectations are in the market. Robbie says it’s just a whole new way of thinking about your business.
[08:42] – I’m assuming since your first book, The Membership Economy came out, you’ve probably seen a lot of growth out there. I’m wondering if that’s true and also what are some examples of companies or organizations who are doing this really well?
Robbie shares that she’s been focused in this space for about 17 years and The Membership Economy came out about five years ago in 2015. And she wrote it because even though she was seeing similarities across all of her clients (regardless of their industry) in terms of the value and power of subscription pricing, and the opportunities afforded by a freemium model, executives and entrepreneurs didn’t see how this applied to their businesses.
She wrote the book to explain that this is for everybody—any business, any organization that is trying to build an ongoing relationship, and any business where the customer has choices.
But five years later, Robbie says we are in a totally different world. Every single company, association, non-profit, small business owner, solopreneur, thought leader, and subject matter expert is trying to figure out how to build a forever transaction with their customers, how to get subscription revenue, how to build community—and everyone is trying to figure this out.
Her new book, The Forever Transaction, is about how to do this and it really goes into the trenches. Versus the first book, which was much more about setting the stage and explaining what was happening.
The Forever Promise
[11:18] – You chunk the book into three major parts: launch, scale, and lead. At the core of the launch area is the idea of the “forever promise”. Can you talk a little bit about what that forever promise means and how everyone should be going about figuring out this forever promise that’s going to be at the core at the forever transaction?
Robbie starts by defining the forever promise as the underlying commitment that an organization makes to the people they serve on an ongoing basis.
As an example of a mission-driven organization, for almost every professional association, she says the forever promise is to help you thrive in this profession throughout your career and to protect the health of the profession.
In contrast, Robbie points out there are a lot of businesses that are much more transactional and don’t really have a forever promise.
For these organizations, Robbie advises to take a step back and look at what it is your members wish you would do. She shares an example of a company who sells soap to illustrate how looking at why people buy soap helps you see other opportunities to layer in value.
Robbie also shares an example in the association world (featured in The Forever Transaction) about the Healthcare Financial Management Association (HFMA) and how they were able to step back and look at the best way to deliver on their promise today.
[15:28] – For a lot of businesses it may not be crystal clear out of the gate what that forever promise is—there may need to be some experimentation and learning that happens to be able to tweak it over time and to get it really aligned with who it is you’re trying to serve. Am I interpreting that correctly?
Robbie explains that for organizations that have been around a long time, the hard thing about the forever promise is that usually when you’re starting out, you’re crystal clear—
you’re filling a gap in the market, there’s a group that’s underserved, etc. But what happens over time is somebody who doesn’t fit in your original model, signs up, buys your product, and becomes a vocal communicator.
So you take a sharp left turn to serve that person or small groups’ needs, and before you know it, (and Robbie likens this to a tree) you have all of these volunteer “branches” that are growing in every direction, taking energy from the core tree and you have to prune. Robbie notes this is very painful, especially for associations that have been around a long time.
You can’t serve everybody equally well so you can either do a mediocre job for everybody or you can do a great job for a smaller group.
She also talks about how difficult it gets when you’re looking at helping people throughout their profession and the health of the profession. There are so many subsets of the profession, so many stages of someone’s career, so who are you going to be optimizing for is really hard, especially when you have a governing body of members focused on their own interests.
[18:21] – Take your solo subject matter expert, your solo edupreneur, who wants to get out there and serve a market. And very often they’re in highly competitive markets so they have to figure out a forever promise that makes them stand out in the market. How do they come up with that forever promise that’s different from the potentially thousands of others trying to serve that same market niche?
Robbie emphasizes that being focused is really critical. And one of the challenges of the solopreneurs that are in education is that everybody thinks their own content is unique. But a lot of times those nuisances are lost on the prospect. In your forever promise you need to also have features in your offering that are triggers for the right people to join. So you have to use headline benefits that get people in the door.
Pricing for the Forever Transaction
[21:32] – A question that will always come up is around pricing. Even before we got into the current situation where a lot of people are scrambling to increase what they’re doing online, they were already wrestling with whether they could put together some sort of subscription packaging around their education. If we’re going to go with the forever transaction, what does that look like from a pricing standpoint? What kind of advice do you have around pricing?
The general advice Robbie says she usually gives is to remember that the more complex your pricing options, the less your customers are going to trust you.
And there’s a lot of research among business psychologists about how when people get overwhelmed, they decide not to buy anything. So you want to make it easy for your buyers to buy.
That being said, Robbie recognizes you may have reasons to have a more complex offering, which is fine, but she would encourage you to start (especially if you’re a smaller organization) by trying to keep things simple.
The second thing she recommends you do is to see who you are designing the offering for. And be really clear. Then you want to optimize your combination of offerings for that person and price it in such a way that it’s a no brainer for them.
The other guiding principle she says people don’t always consider is that most products, especially learning products, are not highly elastic (i.e., they do not have a lot of demand elasticity). It’s an economic term and what it means is that in your business, if you raise the price by one dollar, do you lose a small percentage of members with every dollar that your price goes up. And does your demand increase with every dollar that the price goes down.
A lot of times when people aren’t buying your educational content, the assumption is the price is too high and to drop it. And Robbie says companies do this before they have any evidence that dropping the price by a little bit is going to do the trick. But in most cases when people aren’t buying educational content, it’s because they don’t think it’s valuable. So rather than dropping the price by a dollar to see if that drives demand, try to understand why people aren’t buying it.
