Beyond the transaction: Turning customers into superusers

Hello, everyone. Welcome to today's session for subscription sessions. I am so excited for today's conversation.

Before we dive in, I'd just like to quickly introduce myself. My name is Sarah McCready. I am the senior director of product marketing here at Recurly. For those not familiar with Recurly, we are a subscription management platform that works for some of the world's largest, b to c brands like FabFitFun, Twitch, Paramount Plus.

And I am extra excited for today's conversation. I've been at Recurly five years now, and in the subscription space for that time. And, the woman that we have the pleasure to hear from today, I have actually worked with four of those five years, kind of on and off, and we've been, in the space, Robbie, for a lot longer than me. But, she's amazing, and I'm so excited to have her today as our, expert to to to speak to beyond the transaction, turning customers into super users.

So if anyone has any questions throughout today's session, jump them into the chat. We'll get to whatever we can, throughout this session. We'll follow-up over email if we can't get to you. And I'm, yeah, really excited to dive in.

So before we go into today's discussion, I'm just gonna have Robbie, quickly introduce herself, and then we'll go into the questions.

Yeah. Hi, everybody.

Thank you for the very nice introduction, Sarah.

I'll I'll add just a tiny bit more. I have been, into subscriptions for a really long time, and people, I think, thought I was crazy, at the beginning because, most people didn't think subscriptions were important, noteworthy, worth talking about.

And for me, from the minute I started working with them, which was, you know, first, as a SaaS product marketer and then as a consultant working with Netflix. Those are kinda my my first two introductions.

I loved the emphasis on long term relationships, and the kind of lens it gives to companies to really take care of the customer, and to have a very clear ROI on that customer centricity. And so since, I mean, I don't even wanna say the year, but let's say that I have a twenty four year old daughter, and I started, I started my my journey with subscriptions the year she was born.

So it's been it's been quite some time and and quite a journey with with, hundreds of hundreds of companies.

And I've really dug in on all the different pieces that make subscriptions, work and written about them in my books and, talked about them on my podcast, subscription stories.

Awesome. So that helps tee the stage because one of my first questions was gonna be you truly have been ahead of your time in the subscription space, you know, writing, I think, your first book about ten years ago, and now you have two under your belt. So what ex what inspired you to explore the idea of kind of this, like, membership economy and and defining this so early on in the space?

Yeah. So, I mean, candidly, I I got laid off when I was on maternity leave with my second child, with Annabelle. And, I said, okay. For at least the next five years, I'm gonna consult while my kids are in diapers. I need you know, I'm in a contract. I'm gonna consult whatever I need to do. I can't you know, it was in a time when it felt really hard, to to be a working mom of very young kids in a in a corporation.

And, you know, very quickly, for those of you who are consultants or contractors or independents of any kind, you either need to build a firm or you need an area of expertise. And I was thinking, what is an area that is interesting enough that I would want to become an expert, narrow enough that I could be credible and broad enough that it would be, you know, relevant for a while.

And I was you know, I worked with Sun Microsystems. I worked with with a bunch of companies in the first couple of years.

And, Netflix, was my fifth client, and I fell in love with their business model. And I started playing with the idea of, you know, recurring revenue, customer centricity, premium services. Like, what is it about the Netflix model that was working so much better than any model of any other company that I was working with at the time? And just for context, at that time, Netflix, had a presence on the East Coast of the United States and the West Coast of the United States, and they were working their way to the center, but they were just on the cusp of having a national presence.

So I was still explaining to people what Netflix was, you know, when I would go and visit my in laws, or, you know, go to a a party at my parents' house. People didn't really understand it, but I was blown away by the model. And other people here in Silicon Valley were too, and I started getting calls from people who said, you know, we wanna do what Netflix is doing for small business, for bicycles, for banking. I mean, you name it.

Somebody was trying to put the Netflix spin on it. And so, you know, I started looking for trends, frameworks, rules, principles, and I'd write a rule, and then the rule would be broken, and I'd rewrite the rule. And, you know, that was really where I started to give into. I said, this is an area that is about karma.

You know, you don't treat your customer well. You don't get the recurring revenue.

And it's about in analytics, which, you know, I feel like that's the best way to prove your value, especially if you come out of, you know, product or marketing. You wanna be able to demonstrate it in a quantitative way.

And the more I did with subscriptions, the more clear it became to me that almost any business could could benefit from looking through a subscription lens, and that was what really locked me in.

