In this on-demand webinar, Robbie Kellman Baxter shares why the smartest and most successful companies are using radically new membership models, subscription-based formats, and freemium pricing structures to grow their customer base – and explode their market valuation – in the most disruptive shift in business since the Industrial Revolution.
Specifically, Robbie will walk us through what membership-focused organizations can learn from other business models and teach us how to leverage and apply ideas to our own membership business model.
In this webinar, you will learn:
- How to use the membership economy to drive recurring revenue for any kind of organization
- The value of a Superuser, and how they can build value for their fellow members, at no cost to you!
- Why membership is so appealing to people and how you can connect on a deeper level with your members
Video:
Transcript:
Kathy: Hello everybody, this is Kathy Greenless Sexton. Hello. I am here with Robbie Kellman Baxter, the author of The Membership Economy, and we are here today to discuss The Membership Economy and subscriptions. I would like to officially welcome you, Robbie. Welcome to our webinar.
Robbie: Thank you so much Kathy. I’m really excited to be here.
Kathy: Thank you. Well I want to let everybody know your background before we get started. Robbie is actually the founder of Peninsula Strategies and maybe you can tell us a little bit about that. In summary, it’s a management consulting firm that Robbie works with clients globally. Can you just tell us a little bit about your firm, Robbie?
Robbie: Sure. My firm, Peninsula Strategies, as you said, it’s a management consulting firm that’s focused on growth strategies for organizations that are entering or part of the membership economy. Using subscriptions, thinking about community, thinking about long term formal relationships with their customers.
Kathy: This work led to you writing The Membership Economy which was released in March 2015 and is a number one Amazon top seller, correct?
Robbie: Yes, I’ve been lucky. It’s been number one in several business categories over the last couple of months.
Kathy: Well that’s just fantastic and I’m really excited and I know all the members are excited to hear from you and what your message is today. I’m going to let you take over and present The Membership Economy and what it means for subscription businesses. Take it away.
Robbie: Great. Can you see my first slide? The Magic of Technology?
Kathy: I can now. I can [00:02:00] move it for you if there’s any issues.
Robbie: Perfect. I want to start by asking everybody to close your eyes and get comfortable and take a moment to think about a time when you really felt connected to an organization. Like you really belonged. It could be non-profit, like a sports team or your church or synagogue. It could be a professional association or a fraternity. Or it could be a business. A user group. A gym. Even an investment firm that you’ve been part of. It was a place where you felt like it was helping you to mitigate risks, you felt like you belonged, you felt like you had an opportunity to be recognized by your peers for your contributions and held in high esteem, and you wanted to tell your friends about it. You wanted to tell your peers about it and you felt maybe even a little bit of pride in being associated with the organization.
Now I want you to open your eyes. That’s what The Membership Economy is all about. Today I’m here to share with you what The Membership Economy is, how you can apply the principles to give your members that same kind of feeling that you just experienced, and why that should matter to each one of you as entrepreneurs and executives running subscription businesses. We’ll talk about some very simple things that you can do to transform your business for continued growth.
Kathy: Great.
Robbie: Can we go to the next slide? For me, this all started with Netflix. I became aware of this massive transformation about 12 years ago when I started working with them as a new client. Are we on the right slide?
Kathy: Yeah. It seems to [00:04:00] be playing. I’m going to just – for some reason it got in play mode. I’ll just manually go and change them for you, okay Robbie?
Robbie: Thank you. Sorry. There we go. Netflix. I had already been consulting for many years as a strategy consultant with Booz Allen and Hamilton, and I had gone out on my own and Netflix came to me as a client and I fell in love with their business model. I was helping them with customer acquisition and retention and I was just so impressed and excited about their model. I was excited as a consumer because I loved “three out at-a-time”, I loved always having movies at the ready, and I loved no late fees.
