The Importance of Pricing and Product Market Fit in Subscription Companies

On the podcast we talk with Robbie about finding your super users, the real reasons for subscription fatigue, and why pricing isn’t as important as you might think, especially early on.

Our guest today is Robbie Kellman Baxter, consultant, keynote speaker, and author. She’s advised many of the world’s leading subscription-based companies, including serving on the advisory board of Strava. Her most recent book, “The Forever Transaction” is a deep dive into everything consumer subscription, and a must read for anyone in the space.

In this episode, you’ll learn:

• Identifying and attracting lifetime value customers
• How to get and maintain customer loyalty
• Three causes of subscription fatigue
• Why customers cancel their subscriptions

Links & Resources

• Strava
• Intuit
• Survey Monkey
• Oracle
• The Subscription Economy
• Tien Tzuo: Subscribed
• Eric Crowley
• Seth Miller
• CrossFit
• Shopify
• Calm
• Matthieu Rouif
• PhotoRoom
• GoPro
• Elevate
• VSCO

Robbie Kellman Baxter’s Links

• Robbie Kellman Baxter’s website
• Follow Robbie on Twitter
• Robbie’s book: The Forever Transaction
• Robbie’s book: The Membership Economy
• Robbie’s LinkedIn

Follow us on Twitter:

• David Barnard
• Jacob Eiting
• RevenueCat
• Sub Club

Episode Transcript

00:00:00 David:

Hello, I’m your host, David Barnard, and with me, as always, RevenueCat CEO, Jacob Eiting.

Our guest today is Robbie Kellman Baxter, consultant, keynote speaker, and author. She’s advised many of the world’s leading subscription-based companies, including serving on the advisory board of Strava. Her most recent book, “The Forever Transaction” is a deep dive into everything consumer subscription, and a must read for anyone in the space.

On the podcast we talk with Robbie about finding your super users, the real reasons for subscription fatigue, and why pricing isn’t as important as you might think, especially early on.

Hey Robbie, welcome to the podcast.

00:00:58 Robbie:

Thanks for having me. I’m excited to chat with you both. 

00:01:00 David:

I was introduced to your work by somebody recommending your book, The Membership Economy, and it really struck me. I was so excited that you agreed to be on the podcast, because here’s a book written in 2015, and we’ll talk about your other book that was written more recently, but written in 2015. I was looking through it, scanning the chapters, so I bought the book. I was like, this is everything we’re talking about now, thinking it’s all so novel with subscription apps, but really consumer subscriptions have been around for decades. You’ve been working in this space way longer than any of us.

So, I thought it would be really fun to have you on the podcast to talk more broadly about these principles of consumer subscriptions that apply equally to D to C subscriptions, as well as the app space that we work in. That’s where I wanted to kick things off.

So, how did you get your start in consumer subscriptions?

00:01:57 Robbie:

A couple of threads came together. I was in product-marketing for what is now called SaaS, for five years, right before I hung out my own shingle and started consulting. So, I had that background as a product manager working with software products that were being sold as subscriptions, and then as an independent consultant.

My fifth client was Netflix. I fell in love with their business model, and I was wondering why isn’t everybody else falling in love with their business model, too? This is amazing. Recurring revenue, predictable cashflow, the amount of data they were collecting on their customer. The fact that they’re offering was just a much better way of delivering on a promise that many of us wanted delivery for, which is a professionally created catalog of video content delivered in the most efficient way possible. It meant not having to put a raincoat over your jammies to go pick up a movie, with cost certainty and no late fees.

I was consulting with Netflix. I was already a customer, and a few people started calling and saying, “Hey, we heard you worked with Netflix. We want to be the Netflix of our space.” Whether that was news, or music, or bicycles, or dental pain management products, or clothes, there was a lot of interest in what it was that Netflix was doing.

So, I started trying to create frameworks, trying to say, what are they doing? Which parts are applicable to other businesses, and which parts are just unique to that group of people solving that particular problem?

That’s really where I got started, and it turns out to be big enough and deep enough that it’s kept me really busy for, it’s been 20 years, 20 years. 

00:03:55 David:

Fifth client to, to land as a consultant. That’s a. Really great. And so you were with them before they even introduced the, video on demand on the internet, right. You started with them when it was DVDs in the mail, 

00:04:09 Robbie:

Yeah. 

00:04:10 David:

Traditional D to C subscription service. 

00:04:13 Jacob:

But, but even then was satisfying a lot of those, almost all of those conditions. Right. I didn’t have to go outside just to my mailbox, not too bad price certainty. I didn’t have late fees. and then like, you know, insanely large catalog. Right. you know, it was, it was, it wasn’t. We tend to wait for the technology to get that right.

And then, then we had VOD being, 

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