The Subscription Value Loop and its Components

On the podcast: Phil's Subscription Value Loop framework, what it means to create robust value for customers, and why A/B testing shouldn't be your first step in price optimization.

Top Takeaways:

📈Quantitative growth models can help inform your growth strategy. These models are built around key user actions and growth loops incorporating variables like acquisition, retention, and monetization. They serve not just to align the company around common growth objectives but also as a tool to identify strategic leverage points for driving user and revenue growth.

📲The subscription value loop can model successful consumer subscription apps. This loop, devised by Phil Carter, is a framework for consumer subscription apps that focuses on value creation, delivery, and capture. It identifies the most impactful areas to allocate resources, aiding in decision-making for product development and marketing strategies. It emphasizes the importance of balancing value creation for the user with the business's need to capture value, ensuring a sustainable and efficient growth model.

🔁The 4Rs of value creation — robust, rapid, repeatable, remarkable — emphasize creating a product that solves real customer problems with strong product market fit, delivering value quickly, ensuring long-term engagement and value through repeatable benefits, and being compelling enough to spark word-of-mouth promotion. This framework guides in developing products that not only meet immediate user needs but also maintain their relevance and appeal over time.

💲Value delivery is efficiently connecting users to your valuable product. The playbook of relying on paid marketing to acquire users no longer works, due to increased app store competition and reduced efficiencies caused by ATT. The healthiest subscription app businesses are built on a robust organic acquisition strategy as a foundation, where paid ads are supplementary.

🎯The 5Ps of value capture — paywall, pricing & packaging, payments, promotions — focus on the strategic elements crucial for monetizing a subscription app. Paywall strategies should, as well as adopt general best practices, be tightly aligned with the nature of the app; pricing & packaging perhaps offer the greatest leverage for later-stage apps; payments is about an awareness of alternative payment methods and ensuring you have a clear and transparent payment flow; and promotions should be thoughtful and targeted.

About Guest:

👨‍💻Founder and CEO of Elemental Growth, an advising consultancy focused on helping app businesses unlock their potential.

🔁 Phil developed the Subscription Value Loop, a framework for understanding how to maximize growth in consumer app businesses.

💡 “If you don't have a repeatable value prop that can sustain long-term retention, and your primary growth loop is paid ads, that's where you see a graveyard of companies that have just completely failed.”

👋  LinkedIn

Links & Resources:

• Connect with Phil via LinkedIn
• Check out his website - www.philgcarter.com
• Find Phil on X: @philgcarter
• Check out his Consumer Subscription Growth Course

Companies Phil has helped:

• Quizlet (https://www.quizlet.com/)
• Faire (https://www.faire.com/)
• Ibotta (https://www.ibotta.com/)
• Matter (https://hq.getmatter.com/)
• Save My Exams (https://www.savemyexams.com/)
• uDocz (https://www.udocz.com/)
• Knowunity (https://www.knowunity.com/)
• Rise (https://www.risescience.com/)

Episode Highlights:

[0:44] From consultant to growth guru: Phil’s journey into the subscription growth world began with mission-driven app businesses like Quizlet.

[5:25] What you need to know to grow: Any quantitative growth model will be “wrong”… but you’ll learn so much building one, you should still do it.

[8:30] The Subscription Value Loop: A framework for identifying product-market fit, building a remarkable solution, and investing profits into shoring up your competitive advantage.

[13:48] The 40% rule: Determine product-market fit by how disappointed customers would be if they could no longer use your app.

[23:05] Perfecting the elevator pitch: A great app onboarding experience is snappy, immersive, and packs a punch.

[33:32] Avoid churn: Build repeatable experiences designed to bring users back again and again.

[38:24] Go viral: Find out how to get and keep your users talking.

[45:37] Organic is healthier: In today’s crowded (and post-ATT) app stores, paid ads can’t realistically be your primary growth lever.

[50:22] Keep the engine running: Balancing how much value you capture versus provide can be a challenge — especially when it comes to free users.

[1:11:12] The price is right: How to determine the optimal packaging and pricing for your app.