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Growing your Membership Subscription Base

Seth Greene here, of www.GrowYourOwnCult.com

Today I am here with Robert Skrob, www.RobertSkrob.com

Robert, For folks who don’t know who you are, can you give us a kind of a short version of how you got from working in the world of association marketing to where you are now?

Robert Skrob:

Well, I wanted to be a CPA and went to public accounting. After two and a half months, I realized that I quite hated it, took a job with a company that consulted with associations, and ended up buying that company five years later. I discovered direct response, copywriting, essentially writing, marketing, sponsorship, exhibit sales letters, which brings us up to the year 2000. That’s when I discovered Dan Kennedy and was using his strategies of information marketing with the associations that I was working with. I then started working with him in for-profit organizations, and for-profits subscriptions launched the information marketing association with Dan Kennedy and Bill Glazer in 2005. I sold it in 2012 and have been working with some of the biggest subscription brands in the world.  I help these brands to stop their subscribers from quitting. It’s taking what I learned from the non-profit world about retention and about more than that, but the perceived value and the reasons why members subscribe and stay as members and really break that over into the for-profit world.

Seth Greene:

So I love what you’ve done in terms of translating something that works in one place and moving it to another, which is something Dan and Bill have taught forever, which is the best ideas aren’t necessarily in your industry. Because in your industry, everybody copies everybody else as opposed to something that looks brand new because it came from somewhere else. We’ve had clients in common. We have also worked with Agora, with different, multiple divisions at Agora on different things because we do not have your area of expertise. So let’s start there. So you’ve got a company that’s the largest newsletter publisher of its kind in the world, selling billions and billions of dollars a year. What are some of the most common mistakes, or some of the biggest mistakes you see business owners, entrepreneurs, people who have subscription-type services making?

Robert Skrob:

I’m not talking specifically about anybody, but for the most part, most companies focus on getting the new subscriber, and then they stop. There isn’t a focused effort on getting that subscriber to renew their subscription, whether it’s a month later or a year after the initial subscription or any sort of structured upsell approach. And what I work with extensively with companies is what I call kind of moving the finish line. So if it’s an annual subscription and the renewal is 12 months from now, this was really one of the things I discovered in the association world back in 1998 is you can get a new subscriber, but that first-year renewal rate, even if you have like an average of 80 or 85% renewal overall, if you look at it and stratify it by year, that first-year renewal is probably around 55% and the second, third and fourth-year renewal as well over 90% renewal rates.

What I did is move the finish line for our team and say, “Look, we’re not patting ourselves on the back or paying bonuses or rewarding ourselves until after a year, and they renew.”  What are you going to do for the first year if you think of that as converting that new member is crucial, because you can’t get a renewal until you get a new one, but how do we think, and how do we communicate in order to get that first renewal? Now in the for-profit world, there’s the proliferation of monthly continuity, and it’s how is it that we are going to structure that first 30 days and even 30 hours, that first 30 hours that they’re a member in order to get them engaged. Get them more excited after they bought than they were the time that they pressed that checkout button, so that they continue to become more and more excited about the subscription and that giving it up would be something that they would fight over, much less something that they’re going to call you to quit it out.

Seth Greene:

Okay, so there’s a whole lot we could unpack in that answer. There’s a seminar in that answer. You could probably talk about just that for a couple of days.

Let’s break that down a little bit. So we’re talking about the initial customer acquisition, and it’s funny; I did a consultation with a potential client literally right before this, where she said, “I want new members; we need to get our membership up.” And I said, “How many members left in the last year and a half? What was your COVID churn?” And she said, “Oh right, 75%,” So 75% quit during COVID and haven’t come back. But you want new members? I said, “It would cost you a lot less and be a lot easier to just go get those members back, at least some of them, then try it.” But everyone wants the sexy new customer, that’s what they think of. So how do you bridge the gap? How do you get the owner of the company, the entrepreneur, to start thinking, “It’s not just about pouring more things in the bucket. Let’s plug the holes in the bucket first.”

Robert Skrob:

Well, the cash flow forecast has been kind of a sobering reality here lately, and very few marketers or really even business owners want to look at the cash flow forecast. And most of the time, if anybody actually has a cashflow forecast, it is usually like month six they’ve changed their churn rate from 15% to 8%. Because a magic fairy’s going to come along, they just think that “Oh, well, it’s going to start lowering,” or they lower their customer acquisition costs. So you see that not the rate of new subscribers increases over time. But what I’ve been doing is working with subscription businesses to create a cash flow forecast based on their own numbers and then show them because what happens is there is a subscription growth ceiling, and the number of subscribers you generate divided by your churn rate determines the total number of subscribers you can have.

