Ep #027 - What Separates Good Subscriptions From Great Ones

ben fisher -

Andriy Rudnyk, founder of Good Subscription Agency, has established himself as a top agency for Shopify brands. He’s learned that subscriptions are powerful—but only if they create value for the customer. In this conversation, Andriy and Ben unpack where brands go wrong with the customer experience as it relates to subscriptions and what to do instead.

Topics

  • Understanding your business before deciding
  • What are your jobs to be done?
  • See yourself as a software company
  • What "The Membership Economy" teaches us
  • Why consumers love subscriptions
  • Create a better CX without canceling
  • Experiment with prepayment
  • Three pillars of The Membership Economy
  • Subscriptions: tried-and-true

Key Takeaways

Understanding your business before deciding

05:12

It's not about the number of features an app has, it's how personalizable the most important features are to the business and business model.

“What I've said to a brand is before I can even say if what if Rodeo is a good fit for you? I need to understand your business. Because you can go to a feature matrix and compare. A dozen apps or even five apps and someone's inclination might be to go to the one with the most number of features. What they don't realize, or most of don't realize is it's not with the number of features, it's how personalizable are the most important features to your business and your business model.”

What are your jobs to be done?

07:03

It's important to understand the needs of the company and what they are looking to grow into.

“The, one of the common things we do is yes, migration, but app procurement is a whole month long process where it's yes, we need to first of all understand what you need currently, what are you looking to grow into? Are you gonna need gifts? Are you gonna need to build a box? Are you gonna need this flexible shipping schedules? And then being whose current setup is good? Whose future roadmap looks ? It's a lot of, digging under and talking to product people too directly and being okay, what's on the horizon? And then, cuz it still blows my mind that people can decide on a subscription app, which is literally the backbone of your business after a 30 minute sales call. Your 90% of your efficiency will be built right here with this one tool, don't rush it. Don't rush it”

See yourself as a software company

09:43

Subscription companies can benefit by thinking of themselves as software as a service companies.

“I do think companies benefit subscriptions, specifically subscription companies benefit if they start thinking software as a service companies. Because there's the importance of onboarding, the importance of daily active users, the importance of user feedback and iteration. There's a lot that can be learned that, and again, this religious focus around churn and how churn is key.”

What "The Membership Economy" teaches us

14:43

Robbie Kellman Baxter's book "The Membership Economy" explores the benefits of subscription and membership-based businesses.

“There's this book called The Membership Economy by Robbie Kellman Baxter I've read it's some of my favorite books. Subscription- and membership-based stuff has been working for forever and there's a reason for it. She emphasizes super user onboarding  you want somebody to feel they're walking into a house they've owned for a number of years. They know all the ins and outs, all the tricks that your most advanced users have found out on their own. Explain that to a person even before their first box arrives. Before their first package ships.”

Why consumers love subscriptions

16:04

Consumers want convenience and curation, but not too much product.

“Because subscriptions are a business model. If we're talking about jobs to be done, the consumers not wanting a subscription. What they're wanting is convenience. They're sometimes wanting curation. They're wanting but they don't want too much product and membership is the and then and below that, subscriptions are a business model, and it's and when you think about what, when consumers subscribe to something, they're not necessarily subscribing to an individual product. They're subscribing to the brand and that's a membership.”

Create a better CX without cancelling

24:26

Customers may cancel their orders if they are not satisfied, which creates problems for the company.

“We don't wanna prompt cancellations. Here's how I've seen this play out a couple of times: a customer either wants their next product or they don't. If they don't, they will cancel after their payment's been charged. The problem there is it's gonna go through your support, clog it up, and create a terrible customer experience in general. Good luck winning them back. On the other hand, if they still want your product at some point in the future, any option is better than canceled. Pause, delay, swap, downgrade, give it as a gift to someone else. All of these options, you simply have to provide a better option than cancel on their next order. That's the the best way to bust that objection.”

Three pillars of the membership economy

30:16

The membership economy is based on long-term relationships with brands or individuals.

“You're building a long-term relationship with a brand or with a person. Three basic pillars of that: you need transparency around upcoming order notifications, around subscription tiers and savings tiers, when the upcoming orders are happening. You need flexibility for people to stick around because you need to meet them halfway. At some point, I'm not gonna follow this thing. Flexibility means in pricing and frequency. And then occasional pamper. Make your customers and your subscribers feel valued more than somebody who's a random visitor on your site. This is the reason why we hate cable companies and phone companies, because I can't get the same deal as a long-time customer. Why can't I get the same deal as somebody who's buying for the first time on Black Friday? Make sure your longest-term customers are getting the best offers.”

Experiment with prepayment

39:26

Prepayment in bulk saves on shipping costs and is more efficient for the supply chain.

“There's the two different ways of doing prepayment. One of those is the one that we've focused on, which is prepaying and mailing in bulk. And the reason behind that is shipping costs and, warehouse and your entire supply chain. The one that you see more frequently is prepay and then receive monthly shipments of it. does not save you on shipping. Does not. No. But again, it, you're still getting the money up front, but, The margins aren't as good. And it depends on your business. Not every product is in a form or even depending on if there's an expiration to it that you can send a year's worth of it. There's only certain, there are some products you can send a year's worth, but if you send a year's worth of something that I'm imagining a bag of chips, that would take up the entire cabinet. Yes. It doesn't work with everything.”

Subscriptions: tried-and-true

49:46

Subscription should be the focus for businesses, as it is a lucrative and solid business model.

“It comes back to my saying that your upcoming order email is your most profitable email. Is your most profitable marketing email now, cuz profits are made on the retention piece? One kinda think of it, one thing that makes me what you would call it drives me nuts is when I see businesses still want to reward new acquisitions and give discounts they would never offer to their existing subscribers. That thing still blows my mind. And also one crazy thing is you might have a big direct to consumer brand, and you've launched subscription as an accessory bolton at some point, and it was never the focus. That blows my mind too, as well, where it's the business model is lucrative and solid. Once you have it up and running is when you see massive brands that are giving you a simple subscribe and say of 10%. And again, not pri solid. There's no real reason other than that and it blows my mind that they would not drive. That as be subscription first in that sense.”