As a businessperson, I noticed that they were using the data they were collecting to constantly improve the experience for their users. I saw that they were getting a recurring revenue model, which is pretty much the Holy Grail for any business owner. I thought to myself, “This is what I want to do. This is the best business model I’ve seen. It’s best for the company but it’s also best for the consumer.” I was lucky because even as I was working on that engagement, I started to get calls from other organizations that wanted to be the “Netflix of news”, the “Netflix of music”, the “Netflix of software”, the “Netflix of hardware.”
People were starting to catch on that subscription models were really the way to go and that building a membership model really changed the game for a lot of different kinds of industries. It totally changed the direction of my career and I began to focus on what I’ve come to call The Membership Economy. What is The Membership Economy?
Membership economy is a term that I coined to [00:06:00] explain this tidal wave that is changing all the rules. It’s about a move from ownership to access. It’s about going from the transactional to the relational. It’s about going from the organization pushing out messages to the customer to the organization acting as an umbrella and facilitating conversations among members and back and forth between the organization and the members. It’s much more transparent.
In The Membership Economy, the transaction is the starting line. Not the finish line, and your customers become super users who can catapult your business forward. Organizations enjoy predictable recurring revenue, greater engagement, and loyalty at a whole new level. It’s pretty clear why organizations are rushing to evolve to these membership models. Customers and consumers are also rushing to join and that’s also really interesting. From the organizational perspective, it’s all about recurring revenue and reducing lumpiness.
If you’ve ever worked in a business that had lumpy revenue, where you’d have a big customer come in, get a lot of revenue, but then you didn’t know where the proverbial next meal was coming from. If you’ve ever had that kind of experience as a business owner, you know how great it is to have that predictable cash flow. Just making sure we’re on the right slide.
That’s why it’s important for companies. The question is why is it important for the customer? This is really interesting and it goes to Maslow’s Hierarchy of Needs. My sister is a psychologist and she taught me about this idea that Abraham Maslow in the 40s came up with which is this idea that we all as human beings have the same basic [00:08:00] needs. Once our physiological needs have been met, those are things like food and shelter, once those things have been met we want to mitigate risk. We want to be safe and secure. We want to belong to social organizations and be connected with other people and we want to belong.
We want to be held in high esteem by our friends and our peers and ultimately we all long for self actualization, which is basically just the idea that we want to achieve our highest and best purpose. Membership, when done properly, because it’s an ongoing relationship, lends itself really well to helping people fulfill these needs. It’s the way that we feel when we are part of a fraternity or a sorority. It’s how we feel when we’re at family reunions and surrounded by people who look like us and know our family lore.
It’s how we feel when we go to sporting events and root for people playing a sport that we might never have played, we might not even have thought about playing. We sit in the stands next to people we don’t know but we feel close to them and connected to them because we’re wearing the same logos and because we’re watching the same event. It’s even part of the reason, maybe not the whole reason, but part of the reason that we participate in organized religion. It’s the bringing together the recognition, the connection, that feeling of security that something really important in our life is being handled for us. Membership can be really powerful.
Why is this happening now? None of these kinds of models are new. Fraternities have been around for hundreds of years. Churches have been around for thousands of years. We’ve even had paid subscription models for thousands of years in the form of trade guilds. In the last few [00:10:00] hundred years, subscriptions have been very popular across many industries. Charles Dickens sold his novels in a subscription model. This is not a new idea and yet it seems to be taking the world by storm right now. What has happened?
For me, the biggest change has been technology and technology is accelerating the expansion and the infrastructure of trust. The infrastructure of trust – You cannot have a membership relationship unless you trust each other. The organization has to trust the members. The members have to trust the organization. That’s easier to do when it’s face to face. It’s hard to do when it’s remote. Things like mobile devices with always on technology, big data that allows you to analyze people’s behavior and provide them increasing value in an increasingly customized experience. Storage prices going to zero, that makes it possible for us to share content, video like this, at a very, very low cost. All of this is extending the infrastructure of trust. Which is creating new opportunities for virtually ever kind of industry to participate in the membership economy.
I want to explore some of these new possibilities and what’s changing for people. There’s several things that have changed in the business model and I’ve created this seven step membership economy framework as a means of simplifying some of the ways that you can immediately apply some of these principles to your own business. I’ll run through them quickly and I’m happy to take questions.