Yeah. And I think a core piece of your work is we use the term superuser a lot. Right? And even the Netflix model was taking sort of a transactional, maybe, like, blockbuster type approach. Like, you walk in, you buy the movie, you leave, you bring it back, and that's it. And this whole kind of mindset shift from a customer to a superuser or a transaction to a member.

So in terms of, like, how you define a superuser, I'd love like, how did you, number one, kind of help drive that organizational shift? And I know that's still happening in a lot of industries of, like, this is a new muscle of just how do you, like, reinvent the wheel of how you operate internally around, like, metrics and the investments you're making and the actions you're driving right across your applications? And then also how are you sort of, defining super users for your clients, whether that's, like, from a data perspective or what other metrics you might be looking at?

Yeah. So the way I think about it, you've you go from you know, the first big jump as you pointed out, is from a transactor to a subscriber. Right? And when you do that, you have to think of them from being from a customer or a consumer to being a member and treating them with a member mindset, which, you know, a way of thinking of that is what if they had your home phone number?

You expect them to return to you. If you're not treating them well, they'll call you. My mom, there there's a a friend of mine from business school who was quite senior is at Intuit, and my mom used Intuit. It was a subscription based business, QuickBooks.

When she has a problem getting the check paper, this check stock to go into her computer, she calls him. He's a senior VP. Hi, Roy. You know, I couldn't get the paper in. Right? And so he has to think about, oh, man. Joy can't get the paper in.

I'm gonna get her to the right person because otherwise she'll call me back, and I'm gonna find it for her. I'm not gonna make her go through our own, you know, navigation system. And I wanna make sure the problem's and then I'm gonna figure out how that problem never happens again for anyone because it creates friction.

That mindset of the customer's gonna be with me for a long time and they have access to me really drives better decisions across the organization, because you're building for the long term. So that's step one. It's just going from, I wanna get them to buy some stuff for me, and I don't know if I'll ever see them again, so I'll get them to buy as much as I can right now, to I'm gonna have a recurring relationship, and I need to provide recurring value and build a real relationship.

From there, some organizations have figured out how to create what I call super users, which are the way I define it is people, customers who go beyond just being good customers, good fits, profitable, who actually give back to the organization on their own account. So these are people who participate in giving you feedback, who care enough to give you feedback because it is a gift, people who will beta test your products, who will be early adopters, be willing to deal with things being not quite perfect, and who make referrals on your behalf, who bring in more customers, for you, either for a very small bonus or gift or recognition. Or, honestly, a lot of times, it's just for the pride of of being an insider who knows a good a good service to to share with friends. And that's the superuser, and they can really be a flywheel for growth. There are so many great subscription businesses that have gotten going through their superusers, through these loyal people.

You know, Dollar Shave Club is, you know, a great example, and, you know, Harry's Shave also took a very similar approach.

A lot of membership based clubs and organizations also use this model.

You know, I sometimes joke about the Church of the Holy CrossFit, you know, which is a, you know, membership based health organization that a lot of companies have copied, that really depends on word-of-mouth more than anything as a way of of bringing in new members, and they really take feedback from their members quite seriously.

So those are a couple of good examples.

And I'm gonna I have this question later, but I'm gonna bring it back up. So if super user is that, like, advocate user that like, I like that you brought up it's not tough sometimes to measure. Right? It's we have all the data and, like, AI, propensity models, etcetera, in the world that we're looking at right now, but sometimes, like, you can't measure a conversation I'm having with a friend about, hey.

This this app is awesome. You should use it. But what are other sort of categories of users or segments that you look at with clients to then drive like, I've heard the term zombie before. Right?

If it's a a segment of users that are sort of, like, paying but aren't as engaged in the app. So what are maybe some other sort of, like, groups and segments that you're looking at with your clients that, like, if the goal is to turn people into super users, what are some of those other kind of categories you look at as well when you're looking at the holistic view of someone's subscriber base?

Yeah. Well, so so there's some funny categories.

When you when you segment segment, subscribers, one of them is, zombies, right, which are, you know, basically, they're sleep sometimes they're called sleepers, but they're customers who pay you every month or every year, and yet they never use the product.

And we all have a suspicion that they forgot about the product, but what we often will say to each other to make ourselves feel better is, they're planning to use it at a point in the future, and it's that insurance that they're willing to pay for, which is kind of a crock, but, you know, is something that that people like to say. But except for something like an insurance product where we really do you know, my house, you know, Knockwood has never burned down, but I still pay for, you know, insurance in case of fire. But for the vast majority of other products, I don't subscribe to Paramount plus, as a form of insurance so that I always have something to watch. I subscribe because I actually watched a lot of their content.

