Launching a marketing campaign to support an existing or new subscription business, membership, or product? You don’t need a big marketing budget to get started, but you do need to market smart.
In this Subscription Marketing guide, we outline in detail 12 steps every subscription marketer needs to take to get a marketing program off the ground and driving profitable revenue, even with a small budget or even little experience.
Market smart, and profitability, with these step-by-step detailed directions.
- Step #1: Define Your Prospects
- Step #2: Understand Your Prospect’s Use of Words
- Step #3: Research Your Buyers (Cheaply)
- Step #4: Define Your Benefits
- Step #5: Get Testimonials
- Step #6: Optimize Your Sales Site
- Step #7: Promotion Research
- Step #8: Get Your Affiliates and Referral Partners Set Up!
- Step #9: Set Up and Plan Your Promotion Calendar
- Step #10: Getting Promotions out the Door, Think Like an Agency
- Step # 11: Creating Your Promotional Offer
- Step #12: Do Your Modeling
Who is your business selling your subscription or membership to?
When I ask subscription executives to define who is their perfect prospect, they tend to start naming all sorts of different demographics, vice presidents of this, analysts of that, managers of the other thing, this industry, that industry, Wall Street, boys, girls, men, women, everybody. If your answer to this question is “everyone”, your marketing can’t be focused or effective.
The thing is, you can only do great marketing when you are focused on a very defined target. What you really need to succeed in your subscription marketing is a target demographic. Think of your target demographic like the old game Pac-Man, where you have one large primary target customer profile, a/k/a/ demographic, and then perhaps some smaller secondary ones. If you already have an operating subscription business, go and look at your real buyers and you find they tend to clump into a couple of big clumps.
When you’re looking for your target demographic, these are some of the attributes that you’re going to be looking at and understand:
- Why are your current customers buying? Why would prospects buy?
- What’s their motivation? (That’s an incredibly important thing for you to know as a marketer before you do anything.)
- Which traffic sources convert best already?
- Can you find enough great traffic sources to market to?
- Are they an early adopter? Are they going for new things? Do they like cutting edge things or are they more somebody who would prefer to get it because everybody they already know gets it?
- Are they a bargain hunter? Are they going to go for some kind of discount? Do they want savings? Do they want the cheapest on the market, or do they want the best? Think about it. you could buy a Mercedes and you could buy a Kia and they both basically are the same thing, but it’s a very different demographic that they both appeal to differently.
Understand as many things as you can about your target demographic’s wants, needs, desires, problems everything. This will provide a great foundation as you work through your marketing.
Understanding how your target customer uses words is one of the most important things you need to know about as a marketer to a new marketplace.
The words are not how you use words, your sales team uses words, your marketing, content marketing or editorial team words either. Don’t just go to Google and look up heavy keyword traffic either, because you don’t know who the people are on Google using those keywords. Use the words your prospects and customers use. These are the words you may use for keyword targeting, copy, even the taxonomy in your product, service, app or site.
Your target customer? They tend to describe themselves in a certain way. Do they say I’m a housewife or do they say I’m a homemaker? How do they describe themselves? Then, what are the keywords that they will use to find your site? If you can, go to your own (or competitor’s sites) and find out what kind of keywords are being used. If you already have a blog or some free content that’s available, look up the search logs and understand what are the words that people tend to use when they’re looking for information.
Different words will have an incredibly different the impact, even when describing the same thing. As an example: look at the terms B2B, b-to-b marketing, of course, business to business marketing. All three of those are, one would think, interchangeable, but look at the difference in usage by the target market.
Know your words, they will make a major difference in how your prospects react to your marketing campaigns.
Now it’s time to understand, really understand, in detail your target customers. Take the time to see them as real people, with real issues, who you know inside and out versus an abstract concept called a demographic. Here are some of the best places to find out more about your potential buyers:
- Surveys.Conduct a survey. If you cannot survey your own current buyers, go to a vendor or perhaps a free newsletter or something and offer to do a research study in conjunction with them. Maybe you could offer to be the researcher that does the survey for your partner and learn from the data.
- Comments:Read comments by your target prospects and customers on your own site, competitor sites and other locations where why may be. What are they talking about on discussion groups, and what are the words that they were using there? What are they saying on forums and groups? What are they saying on their own blogs? What are the comments they are writing on stories? I’d rather read their comments than read the top reporters who write for them. You can learn more from their comments.