The first one is around your organizational model and that has to do with, what’s at the center of your business? Is it your products and services? Or is it your customer? [00:12:00] Depending on how you build your business and how you structure your team, you might be putting the wrong thing at the center of the model. It has to be about the customer and you have to be willing to change and evolve your products and services in order to continue to serve that customer’s best interest.
Second thing is the funnel. The funnel used to look like an inverted triangle, now it’s an hourglass because that moment of transaction, that narrowest point in the bottom of the funnel is really just the starting line that leads to a need for … Your best customers need to be participating for a long time. They need to be telling their friends about it. They need to be participating in a way that improves the experience for their fellow member. All of that comes after they sign up with you and so you need to keep thinking about your communication and your relationship with your customer even after the point of transaction, so that’s a big shift.
That leads to onboarding. Very few organizations have a really good onboarding program. A lot of companies have it with their employees where they say, “The first 30 days that somebody’s hired here, this is what we’re going to have them experience so that they can both be really effective at work and so that they feel really good and really loyal.” We know as human beings that those first 30 days, maybe even those first couple of days are when we decide if we belong or not and if we feel good about our investment.
Organizations, especially those using a subscription model or a membership model, need to think really hard about how you onboard new members so that they get some of the value right away and they engage and they learn how to behave in a way that is going to get them the results that they want. It’s really easy for someone to subscribe to something and then not use it and then one day wake up and say, “Why am I spending money on something I never [00:14:00] use?”
The fourth and fifth items are around pricing. You want to think about tiered pricing. I know this is something that you think about a lot, Kathy, and you want to price in a way that is priced on value, not on your costs, that makes sense to your customers and that’s both flexible enough, it gives enough choice to meet different needs, but isn’t so complicated that something has to become an expert on your – it’s like a phone company, when you get your cell phone and you’re like, “I don’t know what I need. Why don’t you tell me what I need and make it fair. I feel like I’m about to guess the wrong answer on a test.”
Then the other piece that goes hand in hand with your pricing is what you don’t price. Do you offer a free trial? Do you offer freemium, which is basically a free subscription forever as a means of either building trial or expanding your community to create more value for each member that’s already there. Or maybe even your free members are spreading the word about your paid offerings and so they’re serving as marketing channels. There’s lots of reasons to consider free and because of the decline in costs of storage and the ease of distributing content, it’s becoming cheaper and easier for almost every kind of organization to at least consider giving something away.
Technology is something I know that you think about a lot. What is the underlying technology that’s going to allow you to establish a forever transaction and build strong relationships? I encourage organizations, even very small businesses, to think about what they need, write up their requirements, and then go look for technologies that can support them as opposed to just blindly looking at technologies because it can be overwhelming. I also encourage people to think about it in an ongoing basis. You don’t want to do it once and then forget about it. It’s something that’s constantly evolving and you need to stay on top of that.
[00:16:00] Then the last thing is this new discipline called “customer success,” which is very big out here in Silicon Valley and it’s the idea that after the sale, you want to make sure that people engage and you want to have people on your team, it could be you if you’re a small business owner, it could be somebody that works for you, who is checking in with those people, not just for customer support, not just to sell them more stuff, but to make sure that they’re having a great experience and that they’re engaged and they’re loyal because so many subscription businesses confuse inertia with loyalty and they’re different things. Then they’re surprised when people cancel. I know this is something that you talk about and that you teach your members as well.
Do you want to share your stat? I know you have a great stat on why it’s so important to be first and to be connected.
Kathy: Yeah. I have actually a couple stats that the members may or may not know. First of all, to your onboarding point, our data has shown if you have a great onboarding program, you’re going to have a 20% lift in your retention rates. Now, the onboarding that we look at pales in comparison to some of the concepts that you’re talking about, Robbie, and if people really take to heart your message, I think that 20% could be raised even higher. That’s just point number one.
