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SVS and Creating a Membership Community: Two Key Components to Winning in the Subscription Industry

Jay Myers, co-founder of Bold Commerce, shares his insight on what sets apart winners and losers in the subscription industry.


What separates winning subscription businesses from losing subscription businesses is a well-rounded subscription stack that creates a healthy subscriber community.

A Subscription Value Stack (SVS) is the combination of curation, access and replenishment that a subscription offers to customers. A well-rounded SVS includes all three aspects and is what increases perceived value for customers. An increase in perceived value means businesses can also increase prices.

In addition to a great subscription value stack, companies must seek to expand and improve their offers year over year. This is what keeps customers returning for more and reduces subscription fatigue.

Subscription businesses must also focus on turning their subscribers into members. Creating a sense of belonging and giving them exclusive benefits increases the likelihood they will remain subscribed.

Finally, subscription businesses can create exponential grow by utilizing the refer-a-friend program. But instead of offering their members an unlimited amount of invites with a low value, businesses should extend a limited amount of invites with a high value attached to each subscriber. Seeing how valuable the offer is, the subscriber will then do the hard work of finding new customers who will actually use the offer. Through this program, businesses get the healthiest form of customer acquisition costs and see unstoppable growth.

Increase your value symbol. Concept words Increase your value on wooden blocks on a beautiful grey table grey background. Businessman hand. Business increase your value concept
Source: Bigstock Photo

What separates the winners from the losers in the subscription industry? Some would say it’s the acquisition rate; others would point to retention; still, others would say what most businesses do — the health of the bottom line.

While none of these answers are wrong, there’s another way to view winning within the subscription industry: a well-rounded subscription stack that creates a healthy subscriber community.

Jay Myers is the co-founder of Bold Commerce, an eCommerce app developer. With about 20,000 subscription brands using Bold Commerce software, the company looked at their data to figure out which companies were truly winning in the subscription industry…and why.

Their analysis of that data revealed trends among the top tier of performers — where companies grew exceptionally fast. It also revealed trends amongst the bottom tier of performers — where companies were simply failing.

Subscription Value Stack

What sets these two groups apart? The winners had a well-developed Subscription Value Stack (SVS) and the others did not. An SVS is the combination of curation, access and replenishment that a subscription offers to customers.

When subscription businesses first appeared, it was fairly easy to win. Companies simply needed to create a formula that saved customers money and created convenience for them. However, what used to delight and create convenience for customers is now expected. Further, if subscriptions fail to automatically offer convenience and cost savings, people become fatigued with the subscription and leave.

Is every subscription brand doomed?

No. The good news is there are many subscription businesses doing better than ever and growing faster than ever. Even though customers have come to expect more out of their subscriptions, subscriptions still create value for them in many ways.

Research from Bold Commerce backs up this silver lining:

  • 78% of adults have at least one subscription service
  • Top Fortune 500 companies embrace the subscription model
  • 75% of organizations selling direct to consumers will offer subscriptions by 2023

Even though most customers view subscriptions as offering them access, curation or replenishment, the subscription companies that flourish figure out how to combine all three in their offerings. They look at all of the value that goes into a subscription and find ways to maximize it for the customer.

“What we always challenge brands to do is, think about your offering on a board. Put these categories up and write down all the value you give that falls under each of these,” says Myers. “If you want a well-rounded offering, [customers] need get something from each of these buckets.”

Subscription businesses need to ask themselves: What is our subscription value stack?The answer to this question should be crystal clear. If not, business owners should take the time to figure out the answers to the following questions:

This is what our customers are getting for access…

This is what our customers are getting for curation…

This is what our customers are getting for replenishment…

When packaging all of these value levers together, it becomes what’s called “perceived value.” As a good rule of thumb, the perceived value should be three times higher than the actual value. For some brands, the perceived value may actually be much more. As the perceived value increases, the ability to charge more increases, as long as it remains at a healthy ratio.

“Access has the highest potential to increase value for the lowest input cost. If you had to do something to scale with the least amount of cost input, it’s access,” says Myers. “I would challenge people to think creatively about what kind of access they can give.”

Access is one of the value levers that’s often underutilized in Myer’s experience.

“Access is a really interesting one; you can add a lot of value under access that doesn’t cost a lot. And one of the biggest ways is through partner benefits,” says Myers.

Reaching out to aligned partners and finding out their customer demographics are similar allows for increased perceived value for the customer. Partnering with other organizations doesn’t necessarily cost anything. In many cases, the other company may pay to be the “preferred” or the “partner brand.”

Gold beam balance with shadow, representing value levers. Right bowl below. Front view. Gray background
Source: Bigstock Photo

Taking it to the next level

Unfortunately, subscription businesses can’t stop with a well-rounded SVS. If they want to see exponential growth, they must always increase their offerings year over year.