If you’re generating a thousand new subscribers a month and you have an 8% churn rate, then your maximum number of subscribers is 12,500. And so as you approach that, which if you’re a startup generating a thousand subscribers a month, you’re going to do around year three, you start tailing off your subscription growth. It’s easy to say for me, and so by showing them that their growth is going to tail off and then showing them at different retention rates or churn rates what could happen to growth, we’re able to help illustrate the impact that these changes can really have.

Most people are like, “Oh, I just want more subscribers now.” Do you want to work for the next three years and be no closer and having no larger business, and be frustrated at the same number of members? Or in three years, would you like to have 10 X’d your revenue, because you put in upsells and you are taking media opportunity money in, and you reduced your churn rate and. Given that, most of them choose to go ahead and fix it.

Seth Greene:

Absolutely. So you are making deposits, as Dan taught, both into the present bank and future bank. So why do you think we focus as business owners so much on customer acquisition, on getting new customers, but then we neglect the retention part. How do you turn the tide?

Robert Skrob:

It works in the beginning. So, where there’s a thing about running a new business. It’s like, what gets you to a million dollars, won’t get you to five million. And then everything you did to get to five million is exactly the wrong thing to get through to 10. And I think that’s the same way with a subscription business: they grow fast in the first year or two, and the answer to growth is more new customers. But as you reach that growth ceiling, more new customers just accelerate the rate at which members quit.

It takes a really different shift in thinking in order to get to the next level. I think that’s the main thing is that we’re conditioned by the early success to think that new customers is the secret to fast growth, when once your churn rate, because you can’t outrun your churn rate. Once that churn rate starts catching up with you and slowing your growth, it’s hard to totally change and go, “Oh, wait a minute. What got us here won’t get us to the next level. I need to change in order to move and really grow like I need to.”

Seth Greene:

What are some of the levers that we can pull to increase the length of retention? What are some of the things you’ve seen across all of your clients work the best?

Robert Skrob:

You know, I think number one is member-centric communication. Too often, we are focused on what we are delivering and like a list of benefits. So many subscription offers might be emotional in the beginning, but then it’s like, “Oh, and we’re going to give you this, this, this, and this.” Or if they show you tiered pricing, and tier pricing does increase your revenue because you’re giving your customers choices of an order to maybe to buy more. But most subscription businesses when they do tiered pricing, they do the tiers based on what that delivers to you, not based on the customer and the different types of customer and what their needs may be. And then when it comes to fulfillment, it’s all about, “here is this thing. Here is this newsletter. Here is this call. Here is this stuff, here is this a video to watch here is this”, it’s more and more and more.

They get overwhelmed, and they run off, and they just aren’t interested anymore because they have the feeling that they need to consume it all in order to get the value for what they’ve gotten. Instead, you should be focused on switching up the communication and communicating directly to the member, what they’re looking for, how we can help transform their life and get them the value they’re looking for and hope to gain by joining your subscription. That’s the number one biggest thing. Number two, maybe working on their beliefs. You know, if you are selling anything where they need to do something with what you delivered, maybe it’s a SAS product, and they actually have to use it on their phone.

You have to have them believe that not only will they get this magical outcome that you’ve promised by the product, but that they can really do it. Those two separate belief elements, one that it’s possible that other people do it, and that other folks like them do it. Two, that they can really do it with their education, their experience, their background, their amount of time that they have to invest, that they can do it. That really helps because it has to really resell them. Now that they bought it, you have got to resell them on actually using it.

Seth Greene:

Which is crazy, because as marketers, we think, “You bought the thing, you wanted the result, you think you should actually do it.” But now I got to re-convince you that even though you wanted the thing, I’ve got to train you to actually do it in order to get the results that you’re thinking about. It’s so funny that you mentioned in terms of the overload of information. So I joined another newsletter program this morning, and there are 23 special reports. I don’t want to read all 23. And I just got pitched another one by a vendor of ours that says, “Oh, you could get this too.” And I’m like, “Okay, send me that. What is that?” And I was like, “There are 50 hours of webinars.” And I’m like, “I don’t want to watch 50 hours of webinars. I don’t have time. I want it done for me,” as much as I can write a check for.

I love the concept of perhaps it should be communication tailored to what the customer actually wants, as opposed to what we think that we should deliver. Now, some of this actually comes into play when we’re talking about Detox, Declutter, and Dominate. Because you can tell the story of how this book was created because it wasn’t normal, Perry goes into his hole and writes a book. You transformed it to another level. Tell us that story, just because I think it’s totally relevant to what we’re talking about.