Point number two is regarding your technology and looking for technology vendors, I strongly endorse your recommendation that you need to talk to more than, you need to put your list together and then talk to vendors and this is a very scary stat. Whoever [00:18:00] calls back a potential customer first, they’re 90% more likely to get that sale and the reason is, people are lazy and they don’t look around. They just go with whoever calls back first. That may not be necessarily what’s best for your business.
Robbie: Wow.
Kathy: Yeah, it’s scary.
Robbie: That is scary, but it’s true. You do need to be proactive and you need to be connected and just because someone’s not, especially with subscriptions, just because someone’s not complaining, that does not mean that they’re happy. I think people make that mistake all the time.
I want to talk briefly about the idea of a “super user.” A “super user” is even more than a good customer. It’s a great customer that uses your products frequently and well, so it’s an engaged subscriber, but there’s somebody who goes a step beyond that. They might be helping you by giving feedback to the organization about ways that you can make things better which might seem like a pain in the neck, but really people who take the time to give feedback are people who are really engaged and really are committed to your offering.
They might also be helping to onboard new people by mentoring them, by explaining how to get going. They might be engaging with existing members in support groups or help groups or responding to other people’s forum questions or maybe volunteering to give presentations to the group on behalf of the organization. These people are like gold in your business model because they’re doing the work of extending and strengthening the value of your program. It’s really important that you build your model to create “super users.”
If you’re a “super user” in one organization and you’re giving 10, 20 hours there, you don’t have time necessarily to do it. If you’re doing it at your church, you’re not going to have time to do it at your professional association. If you’re doing it on [00:20:00] LinkedIn, you’re not going to have time to do it on Facebook. We just have limited time so you really want to think about how you win tem over and get their time and their mind share.
A couple of examples of superusers: One of them is the MVP program at Salesforce. I’m sure some of our listeners are familiar with Salesforce. They were the first ones to really popularize the SaaS model. They were among the very first to come up with this idea of the “consumerization” of the enterprise where they realized that people within companies are still people and they still wanted to be treated with personal recognition, they want their personal problems solved, they want to be able to be held in high regard by their peers. Hey, if I’m spending 12 hours a day at work, I want the people at work to be my community and I want to feel connected with them.
Salesforce realized that. They created this program. First they created a lot of forums, online communities. They have a Dreamforce event, which is gigantic. They invite their best customers to speak at Dreamforce. They have user groups at Dreamforce. Then they have these online communities where you can help one another, ask questions, build relationships, and the very, very most active participants in those areas get a special designation of MVP and do you know what the prize is for being MVP? It’s really hard to get.
Kathy: What?
Robbie: You get to speak more to people that are Salesforce customers. You get access to more senior people at Salesforce, and you get free Salesforce logo wear. People really –
Kathy: People love it.
Robbie: They love it and it’s a huge deal. This is what they gave out last year at Dream Force. These cool Converse sneakers with the matching socks. This is this big deal and it goes on people’s resumes and it’s a bigger part of their identity than their employer. It’s more important to [00:22:00] them than where they work, that they have this designation and they’re really committed.
A consumer example: This is my sister. She’s wearing a shirt and it says, “The sport of old broads kicking your ass has arrived.” Sorry for the expletive, I’m just reading. You can see, we look the same from the front – we look very different from the back in the tank top. She’s a cross fitter. I don’t know, are you familiar with Cross Fit at all?
Kathy: Yeah.
Robbie: Okay. Yeah. She goes, she works full time as a psychologist, but she goes three times a week to Cross Fit. She stays until the last person finishes their workout. She encourages them. If they don’t show up, the people that are in her regular workout, she calls them. “Hi, I was just wondering, I saw you weren’t there today. I’m wondering if everything’s okay. Do you want me to come by and help you with the WOD?” WOD is the lingo, it’s workout of the day, which is their lingo for their workout. Everybody does the same workout on the same day.
On days when her Cross Fit box, which is the name for their studio, that’s the lingo, she and her husband put out the equipment in front of their house and they host a Cross Fit driveway and they invite their entire studio to come to their cul-de-sac and work out with them. That’s how committed they are.