- Search Logs: Pull your logs and understand the search terms on your site, or products. Access Google Webmaster and understand the search terms people are using driving search traffic to your site.
- Customer Service:If you already have an operating business, customer service is going to be golden for you. Your customer service person or team is on the front lines talking with customers. Talk with the team! Understand what they are hearing when people buy, when people cancel, and when people have issues. You will learn a lot!
- In-Person Meetings: If there’s any way that you can meet your customers or target prospects in person, please do so. The key is, you can either meet them in person, say at a trade show or in their offices. Or you can call them up on the phone and talk to a few people. You can do usability tests. Whatever way you possibly can. It’s going to make such a difference to your marketing because you’re going to begin to understand them at a gut level that you didn’t before when they were an abstract mass. I cannot tell you the power of meeting a few people in person. Here’s the key. Make sure the people you do meet in person or on the phone are really representative of the demographic that you’re going to be marketing to. You don’t want the squeakiest wheels. You want the people who really do fit that target market pretty well.
After you know who your prospect is, and know them REALLY well, only then should you map out positioning and benefits. First, ask yourself these two questions:
- What am I selling?I cannot talk about that from the perspective of the website. I have to talk about it from the perspective of the audience. That’s one of the biggest mistakes that most subscription businesses make. They think about the thing they made instead of about the people who they expect to buy from them.
- What is the IMMEDIATE benefit when someone buys? One little secret. When people buy a membership or a subscription online, no matter for what term, a term could be month to month. It could be quarterly. It could be annual. Those are all different terms that people might buy for. No matter what term they buy for the reason secretly why they’re buying is instant gratification. They’re buying because they want to get at something right now that seems like it’s more than worth what they’re being asked to ante up right now.
They’re not thinking, over the next twelve months I’m going to get whatever great tool, content, app or other wonderful product feature or benefit you offer. It really isn’t that case and it isn’t like a magazine subscription where you used to think, I’m going to get this lovely magazine for the rest of the year. That psychology isn’t there with online (mobile) subscription and memberships. It is much more of an immediate impact purchase.
When you’re writing your copy and you’re thinking about your positioning it better be something that you get immediately or darned soon. I’m going to lose five pounds in the next two weeks. Not over the course of the year, I’m going to have a better-looking body. It’s got to be pretty soon. Now, that doesn’t mean that after they come on board as members you’re not going to continue to keep them onboard and keep them satisfied in different ways, but they need to feel really excited about what they’re getting right now.
Now, taking your answers from these two questions, it’s time to build your case for buying your subscription or membership. If you’ve done any kind of research into copywriting, you already understand about features versus benefits. Features are what is the stuff on your website, what is the actual content, tools, service or another part that makes your subscription or membership unique! The biggest mistake I see in the market, especially in business-to-business subscriptions are companies selling with features.
Features are NOT benefits. Benefits are the answer to, “what do I get from using your service?”, from the demographic, that’s buying it. This incredibly important, and if you can look at what the person is really getting out of the information, tool, service or content they’re buying from you, that’s your benefit. Another tip? Once you have your benefits all put together, go out and talk (again!) to your customers and see what they think! You will learn a ton and more than likely, you will want to tweak you benefits and sales copy based on those learnings.
Showing benefits versus telling what your benefits are to a prospective subscriber way more powerful and to do that, you need to get testimonials. While the concept of doing so may seem scary to you, focus on the end result, testimonials are incredibly powerful and support conversions.
It’s very hard to get good testimonials. If you send out a blank note or request saying, “please, write a testimonial for me”, people are going to write what they think and the testimonials you receive will be pretty generic like “I think this a great site”. That type of testimonial will not support your conversion!
What you want is a testimonial that ties into the benefit copy that you just created. Then you need a testimonial that backs that up, that says essential, “Yes! True, I experienced it!”
One of the secret ways to do that is when you send out that note saying, “could you tell me how this site was good for you?”, guide them on what to say! For example, in your note be specific with your question and ask “how did my product, the name of the product, help you, with (and then put your benefit statement in there)?” E.g.; How did it help you find a date? How did it help you get into a relationship? How did it help you save more money? How did it help you grow your career? How did it help you achieve profitability?
When a customer sees this type of question, they see the beginning to their answer, it’s amazing. They’ll start writing. A detailed set-up question prompts them into writing the testimonial that fits your benefit. A detailed set-up question is guaranteed to get your better testimonials.