So that's that's a group. And what I what I say about them, and this is my extreme belief, which not everybody agrees with, is if you have zombie revenue, you should let your you should figure out why it's happening.

And if they're not getting value, you should make it easy for them to leave.

You might go as far as reminding them. So Netflix actually does that after a year, which is a long time, but still, most companies won't even do it after a year. Hey. You haven't logged in in a year.

We're discontinuing you. Let us know if you wanna re re reengage. Putting in pause buttons is another way of doing it. But the idea is if you're focused on a relationship and they're not getting value, you wanna say it before they have to tell you, because that builds trust.

And so that's that's one fun kind of interesting category.

Another one I call smash and grab, which is not the the loveliest term, but it's vivid, and it's the people that sign up for a subscription but have no intention of subscribing. What they really want is short term access, often in a very intense way. So this is, you know, you're you're visiting your cousins across the country and you join their gym that has a free one week trial before you join. And you know you're not gonna be a member because you live across the country, but you're getting your one week free. Or, people who subscribe to a streaming service to watch one movie or one, one series.

And you can often tell by their behavior. So you wanna be able to identify them and shut those doors, because usually those aren't the customers you're trying to get. So those are a couple of examples.

With the shutting the doors, I I love two things you just said. Number one, it's funny because on the merchant side, I hear that a lot. People know there's this kind of, like, zombie revenue bucket, and they are so scared to email them or communicate with them because, like, god forbid they cancel. But I like that, yeah, if you wanna run a, like, predictable sustainable business based on, like, long term revenue and trust, etcetera, like like, reach out, learn more, find out why, give them options.

Like, I I love that mindset, because I think there is a lot of fear of, like, oh, I don't wanna ever touch them, talk to them because, like, god forbid they cancel. But I think it's inevitable if that is gonna happen. And to your point, there's a lot of, like, valuable information you can gauge. And then on the other side of the I forget the term you just used it, the kinda, like, grab and go grab.

Yeah. Grash. So I think what's interesting because I was, talking to, like, a streaming company that's obviously struggling with that, or like a sports streaming company where someone comes in to watch a big game and then leaves. And they're doing some really interesting things on, like, the plan and pricing side of things where maybe they're offering, like, okay.

Let's just let you come and watch the game for five bucks and leave, and you don't need a subscription or maybe, like, we'll pivot you, you know, if you're watching, like, The Walking Dead or something. You're seeing a lot of, like, communities and, like, residual shows pop up around The Walking Dead. So in the off season, there's still valuable content to get out of that one show you came in the door for, or, like, you know, an ad based here or something like that. Are you seeing anything creative on the, like, trying to reengage them into other parts of, like, the subscription that is working.

Yeah. So it's really important. If you see people coming using Intensely and leaving, first of all, it's important. And the same thing with the zombies. The first thing is you wanna understand what's going on. So is their intention truly I just want this one piece of content. You know, for example, I don't like football, but I wanna watch I wanna have a Super Bowl party and that's really all I want.

Versus there's this one really important game. I love watching football. There's an important game, but I also, you know, having a you know, I I like the sport, and I'm a sports person.

So maybe that's an example. You know, my husband watches a lot of sports, football, baseball, basketball, and some other things, but maybe he wanders into a rugby game and is like, oh, this is actually really interesting. Maybe I should subscribe. Right?

So you wanna understand what their mindset is. A lot of times people come in and they do intend to subscribe, but then they look around and they say there's actually nothing else I wanna use, or it actually turns out I'm not using it like I thought I was gonna use. So it's really important at the beginning to understand whether this is intentional. I came in to just watch one, you know, Super Bowl, Or this is an opportunity where I'm open, but I can't find my way to better content where it's really it's a product problem where you need to guide them.

You need to onboard them better. Right? So I might come in and think this is the only content I want, you know, Walking Dead. But once I'm there, I realize, oh, there's actually several programs that look interesting to me.

And then you get to a point in any good subscription where you relax and you become a member, not a consumer. You relax into the relationship and you stop looking for alternatives and you just commit to subscribing. And before then, many people, you know, put a little notation to themselves, you know, end of free trial, end of first month, remember to cancel. And then you get to a point where you're like, I don't do that anymore because that's just part of how I live my life.