Kathy: Wow.
Robbie: If you met her on a plane or you’re sitting next to her somewhere, I guarantee you she’d end up talking to you about Cross Fit. She’d tell you what a great community it’s been for her. How much it’s taught her about perseverance and mental toughness, how she’s never been fitter, how she’s never been healthier, how happy she is with how she looks and how she feels. She would probably take you herself to your first workout.
She doesn’t get paid for this, she just really is committed to the organization. Cross Fit’s a for-profit organization. My sister is constantly onboarding people and training them and [00:24:00] helping them. Like so many other people, she worships at the Church of the Holy Cross Fit. This is what a superuser looks like. It’s really, really powerful for an organization to have people like this.
I want to bring it back to the listeners and how do you win the attention, the hearts, and the minds of your superusers? Membership economy provides a huge opportunity to deepen the kinds of relationships that you have with your subscribers. Loyal subscribers that integrate your products and services into the regular routine and especially the superusers can be such a powerful resource.
What I want people to do is just spend a minute thinking about what The Membership Economy could mean for your subscribers? How are their expectations going to evolve, especially around being treated like members because they’re being treated like members in other places so what is that going to mean for your business model? Are they going to expect greater community? Are they going to expect physical connection as well as online connection? Some organizations do a great job of gathering people for conferences and live events. Others are great online. Some of them are doing both really, really well.
These are kinds of changing expectations. My question for your subscribers is are your members going to expect something different? What is the delta between today’s subscription model and a true membership experience? I would encourage you if you’re not driving while you’re listening, I would encourage you to take a minute and just write down a couple of your ideas and then share it with one of your colleagues or a trusted advisor because this is really important.
What could it mean to you? Maybe it’s gotten you thinking but you’re not quite sure what it means. Maybe that [00:26:00] was a hard exercise. Maybe you’re saying, “I don’t see how I need to go beyond a subscription model to community engagement. This isn’t really relevant to me.” What I want to share is that in my research, I’ve seen evidence of a membership economy across virtually every kind of business. I’m out here in Silicon Valley working with tech companies for the most part. That’s been the bulk of my career for the last 15 years.
I started with online subscription businesses like Survey Monkey and Ignite. Then I worked with online communities as well and they’re a little bit different. Match.com, LinkedIn, Pinterest. In the course of my research I saw that the same principles were being applied in mainstream business models like T-Mobile, like American Express. You can’t even say the word membership without someone saying, “Membership has its privileges.” Small businesses.
My neighborhood bookstore is now run on a membership model because they’ve realized that they don’t make money from selling books but people are willing to pay for access to good ideas. That’s what independent book stores are really about is identification and discussion of great ideas and so people come to the bookstore now and they go to events and you pay to be a member. The bookstore still has some books but nowhere near as many books as they used to have because now they have this big speaker space. They’ll order the books for you but for the most part it’s really become a community treasure, which is kind of what it was already.
Then you see the membership economy in professional associations and you see it in loyalty programs. Loyalty programs have a lot of these elements. They try to have an ongoing relationship with their members. They’re trying to build loyalty by recognizing them and rewarding them but in many cases, it’s more like handcuffs than like a big magnet. I think of it as a gateway to the membership economy although they’re not necessarily all the way [00:28:00] there. For people listening, there’s a lot of different flavors of membership and I think it’s useful to think about what could work for your members.
A couple of quick stories, Amazon, you might not think of Amazon as a membership model. They’re an eCommerce company, but they’ve gone from being a bookseller to a seller of everything to a platform, a community, a marketplace for truly everything that you can buy. Then they’ve been playing with membership and subscription. If you look carefully, most people are familiar with Prime.
Kathy: Prime.
Robbie: Right? Most of us spend too much money on Prime and feel good about it and are loyal and don’t think about buying anywhere else once you get your Prime membership. I buy everything from toothpaste to furniture from Amazon. They have subscription models now, I’m sure you’ve seen this, where you can buy a continuity-based product. I get my ProMax bars. I travel a lot. I like to have a ProMax bar in my purse in case I miss a meal. I get them delivered to my house every two weeks.