You’ve gone out, you’ve researched the market and you’ve researched what they’re going to be buying you for. You’re still not allowed to send out a marketing campaign.
Now you have to optimize your site. You never ever want to do an outward facing promotion, except perhaps a small test, until you’ve fixed your site itself. Why is that? You don’t want to spend time, money and effort getting the word out and having prospects come and see something that isn’t ready. That’s like sending them to a coming soon page or a page where they’re going to go, “Ugh, this is awful!!” and bounce right off. Why would you ever want to do that? Instead, fix your site so it’s going to convert as much of that traffic as possible.
Here’s where you look. Instead of working on your homepage, work backward. Work from the checkout all the way back to the homepage. Why? Let’s say you optimized your homepage but the rest of the pages throughout the site still aren’t very good. Wonderful. They come to the homepage and they say, that doesn’t look bad and then they get a little further and then they say “Awful!” and they bounce off. You just lost them.
Optimize the checkout, then optimize the order form page, then optimize your pay wall. Work your way back out. If they get that far in you’re absolutely going to really have a good chance of converting them. Make that traffic work harder for you by focusing on conversion as you optimize each page:
- Before you do ANYTHING, make sure you have set up Google Analytics, Google Webmaster, Google Tag Manager, Facebook tracking pixels, and Google Adwords conversion tracking (at a minimum)to your sales site. Some of these tools you add code that tracks your entire site and others also require special code on your key conversion pages. Get this set up at the start so you can understand your site and mobile app to track conversions as you optimize and test.
- Now that you are ready, you are going to optimize for conversion. Show your prospects the benefit that will be immediately available as soon as they join. As you go through all your pages, initially work to make sure the benefit copy is clear on your key pages. As you build traffic, you can A/B or multivariate test to improve the conversion rate at each step of your subscription sales process.
- Next, you also want to optimize for referrals or “tell a friend” and social sharing. By optimizing, I mean you’re going to try to put on public pages (and even some members only pages) links that people can use to tell their friends about how wonderful your business or program is. At the moment they’re feeling the most excited about it, especially new members as they tend to get very excited, you want them to be able to tell everybody. The key is not to use an app that you set it and expect that to work. It’s probably not going to. It’s not optimized. You will need to test and really understand how which tools, placements and design support conversion for your business.
- Last but not least, optimize your system and process for ‘staff tweaks’. What are staff tweaks? These are the constant and ever changing tweaks to landing pages, conversion pages and copy around your sales site. Optimize your content management system so that next time you want to change things, let’s say your benefits change or your offer changes, or a new partner, that it’s easy for your marketing staff to get in there and make the change without getting in line for IT and development team resources. This can be a real problem. Make sure you think about this critical issue so you and your team you can optimize pages, create new landing pages, campaigns and whatever you need without being slowed down. There are lots of tools on the market now that can help with this!They key thing is not to tie changes needed for your optimization efforts into your IT and Dev team. Get yourself prepped so that you’re ready to act when you need to and you’re not held up by IT and development resources (they will thank you for this too!).
Before turning on any campaigns, you need to research every single place in the outside world, online and offline, where your business possibly could ever advertise or promote itself that’s relevant to your demographic.
The media, or the place where you promote and place your campaign, is by far the most important factor for your success. Understand social media, blogs, and other places where your target customers hang out. You need to dig in and start getting to know this very early on. In fact, if you can’t find enough places and you’re considering a launch, I would urge you to reconsider your launch.
Here are the three key things you will need to research:
- Research Influencers: The first thing to do when starting any type of marketing is to go out and start files on everyone. Start files on every blogger, ever Twitterer, every group, every active commenter on sites relevant to your business, every journalist.
- Research potential marketing partners. Now, research anyone who could ever possibly be a marketing partner, an affiliate, runs a mailing list, runs a media site, sells technology that also sells to your target customers, even people or companies with active public and private Facebook groups and LinkedIn groups. This includes: vendors; online and traditional magazines; apps; associations; competitors; consumer packaged good firms; anyone who’s got an opt-in list; a postal mail list; a telemarketing list; an active social media following, group or forum; basically, anyone who has a relationship with your target customer is a possible partner at some point.
- Research Influencer and Partner Followers: When you have your list of potential marketing partners and influencers (which includes your competition!), track the companies and individuals who are linking to their sites, engaged in social media and other channels. These are either other potential influencers, partners and even target customers.