Community and Subscription
[26:03] – How do you think about the relationship between community and subscription? Because I think about those as two different things. Subscription to me feels more like the business model—or maybe membership is the business model. Community has a little more of a human/interactive/emotional aspect to it. What’s the power in bundling the two of these together?
Robbie describes how she thinks of community as a feature or benefit of many business models. It can be an incredibly powerful element of a business model of a value proposition. But it’s tricky and actually has real costs associated with it.
She says a lot of organizations just throw up a community platform – or turn on a community function with their already existing technology – and just wait for people to come and have meaningful, respectful dialogue. And that does not happen.
If you want to have community as an element of your value proposition, early on in the digital community, Robbie emphasizes that you’re going to need to do a lot of work. You’re going to need a moderator to nurture the community.
And at the same time, as people do start to participate, the moderator needs to make sure that the tone is what you want, and you have to nip bad stuff in the bud.
Community can be a tremendous asset to a business model because it creates content that the organization isn’t creating themselves. And it creates connections that can’t be replicated—a competitor can’t copy a community. But anyone thinking about building a community needs to recognize, it’s kind of like buying a puppy—the hard part isn’t getting the software to have the community, it’s taking care of it.
What it Takes to Scale with a Membership Model
[30:38] – What does it take to scale, and conversely, what typically interferes with scaling this type of model?
Robbie discusses how there’s several issues with scale. A lot of organizations – whether you’re an edupreneur or a big company – once you have evidence that this is working and the targeted best member is joining, engaging, and giving you good feedback, you want to think about both the technical skilling and your metrics. So how you’re going to judge success, recognize if the business is all systems go, or if there’s a problem to take care of, what the right metrics are.
You also need to consider what your process is going to be for pricing because a lot of times when you’re starting out, you’re experimenting with pricing.
But the most important one is culture. You need to make sure that as you hire people or bring other people from the organization into your experiment, that everybody who is joining you, has that same member mindset and that same long-term focus on the health of the business and on the well-being of the customer.
[33:26] – So who’s doing this well that you’ve seen—scaling with this membership model?
In Robbie’s world, she shares the big three are:
She says they do so many things right with the way that they market, onboard, engage members, deepen the value over time, continuously iterate their offerings, and the clarity of who they’re serving and what their promise is.
Robbie also points out that LinkedIn bought Lynda.com several years ago and they’ve been slowly but surely integrating that into their mission, which is to help professionals thrive and stay connected throughout their career. And she’s been blown away with the way they’ve integrated that acquisition.
What it Takes to Effectively Lead
[35:34] – The third big section of your book is Lead. What does it take to lead effectively, and to maintain and grow a market leadership position?
Robbie notes that even though the big three she just talked about are the big gorillas in the space, they’re actually babies because they’ve only been around for about 20 years or less. And there are subscription and membership businesses that have been around for dozens, if not hundreds of years.
For example, newspapers, professional societies, and gyms. These are examples of membership organizations that struggle with staying current.
Some of the pitfalls she sees with organizations that have really well-established member mindsets are:
- They forget about the new members and they focus on the existing members. When you think about your members, you can’t just think about today’s members, you have to think about tomorrow’s members as well and make sure they have a voice at the table.
- They don’t make the distinction that employees are not actually a family. They are a team and a Robbie says the team is a group of people that look out for and take care of each other to achieve a common goal. And if somebody on the team isn’t contributing to that goal, and you’ve tried to work them in different positions and with different strategies, and they are unwilling to change, you don’t have an obligation to let them keep playing the way they want to play.
[39:30] – What is one of the most powerful learning experiences you’ve been involved in, as an adult, since finishing your formal education? And I’m wondering if there’s a community/subscription-based learning experience you’ve participated in that you might put in that camp?
Robbie highlights two learning experiences—one where she was a learner as a solopreneur and one where she was a teacher to create a course on membership models for LinkedIn Learning—and she’s now created ten courses for them.
[43:00] – How to connect with Robbie and/or learn more:
- Website: https://robbiekellmanbaxter.com/
- Book: The Forever Transaction
- LinkedIn: Robbie Kellman Baxter
[44:03] – Wrap-Up
- What is your forever promise? What is it your members or customers really wish you would do—and keep doing—and are you using the right “headline benefits” to attract those people to you?
- Take some time to really study how LinkedIn works and ask: what lessons from the LinkedIn model can we apply to our learning business?
If you are getting value from the Leading Learning podcast, be sure to subscribe by RSS, Apple Podcasts, Spotify, Stitcher Radio, iHeartRadio, PodBean, or any podcatcher service you may use (e.g., Overcast) as it helps us get some data on the impact of what we’re doing.
We’d also appreciate if you give us a rating on Apple Podcasts by going to https://www.leadinglearning.com/apple. We personally appreciate your rating and review, but more importantly reviews and ratings play a big role in helping the podcast show up when people search for content on leading a learning business.
Finally, consider following us and sharing the good word about Leading Learning. You can find us on Twitter, Facebook, and LinkedIn. We also encourage you to use the hashtag #leadinglearning on each of those channels. However you do it, please do follow us and help spread the word about Leading Learning.
[46:01] – Sign off