<<This post was originally posted on Linkedin>>
For the last five years, I’ve worked in the subscription industry as a tech vendor. I’ve worked particularly closely with big consumer media companies in the last two and a half years at the company I co-founded, Limio. So has my cofounder Daniel, who for the best part of the last 15 years has worked with consumer subscription businesses.
Everyone in Media knows they need to do a digital transformation. Every also knows that subscriptions need to be a revenue stream. These things are not questioned anymore. But how you do it is. I keep seeing people making the same mistakes. So I decided to write about it. This may apply to other direct-to-consumer (DTC) subscription industries, but it’s born out of experiences working with big media houses and partnering with other tech vendors.
#1 Scope is too big
You’ve got your big corporate mandate. It’s time to sell subscriptions in a ‘better’ way. Ownership is out, subscribing is in. Your customers will pay for your content. The board, the CEO are keen to go as fast as possible. Everything must shift to subscriptions, all on a new tech stack. The consultancy you hired to define your subscription vision and architecture agrees: go big or go home. The tech vendors tell you they got you covered from A to Z.
Slow down. Adopting new technologies, especially for subscriptions with its recurring schedules and accruing complexity, is tricky. You can’t just unplug your legacy tech stack and adopt wholesale a new tech stack. It won’t work. It will fail. Big bang can and will go terribly wrong - have a look at the Hertz & Accenture lawsuit. It will cost millions, if not tens of millions, in consultants and license fees for tools that never go live.
Baby steps. The best is to start with a new revenue stream, something inoffensive, low risk, low stakes. A digital-only newsletter. A small side publication. A little app store app. As a product manager recently described it: 'We started with something nobody cared about so that we wouldn't get too much heat when we inevitably made mistakes'. Then, use the very bare minimum of new technology you need to, which is typically a web store to sell your subscription, one payment provider, a CRM, and a billing engine. That’s already a lot of tech frankly. You’ll have to figure out acquisition and retention experiences, payment schedules, tax, customer and identity management, revenue recognition and how to map those concepts between different tools. It will take time, several months, more likely 6-12 months. You will start building knowledge about how the tools work and how to operate them.
If you can’t launch a new product or you only have one product, then limit scope aggressively. Start with one geography or one channel. Work iteratively.
#2 Tech vendor-controlled integrations
Funny for a tech vendor to say that, but the last thing you want if you are going to operate subscriptions at scale (that is >100k subscribers) is have all your tools imbricated and tied down together - in a way you don’t control.
There’s a paradox. If you hear, ‘off-the-shelf integration’, that’s good because it means integration is possible and there is an existing pattern. But should you use the off-the-shelf integration though? Chances are you shouldn’t because it will limit what you can do over time.
Let’s take one of the most important examples. The most common pattern is tying CRM and billing together. You hear there is a sync between the two apps. You can get your bills in CRM, you can get your customers in billing. Job done, right? Nope. In subscriptions, everything stems from the customer’s interactions and events. A new order, a cancellation, a payment failure event, a downgrade, a suspension, a failure to log-in. This is the basis for any updates to any systems - a cancel means customer in CRM is inactive, bill is voided, pro-rated refund is sent, 'sorry to see you leave' email is sent, win-back campaign with discount offered landing page is triggered. You don’t want to interpret that because the bill is voided, well surely, the CRM should mark the customer as inactive. Maybe it’s been voided for another reason, for example, the bill was wrong.
You will want to work as closely as possible to the customer’s actions - don’t translate systems to each other, take what the customer did and update accordingly. As an architect at a large financial publication described it: "The business doesn't want to speak the system language. They want to speak the customer language.". That’s why our top tip is to build your own ‘order management’ service layer in a dev-friendly tool that can properly manage integrations (did someone say AWS 👀), which will then be responsible for updating the other systems. There’s plenty of blueprints out there - talk to your competitors, it’s not exactly a secret.
