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The $100 MBA Show
MBA2336 How To Sell Subscriptions in Any Business in 2023 + Free Ride Friday
00:11:59
Subscriptions are not just for companies like Netflix, Spotify, and Amazon Prime. They can provide stable income and build a loyal customer base for businesses of all types and sizes.
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- [00:00]
Ryan Reynolds
Ryan Reynolds here from Mint Mobile. I don't know if you knew this, but anyone can get the same Premium Wireless for $15 a month plan that I've been enjoying. It's not just for celebrities. So do like I did and have one of your assistant's assistants switch you to Mint Mobile today. I'm told it's super easy to do@mintmobile.com.
- [00:18]
Voiceover Artist
Switch upfront payment of $45 for 3 month plan equivalent to $15 per month Required intro rate first 3 months only, then full price plan options available, taxes and fees extra. See full terms@mintmobile.com and we're back folks.
- [00:33]
Jim
It looks like Jim from sales just got in from his client lunch and he's got receipts. His next meeting is in two minutes. The team is asking can he get through his expenses in that time? He's going for it. Is that his phone? He's snapping a pick. He's texting round. Jim is fast, but this is unheard of. That's it. He's done it. It's unbelievable.
- [00:52]
Voiceover Artist
On ramp expenses are faster than ever. Just submit them with a text.
- [00:58]
Omar Zenhom
Switch your business to ramp.com hey o. Welcome to the $100 MBA show. Practical business lessons for the real world. I'm your host, your coach, your teacher, Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started back in 2014. And today's episode is Free Ride Friday. On Freeride Fridays, we give a lifetime membership to the $100 MBA program. If you want to win a free ride to our six part program showing you how to become a better entrepreneur, 100% guaranteed. Leave us an Apple Podcast rating and review and you enter our weekly random draw we call Free Ride Friday. Listen in on Friday just like today to see if you won. We announced this week's winner a little bit later in the episode. In today's lesson, you will learn how to sell subscriptions in any business in 2023. Subs subscriptions are a great business model or pricing model that gives continuous value to your customers and gives you that reoccurring income we all are looking for. It doesn't matter if you sell a physical product or a service or a course or a coaching program. You can install a subscription offering for your customers that can give you more stable income, but more importantly, raving fans and customers that love what you offer day in and day out. As consumers, we're part of the subscription world all the time. Whether we're subscribed to Netflix or Spotify or Amazon prime or our local gym. But how do you create a subscription service for your customers regardless of your business? Well, we're going to break it down in today's lesson. We're going to talk about what are some of the best subscription models, how to introduce it into your pricing or value metrics, and how to test an experiment on price to make sure you hit that sweet spot where you're making the max amount of revenue for the max amount of value that you offer your customers. Let's get into it. Let's get down to business. Subscriptions are nothing new. They've been around for a very long time. In fact, since the early 1940s, media companies like newspapers started selling subscriptions instead of just selling one newspaper at the newsstand. Started to realize that people that read the newspaper, they actually read it every day and would like the convenience of it delivered to their house and would love to be incentivized by a discount. By subscribing for the month or year, this model of business started to catch on. Magazines and cable TV and gyms and other brick and mortar businesses. And today, subscription services are bigger than ever. Whether it's streaming services or Uber Eats asking you to join their subscription service to get discounted delivery or even office space, like we mentioned yesterday, in coworking spaces, it's a subscription. And the reason why this has been a trend that's been catching on for decades now is because it's good for business and it's good for the customer. Whenever it's a win win, this becomes a staple and a winning product and offering for the marketplace. But not all subscription services are created equal. The top of the line, the