Ways to Keep Track of Your Research
We have certainly used different ways to track this information over the years, the one thing we recommend against is paper! Use Google docs, start a private blog (password protected) or perhaps set up your CRM system so each list is set up as though it’s like a lead, which it is. It’s a marketing partner lead, a list lead and/or someone you want to develop a relationship when you ramp up your PR program. One of the reasons to use a CRM system is that over time you’re going to find more and more targets and you’re going to forget who you found or you’re going to forget what deal you did with them if it worked, who did you call, etc ?
There is no right or wrong approach, do what is right for you and your business. What IS important is to start keeping your leads and information about them it in ONE place so that it’s all documented. Even for incredibly niche subscription businesses, you’re going to end up with a much longer list than you expect, almost always.
A side note on buying outside lists: If you are considering an outside list, do not be impressed with the size of the list, look at the quality of the people or companies.
We have seen lists that had maybe ninety-seven people on them and ended up making thousands and thousands of dollars because they were the ninety-seven right people. We have seen lists with lists that were fifty thousand, sixty thousand, a hundred thousand people and have only received a few click-throughs and nothing else. Size isn’t relevant in terms of the response rate. Often smaller lists will often be much more powerful. It’s like the smaller lists are concentrated. Super concentrated and so super powerful. The only reason why very large consumer sites might not be going after the small lists, it’s just economies of scale. If you have to get out campaigns to thirty million people in the next two weeks you just can’t go after lists with ninety-seven people on them. You just don’t have time. The niche businesses have a much better ability to target a particular type of customers and it makes you more powerful as a marketer.
List tip #1: When you’re looking at lists you never want a compiled list.
List tip #2: You want a buyer list. Do not worry about what they bought. If they bought something (via direct response, an app, or online), that is what really matters. Other questions such as topic and how recently did they buy or opt in are important as well, but the key to list performance is if they have bought something prior.
List tip #3: If a list has done well for you, go back to your marketing partner and ask if you can market to just new names (and anybody else who’s new on their list) monthly. You can automate that for efficiency. It’s a wonderful campaign that’ll really work.
List tip #4: Here’s a secret that a lot of people don’t know. If you’re in business to business, some of the best lists are vendor lists. In certain marketplaces, we’ve tested associations, trade magazines, very large convention attendees, and then vendor customer lists in a particular niche and the vendor lists almost always outperformed everybody else’s and really significantly. Why? We believe it’s because the vendors these days are working very hard to qualify them because they’re trying to make them into sales leads or they actually are paying customers. These are highly qualified names and they tend to perform extremely well.
These days, affiliates can have a bad rap, primarily due to the low quality, spammy networks that used to be so popular. If you have a negative opinion on affiliates, take a step back and think about them differently.
Many subscription management platforms have the ability to track referrals and then pay referral fees. Even if you do not have that capability, you set up conversion and goal tracking in Google Analytics on special landing and conversion pages to do the same (though a bit more work). You do not have to leverage an affiliate platform to have an affiliate or referral program. They key thing to remember is, if you have a potential partner, you want to set up a program to reward them when they refer customers to you.
How you set up your program is really up to you, but the most common way is to pay a percentage of your first term of sale. We prefer that type of payment so there are no ongoing payments for subsequent terms. Once they are in the door, it’s our job to onboard and retain them. Depending on what your product costs, whether its monthly or annual, the volume of sales, your LTV and desirability of your partners’ customers will impact the % you offer. Some companies offer 15% of the first term regardless, some will offer up to 100% of that first term.
Next, set up a timing strategy and calendar for your promotions.
We recommend you “calendar” at least the next three months, if not the next twelve months. Now, you WILL change stuff as you go through time, but you need to put a stake in the ground. You need to strategically set out and understand how you are spending your time and resources. Otherwise, you end up getting caught up in the campaign of the moment and losing track of stuff that really needs to get done, and not marketing as effectively as you can.