Then they have bought a deal of the base site which is a place for them to experiment with community where people talk about the deals in a very authentic way, sometimes even criticizing Amazon for a mediocre deal but Amazon allows and encourages that kind of open, transparent discussion. They’re always testing things at Amazon about subscription, membership, community; building relationships.
This picture I love because this is what Amazon was named for, the river that is the source of everything for the life that is nearby. Right. It’s a source of food, it’s your hygiene, it’s transportation, it’s everything. That’s really what Amazon wants to be for its members. They want you to have a forever transaction and then never think about going anywhere else.
Another [00:30:00] example is the AARP. Last summer I was visiting with them and they were about to introduce this “real pad,” which is a tablet device for senior citizens. Their mission is to improve the quality of life for people over 50. I’m sure nobody listening is qualified for that because we’re all really young. For people over 50, it gets really hard to see the small icons and to understand what you need in terms of technology. They asked around all the big vendors, nobody was willing to build a tablet for seniors so they commissioned one themselves.
I asked Kevin Denellin, who’s the Senior VP of membership there, what happens if your product is really successful when you launch it and the next week Amazon announces Kindle for Seniors and they crush you and put you out of business? He said, “I do a happy dance because I’m not in the business of tablet devices. I’m not in a product business. I’m in a business of helping my members achieve this goal of better life and you know what, if Amazon is creating great technology for my members I am thrilled.” He’s actually willing to disrupt himself in order to keep his members happy and I think it’s just a great role model.
If you think about the organization where you’re working, you really want to think about what has to change, what could change. Do you have the right team? Do you have the right services? Do you have the right processing to really truly treat your members like members and not just like customers or even subscribers? After all, subscription is a pricing model. It’s not an attitude. It’s not a community. I encourage you to think about what might change within your organization and then again, share it with your colleagues. Explore.
Here we are at the end of the talk and what are you [00:32:00] going to do now? Hopefully you’ve felt somewhat inspired. Lots and lots and lots of ideas, but what can you do for your own organization? I always encourage people to get real and that stands for research, experience, adjust, launch. Research means look a little deeper into maybe one or two of the ideas that we’ve talked about today. Maybe it’s about creating some kind of community. Maybe it’s about establishing an onboarding process. Maybe it’s about customer success as something that you want to measure and track.
Look into it and see what data you have. Experiment with some ideas. Adjust as you learn and then after you’re feeling pretty confident about what you’ve got, then launch. You don’t have to do it all at once. You can do it in small increments and that’s the great thing about membership models is that it’s not about the big ta-da with the jazz hands. It’s not this. It’s not ta-da! I’ve got something new for you. It’s test, implement, change, innovate, test. I encourage you to do the same. Try it for 30 days, see where you land. That’s the way to constantly be improving. I know that’s something that you encourage as well, Kathy. Improvement, trying the little tiny things that can have a big impact and to always be innovating.
I want to leave you with this idea that membership is a mindset. It’s not a pricing structure. That’s the big difference between The Membership Economy and subscriptions. You can have a great subscription business and not think of your members as members. You can think of them as customers and it’s a really different way of thinking about them, different expectations on both sides.
Membership is special because it really changes, if you think back to the opening exercise, when you feel like a member, you’re more patient, you’re more loyal, you’re willing to roll with the [00:34:00] occasional mistake or thing that goes wrong, and you feel an exchange really known and recognized and appreciated by the other side. At the core of The Membership Economy, it’s really all about the attitude. It’s how you engage with your customers and it starts with every person in the organization.
We’ve only just scratched the surface in terms of how your organization can harness the power of The Membership Economy. If you like what you hear, I would encourage you to check out the book, The Membership Economy. It’s available on Amazon, at Barnes and Noble, at any independent bookstore. There’s lots of practical tips and tons of case studies. I think there’s over 40 case studies in there of different companies. I encourage you to do that and I’m delighted to talk further. We have time now for Q&A, and through Kathy I’m happy to answer questions for the next week or so if other things roll in. At this point I’ll open it up for questions.