best of the best subscription services out there for a business to offer is a subscription to a shared resource. What does this mean? That means that you produce something once and then you give access it to other people for a fee, a monthly or annual fee. Good example of this is Netflix. They don't create specific movies for each subscriber, right? They have a bunch of movies, bunch of shows. They license a bunch of shows, they put in their library and then they sell access to that library. A shared resource. This is very similar to like a gym, right? The gym has a building and equipment and facilities and you pay to access these shared facilities. The reason why this is such a great model for the business is that they don't need to spend any extra money. Every time they bring in a company customer, their costs are fixed. For the most part, yeah, Netflix has to pay a little bit money Every time they bring in a customer for server costs. But it's not really a big deal compared to how much they're spending to produce a show. So shared resource subscriptions are great. This is a little bit different from what we mentioned with newspapers and magazines because it does cost money to print those things every time somebody subscribes. But the cost does go down in bulk. So the more subscribers you have, the more of a deal you can get with your suppliers when it comes to printing these magazines or newspapers. So in your business right now, is there anything that you can create that's a shared resource that doesn't actually require you to give up extra time or money every time a customer joins that subscription? One that comes to mind is a paid newsletter. Yep, paid newsletters are very, very popular, especially in 2023. Many brands will have a free newsletter that has advertising in it and then a paid newsletter with no advertising that gives them in dep do special articles or videos. And it's pretty inexpensive for these newsletter subscriptions. 5 or $10 a month. But on mass, this is a great model for the business, a great little add on. They create that paid newsletter once and whoever signs up for that paid subscription gets access. Shared resource. Another example of this is a library of training, similar to Netflix, but for courses. Again, no extra overhead. You're creating these courses anyway. It doesn't matter if you have five people or 500 people, it's a shared resource. But you might say, oh, I sell a physical product, I have an e commerce store. How do I have a shared resource and a subscription model here? Well, what is the biggest ecommerce store in the world? Amazon. Now Amazon does subscriptions in two big ways. The first one is Amazon Prime. You pay a monthly fee or an annual fee and you get benefits like two day free shipping, access to, you guessed it, a library of resources like prime movies and music. Their main game is selling physical products, but they have this little subscription thing that makes them a ton of money. Another way they do subscriptions is through reoccurring sales. So say for example, you're buying a tuba toothpaste. They will suggest to you, hey, instead of just buying this one tube of toothpaste, why don't you subscribe and get this tube of toothpaste automatically once a month. And if you do so, you get a bit of a discount. They incentivize people for being part of the subscription. Then you don't have to worry about ordering it every month. They're not doing anything different here. Same tube of toothpaste that people buy, but they're just encouraging people to buy more frequently and regularly.
- [07:20]
Ryan Reynolds
Ryan Reynolds here from Mint Mobile. I don't know if you knew this, but anyone can get the same Premium Wireless for $15 a month plan that I've been enjoying. It's not just for celebrities. So do like I did and have one of your assistant's assistants switch you to Mint Mobile today. I'm told it's super easy to do@mintmobile.com.
- [07:38]
Voiceover Artist
Switch upfront payment of $45 for 3 month plan equivalent to $15 per month Required intro rate first 3 months only then full price plan options available taxes and fees, extra default terms@mintmobile.com got a.
- [07:52]
7Am meeting on a Monday expensing breakfast because it's in policy wasting all afternoon submitting an expense report for that breakfast. If your company used Ramp, you could submit expenses with just a text.
- [08:11]
Ryan Reynolds
Yay.
- [08:13]
Voiceover Artist
Free your team from expense reports today. Switch your business to ramp.com.