- Ongoing Campaigns: First of all, calendar the ongoing stuff. Most people don’t think to calendar this. Most people don’t think, “I need to stick pay-per-click on my calendar” or “I need to stick updating my blog on my calendar” or tweeting or a link building campaign or double checking that the email autoresponders still match benefit copy this week.Yet, these activities are things you absolutely have to calendar because if you don’t, either you’re going to forget to do it because a) you’re going to be too busy putting out fires with the big campaigns or b) it’s going to suck up all your time and then you’ll never get around to doing the big campaigns. We’ve seen people fall into either one camp or other or go back and forth between them both.What works best, is to put time in your schedule. We tend to do the ongoing “to-dos” Friday afternoons. These are the campaigns that tend to assure you a steady low level of sales year long. They’re important sales. You need to continuously be doing it.
- Big Campaigns: Next, pick times when you’re going to be doing a big campaign. You can’t run big campaigns all year long and you also don’t want to do one big campaign a year. Instead, you want to take the money that you have to spend (and your energy and your time) focused on at least four big campaigns a year. In fact, think about four big brand building campaigns a year AND four big “buy now”, special offer, campaigns.These are very different types of campaigns. If possible, schedule the branding building campaigns a little bit before the buy now campaigns. The more you can get yourself known in the marketplace, it will soften that ground and warm up prospects Then when you come in with your harder offer, people are going to be like, I’ve heard of them. I’ll take that!No matter how wonderful your offer is, your prospect is going to bounce if they do not know you. So, when you time your branding and “buy now” offer campaigns, this is what we call the secret branding conversion bump. With branding and market recognition in place for your business, a little bit of promotional work goes a long way. It is a lot easier to get a good response rate from a campaign if they’ve heard of you, you will get a better conversion rate all around. It’s worth investing in a little branding.
Understanding the connection between promotions and your sales funnel.
In the old days, a lot of people thought of the sales flow as a funnel and a step-by-step process. Today, the sales funnel starts a lot higher up and it’s very fluid.
When marketing your subscription business, your job is to make sure your prospects have not only heard of you, they have a pretty good opinion of you and your product as well. There are ways to achieve this, though free “stuff”, a trial offer, or perhaps a free email newsletter. Maybe it’s a great blog. Whatever that is, when they’re ready to buy, they will.
Your campaigns need to create awareness and your programs engagement, so they “self-serve” and bounce their way through the awareness, consideration, trial, buy process and sales funnel and jump on offers when you promote them.
- TOO LITTLE: If you are not doing any outward branding campaigns, your funnel gets skinnier. The volume of prospects is low. You (or your team) are essentially just focused on doing a direct sale with minimal support.
- TOO MUCH: You can also promote TOO much as well! Coca-Cola actually has a rule that when they’re rolling one of their campaigns they try to reach the typical consumer at least eight times in a week. If they reach you nine times that ninth time is actually pretty much wasted. They’ve found that that’s not going to move the needle in terms of sales, but they need to pound you up to eight times just to get you to remember the message and then go and buy the Coke. That’s why people have frequency caps. They say I want the eight but I don’t want the ninth. The problem is, if you keep on pounding the same list over and over again with the same offer, you’re going to get list exhaustion as well. You’ve got to be careful with this. Again, this is why you’re going to schedule throughout the calendar year, test and evolve based on your learnings.
Timing of your campaigns
You’re going to build your campaigns into a big crescendo. Use deadlines in offers to create an urgency of a deadline at the end of that campaign. Then you start the next crescendo, the next big campaign.
A lot of times, your best case for campaign length will be two to three weeks. You should try to get eight touches in during that one period of time. You don’t want to touch this prospect eight times over the course of a year. You want to touch them in a much shorter time period because then she’s going to remember it.
Tip: Don’t hit your list and targets with the exact same ad all the time. Can you imagine if you got eight of the exact same broadcast email offers in one week or even three weeks? You’d be like, go away! Instead, there’s a lot of evidence that shows that you can go across media. The nice thing is your prospects are probably in many different media. They’re not only using email. They’re on websites. They are using social media. They are reading articles in online, social media, they’re listening to the radio. They’re all over the place during the course of those three weeks, so target your campaign accordingly.
Remember, you are the conductor!
Your prospects are in many places and you can reach them across many places but the key is, orchestrate it to create maximum impact!
Let’s say you have some really great affiliates and referral partners. You will want to orchestrate their efforts so they’re all going to, in the same week or two periods, promote your same offer. Then, you will pull back across all of these partners and stop the campaign. Most of your prospects will be on duplicate lists, so they’ll begin to remember it and act. Orchestrating is like combo a branding slash offer campaign.
Try to get all your different promotions for a given campaign going at the same time and then you can back off and let it ride for a little while. Then you go back on and start your next big campaign. It’s very effective.
