Monthly Recurring Revenue; Monthly Recurring Work

Subscriptions are popular for a reason. The stability of monthly cashflow is a very appealing business proposition. The tricky thing about subscriptions for digital products (that aren’t software) versus simple product launches or ecommerce is that they require all the work of a typical launch, usually multiple times each year, plus the maintenance of members to reduce “churn,” plus the management of ongoing content creation. Let’s look at each of these things so you can make an informed decision whether this is a good direciton for your business.

Launching a Subscription Product

When we launch a subscription product, we use the same principle as any other product launch: offer free value, then sell. However, when desiging your subscription offer, you also need to consider:

• What are your subscription terms? (Do you have an annual discount, a free trial period, a refund policy? If someone cancels, when do they lose access to the site?)
• How frequently will you allow people to join, or is your program always open?
• Does your product involve new or live content each month, or is it a pre-set journey? And if the former, will you provide retroactive access to subscription content for new subscribers? (I.e., if someone joins the program 6 months after you launch it, do they only get the content going forward, or do they get access to the previous 6 months of content also?)

The best practice is to have as much of your monthly curriculum visible to prospective customers as possible. You might think that your customers want to attend a monthly call just to practice, connect, or learn–and some do, but the more tangible and specific you can make the “transformation” they will get out of the membership experience, the better. For some, this is incredibly challenging to line up very far in advance, but 6-12 months of newly released content is a much richer offer than either a recurring monthly meeting or 100% evergreen product access.

If you want to map this out in a handy google sheet, here’s a template you can work from (to edit, make a copy of the document and fill it out): https://docs.google.com/spreadsheets/d/1zYTiqB7QdjrsbVBf2DjLzL0yzDPW6bZLbBeesyCpwSk/edit?usp=sharing

Churn

One of the more challenging things about selling subscription products is that, with a few exceptions, each month you need to sell the product again to your existing customers. And (again with a few exceptions) each individual customer isn’t giving you as much money at once as a typical product launch could yield.

This means that in order to make a subscription product work in your business, you probably need to manage member churn, also known as turnover. This is the number of members in a given time period who join divided by the number who cancel. Usually this is measured monthly, but you can also look at churn between launches or annual churn. It is also best to look at this figure as a whole-number fraction as well as a ratio or percentage so that you can see your churn velocity as well as your churn rate.

Churn velocity = how big are the numbers you’re dealing with
Churn rate = what is the ratio between them

Your subscriber churn will vary based on your audience and offer. That said, it’s normal to see a monthly churn rate below 1 for products that don’t have evergreen traffic going to them, with spikes when you launch. It’s normal to see a higher churn velocity in lower-ticket and higher volume subscriptions.

As a general rule, it is easier and cheaper to retain existing subscribers than it is to get new ones. Once your subscription is launched, reducing attrition becomes even more important than bringing in new subscribers.

We find that for this reason, it is useful to conceive of each element of your membership experience as a marketing asset. Because you are essentially always re-selling your product to your subscribers, and you have their attention, you have the opportunity to remind them constantly what value they are getting from their subscription and what they would be missing without it.

Subscription Content

Many subscription programs begin with a great idea that can be extended into the future maybe 6 months. The creators decide that’s far enough and launch it–only to discover, 5 months later, that the need to come up with new content if they want to keep any of their subscribers around.

Sustained ANYTHING over a long period of time can be taxing. You are not a machine; you get tired. Sustained content creation is difficult for a lot of teachers and organizations because they either get bored of repeating themselves or get exhausted from being constantly creative.

It’s important to enter into a subscription product with a plan for how long you intend to create content, a plan for creating it (ideally in batches every 3-6 months so you can do other things with your time every month), and a plan for keeping it, and you, fresh. This is another reason it is a best practice to launch your subscription product with 12 months of curriculum already in place.

It’s also a reason to be careful what you commit to. To protect yourself, we suggest establishing a member threshold before you launch, below which you will discontinue all or part of the subscription if you do not have sufficient enrollment to sustain it.

Is It Worth It?

If you have an audience who would subscribe, an offer they would subscribe to for at least 6 months, and the means to keep content and subscribers coming in for the foreseeable future, chances are that you have a good shot at making a subscription program work for you. It’s a lot of work, and the revenue comes in a bit more slowly than with a product launch. However it also comes in more reliably once it’s all set up, and sometimes that’s what you need.