- [08:23]
Omar Zenhom
Now let's say you don't have physical goods or you're not a coach or a consultant or you're not selling courses. What if you have like a restaurant? Well, I've seen this model implemented in restaurants that's brilliant and it's not something innovative. It actually came from the concept of a country club. So the way country clubs work is that you pay an annual fee or a monthly fee to be part of this country club and you get access to the club, but you also get some perks like a discount on meals or drinks or priority to throw a party, like a birthday party at the country club. So what some restaurants are doing now is they're kind of pulling the country club out of this model and just incentivizing people with the perks. So say for example, in your local pizzeria that you love going to and sitting down and enjoying a meal with your family after an event or maybe at a graduation or the end of the year or some sort of celebration. So say for example, the local restaurant in your neighborhood that you and your family like to frequent sit down and enjoy a meal together. They can offer a annual subscription to their VIP club. Let's say it's $100 and as a subscriber you get a bunch of perks like 10% off drinks, your meal is free on your birthday, priority to book the private room for celebrations, a free extra topping every time you order a pizza. Whatever. The point here is that you're enhancing the experience that you already have by offering this subscription service. They're frequenting this restaurant anyway, they love it anyway, why not get all these great perks? And I've seen this implemented in some really interesting ways in local businesses. It's kind of like people used to reward people for coming to the establishment, whether it's like the restaurant or the laundromat. And they would like punch their card and after 10 times they'd give them a free something. Right. Well, what they're doing here is that instead of just giving it them for free, they're saying, hey, we'll give you this great perk if you're part of this VIP and you just pay up front rather than having to come 10 times. And people really see the value of that because they're like, okay, I get it. I pay this much, I have this VIP access for a year. I get all these great discounts and perks and a free meal. Sounds great. My local movie theater has a VIP club where you pay 30 or $40 a year and every time you buy a movie ticket it's discounted. You get the VIP rate. Popcorn is cheaper, you get early screenings. They're not doing anything different in terms of creating a new product or service. They're packaging their pricing differently for the VIPs and those who paid up front. And to me it's a no brainer. It's an awesome offer because I love the movies, I love this particular theater, and why not save some money and be a vip? So subscription ideas are abundant, but your job is to choose one that's good for your business, that you feel comfortable with and you experiment. Listen, these offerings that you're going to be offering are going to be for the best of the best customers. The customers that absolutely love you. They're not going to be for everybody. It's probably going to be for the top 5 to 10% of your customers. And that's okay. You don't need to sell this to everybody because guess what? As you get more customers and as you grow, the number of subscriptions will grow because that 5% will equal more people. And when it comes to value creation and pricing and packaging, it takes some experimentation. So put something out there, try it out, let it run for about two months or so, evaluate iterate, get feedback from customers, talk to the people that bought, ask them why they bought, talk to people that maybe saw the email or the offering that you offered this subscription and didn't buy, ask them why they didn't buy and no harm done. You might even give them a little gift for the time they took to speak to you on the phone or on a video call. The point here is that roll up your sleeves and see this as a fun project to start installing subscriptions in your business. Thanks so much for listening. Today's episode's not over though. It's Free Ride Friday. Let's see who won this week's free ride and the winner is 543 Me. That's the handle on Apple Podcasts. 543 Me says great show for new and growing businesses. Omar is great at getting his hands on the subject matter to create a rich listener experience. Wonderful show. Well, thank you so much for that great review. Your mission is to email me over@omar00mba.net so I can make sure to hook you up with the lifetime membership to the $100 MBA over at 100mba.net, our six part course showing you step by step how to become a better entrepreneur. 100% guaranteed. If you want to win a free ride, just leave us an Apple Podcast RA review and listen in on Friday. Just like today to see if you won. It's that easy. It's our way to say thanks for showing us love on Apple Podcasts. Before I go, I want to leave you with this don't be afraid to experiment with prices and offers and packaging for your customers. Most of us think that customers are so hyper aware of changes and experiments that they might get annoyed. No, they have their own lives. They're busy. They're not focused on what you're doing. Think of how you feel as a consumer. Do you remember all the prices at the grocery store? Do you remember all the prices every time you frequent a restaurant or the movies or whatever it might be? And if things change, are you so disgruntled that you don't go? No, you understand that's the nature of business and you're never going to know for sure what works best for your audience and your customers until you test it. Thanks so much for listening and I'll check you in Monday's episode. I'll see you then. Take care.
- [14:05]
Voiceover Artist
Got a 7am meeting on a Monday expensing breakfast because it's in policy, wasting all afternoon submitting an expense report for that breakfast. If your company used Ramp, you could submit expenses with just a text.
- [14:25]
Ryan Reynolds
Yay.
- [14:27]
Voiceover Artist
Free your team from expense reports today. Switch your business to Ramp.