Let’s get those promotions created, out the door and live!
When you are doing so, don’t fall into the “today” or “this week” trap. I have seen too many subscription teams use a calendar as their to-do list for a given day or week. They go to the calendar, see they need to promote on a given date, and then come up with an offer, write creative, and go to production.
That is not the only way! Consider a marketing agency, they turn out high-quality, high-impact, and high-converting campaigns consistently and at a high-rate. What do they do differently? They look at the entire calendar (e.g.; not just next week’s email campaigns) and essentially, batch their work with a blueprint called a creative brief.
Creating an agency-like blueprint
Instead of looking at the calendar as a to-do list to get done, an agency views all the various promotions across email, social media and other channels as one campaign with many different tactics. The marketing agency orchestrates the elements of a campaign with one single creative brief.
In that creative brief, there will be copy points, key factoids that everyone’s going to reference, key search terms, and essentially everything that a team will need to execute the 1- to 3-week campaign.
A creative brief is usually one to two pages, but its everything you need to know about the campaign’s offer, about the demographic, about the benefit, the official benefit statement, official promotional price, and deadlines. That creative brief can now be used as the tactical blueprint to efficiently execute all the creative copy, emails, and design.
Many small teams forego using a creative brief because they are well, small, and they feel its extra work. I strongly recommend against that thinking. Even a one-person shop needs a creative brief, with everything documented in one place, you can:
- Go back and reference thinking and strategy if things change.
- Cut and paste all the key creative elements as you need them again, and again, and again.
- Keep yourself honest if you are keeping with the deadlines and goals of your campaign.
The creative brief can typically take a ½ day or full day to get right. Once you have that, you now have the blueprint and executing is incredibly easy and incredibly quick and frankly, the intern can do it. It’s not tough. The only thing that is tough is orchestrating the media buys and partners. You should orchestrate them early on. In fact, you might start contacting them before beginning working on the actual ads for your campaign creative.
When launching a campaign, I recommend you hold a private webinar for your top partners and affiliates. Talk through the campaign, launch timing, creative and help them understand what’s in it for them (their revenue cut) and make them feel great about your business providing them the tools they need to be as successful as possible. Get them excited. Get their feedback and then they all roll it out together.
That’s how you execute agency style.
Now let’s talk about what you actually would be offering in your promotional campaigns, you have basically three different types of offers you can present:
- LEAD GENERATION: This is something is very big now and it really does make a difference. This is one of those ways that you can get that name, get the opt-in, get the registration and then be able to and convert them in a fairly short time period.What you’re looking for is for someone to opt in, then convert them into trying or purchasing. Generally, when you generate leads, you need to them try to convert them to a paying subscriber in about 30 days. After 30 days, the people who are most likely to convert will have done do.
- TRIALS: There are many different types of trials you can offer, but my biggest recommendation is to always, ALWAYS get a credit card and charge something for it. You’re going to need to test and optimize and find out what works best for your prospects. (It could even be a $1 trial!)The period of time can differ although, I tend to recommend a shorter period of time than a longer.During the trial, your job is to convince your prospect they should continue and pay to be a paid customer. Tactics include email drip campaigns, sending a postcard, or even calling them. You could do all sorts of different things. What is critical, though, you have to ask for a credit card with the trial. Really. Unless you’re doing site licensing. Everybody else, you need to ask for a credit card with the trial. If they won’t give you a credit card, they weren’t a good prospect in the first place.
- PREMIUMS: You may want to offer a premium. A premium is a gift with paid order. Don’t assume that if you’re offering something that it is going to improve your lead generation rate or trial offer take rate. Test it.
Whenever possible, with your subscriptions, try to point out to people what benefit they’re going to get, immediately, the minute that they subscribe. If they feel like they’re going to get something right away, the minute they pay to subscribe, it’s like bam, right there, again, instant gratification. Really push that through.
A word about deadlines;
You always want a deadline on your promotional offers if you possibly can. Never make the deadline the first of the month. That’s because even if it’s the thirty-first I really don’t believe the first is coming for maybe another week yet. Psychologically, you never see that first coming until it shows up and suddenly it’s the second. You want your deadline on the fifteenth, the thirtieth, and the thirty-first will work. Any of those dates will work, but the first or second really do not work.