Robert Skrob:

So Perry is an amazing friend of mine. I love him dearly. We’ve gone to Ireland a couple of times together. And I just love what he delivers as part of his subscription business. I’ve been a subscriber since it launched and really wanted to help create a way of onboarding his new subscribers so that they would understand what the newsletter is all about. Because that’s the thing, with a newsletter in particular, when you’re joining a subscription, you don’t start at newsletter issue one and then read all of it like you would binge-watch a Netflix series, right?

Seth Greene:

People don’t go back and binge everything we ever wrote, except for maybe me. I printed every single thing Dan ever wrote when I joined and read all of it, and it’s all in crates. And when I joined the IMA, I printed every back issue. I remember driving you crazy going, “Hey, how come you guys stopped doing the 40-page monthly newsletter? I like that.” And you saying, “People didn’t want it. They didn’t have time to read it.”

Robert Skrob:

It was a pretty amazing newsletter. So what we needed to do is have a way of new subscribers getting an idea of what this is all, what are they reading, and why are they hearing these types of stories? And that’s really what this was born out of. And I had multiple calls probably about three years ago with Perry and the president of his company, Brian. And we identified at that time, what are the things that you write about, Perry? And we came up at that point at eight different things. We distilled those, and I said, “All right, what are the emotional reasons why somebody won’t do that?” For instance, there’s 80/20 in your business and doing the focusing on the 20% that generates 80% of the profits, what are the emotional reasons somebody wouldn’t do that?

We outlined all those. And then he wrote a newsletter about those. I pulled all those together into a book that we put in examples, case studies, stories, and it became this 40,000-word book that was kind of mediocre. And long. And so I thought, “You know, this really kind of sucks, Perry.” And we spent, now at this point, it’s been two years and this really pretty, but let me see what I can do with it and see if this 80/20 principle that we talk about really works. And so we literally deleted 80% of it. Now it wasn’t random. We focused on, all right, each chapter. I took it chapter by chapter, and it’s like, “All right, this chapter is 3,000 words long. We got to get it down to 600. What are we going to keep?” And then afterwards we added some steps, you know, one, two, three steps to get started. And also, I hired an artist in order to create artwork.

Seth Greene:

It reads almost like a graphic novel or infographics. It’s so easy to consume but revolutionary in the concepts, what there are seven steps. If I had to make you 80/20 again, what would you say is the most important one?

Robert Skrob:

You know, I think it’s the first one that Perry calls Renaissance time. And I think it’s very easy for folks to overlook that and think that having a morning ritual or having some sort of way of giving yourself clarity and space isn’t important. Like, “Oh, I don’t need that because I’m superior to that for some reason. Or I’m too busy. I got 12 hours of work every day before I even start and then add on another eight hours during the day that I can never get to. I don’t have time for an hour of setting aside, thinking or writing in a journal or any of that stuff that’s described in there.” And what most people discover when they actually do that is that by giving themselves space and time to really have a contemplate of practice, whether it’s this Renaissance time that’s described in the book, or meditation or anything like that, is that your mind starts to be able to make connections where we weren’t able to make connections before.

You’re able to work with such a high level of focus that you aren’t as distracted anymore. You’re able to accomplish in an hour what used to take you five hours to do. You’re also able to get space from something that you might have thought, “Oh my gosh, I cannot give this up. There’s no way anybody could do this as well as me. It has to be done. Even though it’s a really low-value task, I’ve got to be the one to do it.” By having that time, you’re able to separate yourself from the task and be able to be better at either saying no to it altogether or being able to find ways to delegate it if it must be done. Or find a way around it that doesn’t involve you anymore.

And that 12 hours growing to 20 hour days shrinks drastically, and you’re able to accomplish in half a day or six hours what used to take a week to accomplish. You see things more clearly. So like, it’s very easy to overlook, and a lot of people look at it and go, “Argh, no, I don’t need that.” But dang, is it powerful, Seth, when you actually set aside the time to think and allow your brain to set each day?

Seth Greene:

I’m a practitioner of it. I didn’t call it Renaissance time, but my coach had me doing it. I’ve been doing it every day for six months. I can say it absolutely will change your life. We can talk about this all day, but we don’t have the time. I know yours is incredibly valuable. For our folks watching and listening who want to either get Retention Point or Detox, Declutter, and Dominate, where’s the best place for them to go?

Robert Skrob:

The best place is www.RobertSkrob.com  There’s information there on Retention Point and a video series that goes through the cashflow and the subscription growth ceiling and just describes all of that and how to do the cash flow forecast. If you’ve got a subscription business and you feel like you may have hit that ceiling, that’s a step-by-step quick guide. Three videos will walk you through exactly how to break through and continue to grow.

Get the Detox, Declutter, Dominate book at https://www.perrymarshall.com/detox-declutter-dominate/

 

 

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