Kathy : I actually have one for you. It’s interesting because The Membership Economy is something that’s really being discussed. I was actually at a [Sippa 00:35:15] conference a couple of weeks ago and there were case studies of publishers who’ve created membership and even associations to really engage the people in their community. People are out there testing right now and doing this successfully. I just want to start out with examples and that message.
Diving into tactical, if I’m a publisher, if I’m a website that has members, do I focus on brand, do I focus on live events, do I focus on this onboarding process which in our world is very scientific [00:36:00] almost, or do I really think about technology like forums or discussions or something like that? How do I segment and plan and figure out what I really want to do to engage this community? I think I know you’re probably going to start off with the attitude and who you are, but I’m just real curious how you would segment those details.
Robbie: It’s a great question and the question’s really about prioritization. It’s because we’re all busy and there’s very few organizations that say, “Wow, we have excess bandwidth and we’re not sure what to do with it.” Everybody’s maxed out. What I would suggest is that you start with what I think of as the value market fit. You want to make sure that whatever it is you’re offering, take a step away from what you’re publishing and say, “What’s the value of what I’m publishing for my members?” Really understand that value proposition.
It sounds so basic but that’s where I would start and then you want to work backwards and say, “How would I provide more value to my members?” Someone asked me the other day, they had a couple of different things they were considering and I said, “You work on your brand if your problem is with awareness. If somebody says to me, ‘Every single person that comes to our site converts and they stay for years, but not very many people come to our site.’ I would say, ‘Okay, you have an awareness problem. Go work on your brand.’
“If they say, ‘Half the people that come to our site don’t convert or more than half,’ I would say, ‘Okay, you might have a messaging problem.’ If they say, ‘We have everybody converts, we have lots of customers but then they cancel,’ I would say, ‘Your offering is not very good.’ The first thing you always want to check for is once somebody signs up, are you getting the right people and are they staying for a long time because if the answer there is no, then you need to figure out how do I create more [00:38:00] value, more engagement, more loyalty, and you can do that like you said through the forums, you can do that through an onboarding process, you can do that through customer success. It’s only after you’re saying, ‘Everybody that joins, we know who the right people are and we know that they stay,’ that’s the only time that you would want to think about adding to the awareness and messaging up front.”
Kathy: Go ahead.
Robbie: I was just going to say most organizations over invest in that front end of the funnel, the top end of the funnel and don’t really investigate what’s going on at the bottom. Often it’s not even clearly owned by somebody, making sure that the product and the market actually are aligned. That’s where the energy usually needs to be sent.
Kathy: Got you. I have a quick question here. This says, “My company is in the publishing space and considering engaging its members via discussion forum. I’m worried that the forum might not be the right place or it’s not going to engage people or maybe spam, what’s the secret sauce trying to launch something like that?”
Robbie: Couple things, secret sauce to building a forum. Number one, elbow grease. As the owner or as the manager of the forum, it’s a lot of work and early on the results are small because you’re building something big and you’re getting that fly wheel going. That’s the first thing I’d say. The second thing is to the extent that you can take an existing community that already is engaging, maybe in the real world, and put them online, you have a greater likelihood that the communication and the content is going to be good. That’s what Facebook did, right? They went from college to college. These are people who already knew each other and had a lot to say to each other and they said, “We’re just giving you a new place to have your conversations.
What’s [00:40:00] hard is when you have new people who don’t know each other and don’t have any trust use a new mechanism that they don’t fully understand and don’t fully value yet. That’s where it gets harder. Those are the two things. You want to sprinkle it with really good content. Then people will come.
Kathy: Here’s a question. Develop community via social media or within your own site?
Robbie: This is a trade off. What you really want to do is build awareness through social media and get them to your own site. That’s really want you want to do. Facebook, LinkedIn, Twitter, those are great places to reach people who are interested in your area of expertise but who may not have heard of you.
Kathy: Right.
