I’ve been noticing something funny recently.
As I make my rounds being interviewed by podcasters, influencers and subject matter experts, the conversations turn from “advice for listeners” to “advice for the host”.
In other words, these solopreneurs, subject matter experts, and social media celebrities are trying to figure out how to build a viable, profitable business around their own community and expertise. They’re not just trying to provide useful information to their audiences–they’re struggling with their own revenue model.
Don’t underestimate the power of the “forever transaction” for small businesses.
Subscriptions can be a powerful tool for virtually any organizations–public, private, big, small, venture-backed, family-owned, non-profit, old, emerging, and across all industries. It can be a particularly effective tool for the smallest businesses.
This week, I presented my work to several hundred small business owners through BNI Global, and was inundated with questions. They wanted to know how to apply the principles to their accounting firms, restaurants, car washes, real-estate businesses and solo-consultancies.
Membership models and subscription pricing work great for most small businesses, subject matter experts and even celebrity influencers.
If you have a small business and want to build greater loyalty, engagement and recurring revenue from your customers, here’s what you can do, right now.
- Take a step back to identify your forever promise. Why do customers come to you in the first place? You need to know the bigger ongoing goal they have or the bigger ongoing challenge they face, that prompted them to reach out you in the first place. Most organizations are very product centric, focusing on “audits” or “manicures” or “clicks”. Shift your focus to the ongoing customer mission, and make a promise that you’ll continue to evolve your products and processes to help them achieve those goals and solve those problems. Forever.
- Segment your audience. Of your existing customers and fans, which are your “best” and which are your “not best”? For most of us, our “best customers” are the ones with the highest lifetime customer value. But there are other ways to think about this. Which people in your audience are you best able to help on an ongoing basis, given your skills, expertise, and resources? And which are most willing (most happy) to pay a fair price for that value? The customers who can get the most value and would be most willing to pay for that value are the ones you should optimize your offerings for. Even if you’re not ready to build a subscription model, you can start communicating with prospects in a way to attract more “best customers” and fewer “not best customers”.
- Experiment. What is the smallest way you can offer ongoing value to your best customers, to deliver on that forever promise? What is the “minimum viable product” that is powerful enough to attract and retain your best customers? You don’t need to be the whole business on your subscription. Just make a list of what your best guesses are about what you could offer and who might respond, as well as your concerns and worries. These lists will become your hypotheses, and once you have them, you will be able to start performing small tests, to prove or disprove them.
- Explore the ROI of Free and Freemium. Many of the most successful businesses in the world give away tremendous value for free. Some, like Google and LinkedIn have “freemium” models, where some people get value for free forever, while others pay a premium (get it–free + premium=freemium). Other businesses, like Netflix or Microsoft, offer a free trial. Free trial is a taste of what you have because prospects either don’t understand what you’re offering, or don’t believe it’s as good as you promise. You know it’s paying off if those two challenges go away once you offer a free trial. Freemium, in contrast, provides ongoing value, and only makes sense if it’s a way to build habits and awareness with prospects, or if the free folks are part of the product (like in a network) or if the free folks are, themselves, a marketing channel (like giving accounts to influencers). Not every business should offer something for free, and many businesses offer too much for free without a good reason. Free can be a tremendous tool, but make sure you are deliberate about what free needs to do for your business. If it’s not working, stop giving stuff away.
Once you’ve investing in attracting a customer, you should want to do everything you can to extend and deepen that relationship, by providing ongoing value worth paying for.
If you use the goals of your customers, clients or followers as a north star customer-goals and challenges as your north star, you will more successfully navigate today’s murky and uncharted waters.