“You need to think every year what you can do to add value to the customer. Because what got them in isn’t what’s going to keep them. You have to continually onboard your customer. It doesn’t stop after two weeks; you need to onboard that customer and court them for the lifetime value of their subscription,” says Myers.

The best membership programs continually add benefits, always increasing value for members.

So, business owners need to ask themselves, “What’s our subscription value stack?” And be able to answer the following three questions. But they also need to be able to clearly articulate the rest of that additional statement:

This is what our customers are getting for access…

This is what our customers are getting for curation

This is what our customers are getting for replenishment…

And this is what we’re increasing every year….

A straightforward answer to these questions and this statement increases the likelihood of a business’ success.

Turning subscribers into members

Access is becoming something for which people are willing to pay.

“Subscription is a part of membership. Customers, by human nature, crave membership. You can be a member of something and not subscribe to it; and you can be a subscriber of something, but not be a member of it,” says Myers.

Subscriptions give access to a product or service for a period of time. A subscription is a revenue agreement. It’s a financial concept that says nothing of the benefits of belonging, but it’s rare that a person would pay regularly without some type of benefit.

Memberships mean being a member of a store, an organization, or a group, usually with exclusive access of some type. Membership is the notion of belonging. It’s a relational concept. It says nothing of cost or price, though most memberships end up having a cost.

Brands that execute memberships really well wrap a subscription around it. That’s where exponential growth happens.

“When you think like a subscription organization, you act differently, and you think differently. It’s simple things like calling your customers ‘members’ instead of ‘customers,’” says Myers.

Changing that mindset from the inside out is very important for companies in order to do this well.

Happy African American woman smiling and pointing at camera while searching for new members for international team
Source: Envato Elements

The subscription death curve

Around 80% of subscription brands have a growth curve that looks great initially and then flatlines. Regardless of the rate of churn — 8%, 10%, 50% — and regardless of the rate of acquisition, businesses will reach a point when they’re losing and onboarding the same number of people per day.

Companies plateau when churn and acquisition occur at the same rate. So how do companies with an exponential growth rate get past the subscription death curve? It’s all in their average referral rate — specifically, referred by a friend.

This is called the “viral coefficient.” For example, if a company has a 15% churn rate and the average customer refers 1.2 people per subscription, the growth won’t slow down, ever. Every customer acquired becomes a marketing channel and fuels further growth.

“Referred by a friend is the number one reason people subscribe to something,” says Myers. “It is the number one acquisition channel for subscription brands, yet 95% of our customers do it horribly wrong.”

Many companies simply have a link on a thank you page that invites customers to share their referral link with their networks so they can get a discount. It’s predicated on sharing that URL on a social media platform, yet many subscribers don’t do it. The offer is usually not incredibly enticing, and it welcomes an unlimited number of invitees.

Companies that execute a referral program really well offer a limited number of invites with extremely high value, says Myers. For example, instead of offering an unlimited amount of 10% off referral offers, business owners could give subscribers the option to give one month completely free to three friends. This leads subscribers to take the offer more seriously and increases the likelihood of vetting potential customers and sharing their invitation with people who will actually use the offer.

The referred person then becomes the exact customer a business wants because their current customer already did the hard work of vetting them. Referral rates, then, start to increase rapidly.

“You have to continually educate your customers on how good your product is and give them ammunition to refer and sell. It’s not enough that they signed up,” says Myers.

That’s why a good onboarding process is crucial in helping customers become the best advocates.

This strategy is known as, “Customer Led Growth.” By letting customers do the hard work of finding new customers, business owners increase acquisition and, therefore, increase growth. (Of course, they should also focus on a great retention strategy and delivering a frictionless customer experience to maintain a healthy bottom line.)

Text showing inspiration Onboarding. Business showcase Action Process of integrating a new employee into an organization
Source: Bigstock Photo

To get started, Myers challenges brands to :

  1. Make “Referred by a Friend” their main KPI.
  2. Try to make it their number one source of sales.
  3. Give members exclusive discounts and promotions to offer to a limited number of friends (e.g., first month free)

The referred-by-a-friend method is the healthiest form of Customer Acquisition Cost because everyone signing up acquires more customers for the business. But this is only achievable through limited invites with a very high value. People seek exclusivity and great deals. With these in place, businesses then need to track the offers and continue to grow the business by expanding the offers as new customers come into the business.

In the end, subscription businesses must create a membership with so much value that customers will never want to leave. By analyzing their subscription value stack, they can determine where they’re lacking and how they can shore up their offerings for their subscribers. This establishes a healthy community of subscribers that become the best advocates for the business when provided a referral program that actually delivers sought-after value. Ultimately, this process and mindset is how subscription businesses become top-tier winners.

Text showing inspiration Refer A Friend. Business overview Recommendation Appoint someone qualified for the task
Source: Bigstock Photo

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