This one is dear to me because it was the basis for Daniel and me to create Limio. You’ve embarked on this grand digital transformation, with the idea that you will now be able to create compelling acquisition landing pages, suggest cross-sells and upsells fluidly, dynamically save people from canceling online, experiment with new creative pricing and special bundles, adopt micro-payments, test out pay-as-you-go and new innovative ways of paying on your checkouts. Everything will be A/B tested, any messaging will be personalised, all feedback to your analytics pipeline, so you know exactly why buy hit subscribe and don’t churn. It will be a world of flexibility, convenience for your customers, breakthrough insights and revenue-maximisation for you.
The problem is, you quickly get bogged down in making the damn thing work for just one simple use case. Exhausted after 12 months (more like 24), you tell your conversion-optimisation-thirsty marketers: if you want the flexibility to create new landing pages on the fly, it’ll take another six months. If you want to launch new pricing or bundles, that’ll be another three. If you want personalisation, go to hell.
So your customers all see the same boring paywall, the same ads, and the same low-conversion shop. If they want to cancel, well they can call customer service. Cross-sell and upsell? Customer service will take care of that (they won’t).
Don’t do that. There’s a reason why Netflix and Spotify are winning. They experiment, they are flexible, they are convenient, they are personalised. So plan for it, from day 1, and get your marketers involved. Every once in a while I hear a tech team saying 'We don't want marketers involved because they always come up with craziest ideas'. But consumer subscription is not a billing exercise or an architecture diagram contest, it’s a customer experience exercise. Your internal experts for your customers are your marketers and yes, they will want flexibility which can be challenging. But a one-size-fits-all approach isn't going to improve your conversion and retention rates.
#4 Overreaching on tools’ functionality
As a product manager at a large media company in the Nordics recently told me: ‘We did well because we didn't use the tools for what it wasn't made for’. Repeat after me. A CRM is not a subscription management tool. A billing platform is not a campaign management tool. A paywall is not an online shop. An email platform is not a CMS.
No one wants to bring onboard 10 different vendors and struggle to identify ownership and do complex integrations. But if you believe that one vendor can do it all when it comes to subscriptions, well you’ve drunk the sales Kool-aid and it’s going to cost you in professional service fee. The truth is, no one can do it all and that’s why in pivoting to paid, publishers are running in tech headaches (Digiday).
So back to point 1. Start small. Bring a few vendors in for critical pieces of functionality. The rest build in AWS (but don’t catch build-it-all-myself-ytis). See what piece of kit is good at, what you need vs. what you don’t need.
#5 Too many consultants
Here’s one freebie. I’m an ex-consultant, so I don't mind saying it. Don’t have too many consultants in your transformation. Subscriptions are a hard business model, the software servicing the subscription industry is fragmented and arcane, and a culture of agile delivery and experimentation doesn't happen overnight. As time goes on, subscriptions only get more complex. You need to build internal know-how, operationally, technically and strategically. There’s no way to do that if you have consultants that build something and fly-off or get replaced as things get tricky after six months. You need people with a two-year horizon at least. So start hiring perm and complement with consultants when the talent pool is too thin or it’s a well-scoped out job.
So what is Limio and how is it going to fit in my transformation?
Limio is a headless commerce solution for subscriptions, made for people who care about optimising conversions. What? Ok, in layman terms, we help marketers create campaign-based landing pages - often for acquisition, but also for cancel/retain pages and win-backs pages - which then point to a checkout (which can be a Limio one or a third-party one). For multi-brands companies, it can be used to power a wider subscription shop. Dev builds it once and for all in the framework/language they love and don't have to operationally support marketers who can then independently launch new landing pages, products, pricing, promotions, etc...
We’re not a billing system, a paywall, a CRM, an email platform, though we play nice with them. We’re a headless CMS with one specific purpose: get you to sell subscriptions and retain subscribers with the right offer and messaging at the right time. It's the source of truth for what you intend to sell to subscribers at a given point in time.
If you are more the visual type, it's this stuff for customers... 👇
... powered by this stuff for marketers 👇