Pay attention, even if you didn’t like math in school or don’t have a math background, pay heed to this: Subscription marketing is ALL about math.
It’s imperative to model the performance of your subscription marketing campaigns.
1 First, estimate your lifetime value.
The lifetime value of a subscriber or member is the amount of revenue you receive while they are subscribed. For example, if you offer a monthly subscription and your price is $20.00 and your typical member sticks around for 5 months, then your lifetime value (LTV) is $100. If you offer an annual subscription for $1,000 and your typical customer sticks around for 5 years, then your LTV is $5,000.
If you do not currently sell subscriptions, you will want to underestimate.
If you’re a current subscription business but you haven’t done a lot of heavy marketing maybe in the last six months or in the last year, underestimate. You want to underestimate your lifetime value because the people who are on your file now are probably your biggest fans. They’re the hardcore people and their lifetime value is going to be really different than the lifetime value of maybe your average typical newbie from a big marketing campaign. Underestimate, keep yourself safe.
Do add in the average cross-sales and up-sales. Those are other things that you’re selling people once they come in as a subscriber. Maybe you’re selling them an event ticket, an ebook or coaching. Maybe you’re selling ads against their page views or renting out your list. There may be other ways that you’re making money from that subscriber. Make sure that’s all estimated in there.
When we say lifetime, we really do mean the life of the account (but still underestimate). You’re going to take that number and set it to one side.
2 Next, calculate your estimated cost-per-acquisition.
Your cost-per-acquisition needs to track a new subscriber going through all the different tactics that you typically would be using. You need to track offers, leads, trials, and conversion rates by promotional channel. You also need to track any commission on the sale, cost for the promotion (e.g. cost-per-click) and other activity. Maybe you’re paying a consultant a one-time fee.
Please bear in mind internal team time suck. Social media, marketing partnerships, and barters can suck up a huge amount of time and you are not tracking it. It’s your internal fee. You want to reflect that in your budget because otherwise, you will not fully understand the cost if you want to ramp up a program. (Then you’re going to be crushed with work.)
You also want to include card processing costs. In other words, what does your merchant account cost you to process each order? That could be a large part of your cost, especially for high-volume low-cost subscriptions and memberships.
To do all this math I recommend you go to the site and download our Subscription Financial Model. It’s a comprehensive excel spreadsheet, while very detailed, is pretty easy to fill out. Download the workbook and instructions, take a look at it. It will help you. It has ten different kinds of marketing campaigns and it helps you figure out the math on all of them, immediately showing you a campaign cost or cost per acquisition for each one of them.
You’ll be shocked when you look at it because the amount it costs you to get a new subscriber from each one of the different types of marketing. Each is so different. You won’t realize it until you do the calculations. You’ll finally understand where to put more effort. It really changes what you decide to do with your time.
3 Finally, understand acquisition budget per subscriber.
Now that you know your lifetime value as well as the cost per acquisition, averaged across all campaigns and (at a minimum) your most expensive and your least expensive campaigns, you can do some math to determine the maximum amount you want to spend acquiring that customer.
The more you invest in marketing in general, the more you make over time. The trick here is to spend smart. You MAY want to spend 100% of your LTV or you may want to spend only a portion of it and there are valid reasons for both options. Your president or CFO should be making this decision with the marketing department. The marketing team should not be making his decision in a void.
You, your marketing team, your company should clearly understand that you can spend a certain $, the first term revenue, or % or sale for each new customer acquisition.
TIP: For markets or product lines that are declining, cut off every possible expense and just milk it. Let it run. The few faithful that are left, the ones that will pay and pay, you will at least make profits from them and you won’t waste any more money. You have to really know your marketplace to make that decision.
Successful subscription marketing is constant learning and adjusting based on analytics and testing.
Look at every single source where you’ve got members in the past year (month or quarter) and understand actual results. How much did you make and what did it cost? What was that lifetime value of the people you got from that campaign and from what source? Map all this detail against your original estimates to understand, not only how well you did against those estimates, but to learn how to model your business better moving forward.
There will be radical differences between your estimates and reality. You’ll always be surprised. There’s ALWAYS going to be a surprise. One campaign will have done way better than you thought and one of them will have stank and you never would’ve seen it coming. You will get smarter and smarter about what works for your target customer and your business, and you can use whatever you learned to improve your marketing investment the next time around. Over time, you get better and better and your marketing machine will ramp up to support your profitable subscription business.