Robbie: They already have the preexisting structures for you to capture those names and start to build a relationship. The problem is, number one, most of those sites aren’t really optimized for true community of the kind that you want to build. Number two, you don’t control them. Facebook, they’re always changing their algorithm but last year I was working with a company that had already invested a lot of money in growing their Facebook fan base and they had thousands and thousands of followers. When Facebook changed the algorithm, it went from, I don’t remember what the numbers were, but 50% of the people seeing their posts to less than 12% of people seeing their posts. Facebook just said, “That’s how we’re doing it now.” This company had no control and they’d already invested not just elbow grease but money. They had done tons of ad campaigns to really grow this community and they didn’t have control now over what that community was going to see. It’s [00:42:00] risky.
Kathy: The next question is kind of a follow on, I believe, is segmentation. How do you segment, if I’m a publisher, how do you segment what goes in your core area versus a discussion forum over here, versus a public social, Facebook, LinkedIn, to drive people. How do I think about that?
Robbie: The public ones, you’re trying to attract people. You want to have content that reaches people who you wouldn’t otherwise reach. Little tidbits, great quotes, things that connect to other people, topics and ideas that kind of connect the dots between what you’re doing and what other groups or other ideas, how they’re related. With our private forum, what you really want to do is give people the opportunity to help one another and to go deeper on specific issues. We all know that, I mentor entrepreneurs on their membership models and it’s really helpful they ask me questions but sometimes they don’t even know what to ask and what’s great is we have a mastermind group where they can hear other people ask the question. Then they’re like, “Oh! I didn’t even know that was an option. It never occurred to me to have a breakfast series or it never even occurred to me to call fast company and see if I can blog them.”
The forums are a place for letting people eavesdrop on each other’s questions and also giving people – we talked about how Maslow saw that we want to be held in high regard, well a great way to be held in high regard is to help your peers. That’s really what the forums are about.
Kathy: Got you. I just want to let everybody know we are running over [00:44:00] compared to what we usually do so if you have any other questions, just let us know. I had a question, I actually forgot what I was just about to ask you. Just popped out of my head. What in your mind is, let’s say the number one thing that great communities and great membership organizations are doing? What is that number one thing?
Robbie: I think the number one thing that the great organizations are doing is listening. I think they’re listening to their members bu they’re also listening to what’s going on in the bigger world. You can’t listen to one without the other. That’s what I would say. They’re very aware of what’s going on in the bigger space, what competition is doing, what even unrelated businesses are doing. You see so many businesses that are being disrupted out of left field. You’re seeing professional associations that are being kind of gutted by LinkedIn. Totally different business model. You want to kind of be aware of what your customer’s alternatives are, what their environment looks like as well as what they actually saying to you. The best organization constantly are asking and looking and listening.
Kathy : Absolutely. Well, I think it’s time to say thank you, Robbie Kellman Baxter!
About Robbie Kellman Baxter:
Robbie Kellman Baxter is the founder of Peninsula Strategies LLC, a management consulting firm, as well as the author of the Amazon Hot New Release, The Membership Economy, which has reached #1 in 6 categories including Sales & Selling. She coined the popular business term “Membership Economy”, which is now being used by organizations and journalists around the country and beyond.
Her clients have included large organizations like Netflix, SurveyMonkey and Yahoo!, as well as dozens of smaller venture-backed companies. Over the course of her career, Robbie has worked in or consulted to clients in more than twenty industries. Before starting Peninsula Strategies in 2001, Robbie served as a New York City Urban Fellow, a consultant at Booz Allen & Hamilton, and a Silicon Valley product marketer.
As a public speaker, Robbie has presented to thousands of people in corporations, associations, and universities. We found Robbie through our friends on the faculty at University of Chicago, Northwestern and University of Utah, who had recently invited her to speak at their Winter Ops conference in Snowbird, Utah.
Robbie has been quoted in or written articles for major media outlets, including CNN, Consumer Reports, The New York Times and the Wall Street Journal.
She has an AB from Harvard College and an MBA from the Stanford Graduate School of Business.