So you really want wanna do that. So the the interesting things is that I've seen though are people who've really taken the time to understand what's behind the behavior on both sides so that they can adjust their communications and potentially even the product itself to to accommodate. So if you know that there are people that only wanna watch the Super Bowl, you charge for the Super Bowl.

Right? And, you know, you might say you can't get a free trial during the month of the Super Bowl. You might say, hey. There's actually a Super Bowl product that you can subscribe to or you can buy.

There's lots and lots of tactics that you can use once you've identified the issue. And I think too many companies don't get specific enough about what is the actual issue. What is really going on here? And so they jump to conclusions and just copy someone else's model without having first proven that that's the problem that needs to be solved.

And when you go about, like, getting to that level of detail, what do you look at with clients? Is it, like, surveys, behavioral data, tracking, kind of a blend of everything?

Yeah. Well, it depends. I mean, I I love you know, I'm a consultant. Everything depends.

Everything is bespoke. Everything is, you know I mean, the difference between Netflix, who I've done a lot of work with, and electronic arts, which is video games, you know, you think that they're the same because maybe they both come out on you know, they used to come out on DVDs, and now they're both streamed. But the DVD goes in all different directions, and the way people play a game is so different than how they consume a movie. And so you don't wanna have the same trial and you don't wanna have the same pricing.

It's it's really important to understand your idiosyncrasies.

That being said, what I what I usually do is say, okay. Where's the issue? So I I was working with a client and their big issue was this smash and grab. People were coming in to watch one piece of content and then never coming back. And they'd either use a free trial or they'd sign up for the first month and cancel almost immediately.

And, you know, you get the whole month even if you cancel the next day. They were canceling the next day, so they never planned to stay.

And so we looked at, you know, what are all the hypotheses we have? That's the first thing we do of what could be going on. And then what is the smallest way we can test each one of those in the cheapest way? Sometimes it's a survey. Sometimes you just have to look at the data and see, like, oh, they were all canceling the next day. They had no intention of staying.

Sometimes you ask them, why did you come if you didn't stay? Well, I intended to, you know, but, you know, there's a there's a funny comedian that talks about going to the gym, and the only machine that's ever open is the neck machine, but it's really hard to cancel.

And so, you know, sometimes you go and you're like, I wanna work out and I wanna get fit, but the only machine available is the neck machine. That's why I canceled, not because I don't believe in your forever promise. It's just you didn't deliver on it. So getting specific on that, I think is important.

And then once you know you have so much power so back to the zombie side. Right? If you know that the reason that people usually become zombies is because the equipment's not available or because, they've moved away or whatever, you know, these are the three reasons at a gym. They've moved away, the equipment's not available, the courses, the classes are bad, they've gotten busy, they've gotten lazy.

Right? Then you can start to have targeted campaigns, and you can also start to manage usage on the machine so that people can work their way in, and you can start to fix the problems and see what happens.

So a lot of brands that even we're talking to now are still new to subscriptions. Right? There's some obviously on the more, like, sophisticated, mature side of the model, and then there's some spaces like automotive, writing, or, like, kind of the food industry is kind of getting into subscription. So what are the first few things you would recommend for someone to build out that's new to subscriptions?

Because as you talked about it, there's there's so many pieces. Right? There's, like, the plan and pricing flexibility, and giving people options. There's the actual, like, subscriber journey.

We haven't touched on that yet, but, like, onboarding, driving product adoptions, renewals, things like that, defining your segments. Like, how do you kinda map out those, like, first few steps when you're building out a subscription strategy?

Yeah. So the first thing assuming this is a going concern, like, let's let's do automotive. You brought that up. That's a great example.

All the I mean, I I think it's safe to say all the automotive manufacturers are working on subscriptions right now. They're working on services.

They've publicly stated really ambitious goals. You know, two twenty billion, thirty two billion in revenue by twenty thirty in services globally. And right now, they're, you know, doing, you know you know, tens of millions. They have a long way to go.

And so the first thing is why are you using subscriptions? What do you want what do you want services to do for you? So in the world of automotive, it might be a real revenue source. Like, you might say instead of selling cars, we're gonna have people subscribe to cars.

And so, actually, the lion's share of revenue in the future is gonna go through there. Another thing is it's it's add on revenue. Right? We can we can increase, the customer lifetime value for the period of the car ownership by twenty percent if they, you know, add on services.

That's a different use case. Another one that's really common is we wanna have a direct relationship with our customer. Right? So many automotive manufacturers don't even know who has their cars, right, because they're sold through dealers and the dealerships have the relationship.

So maybe, you know, that's what's happened in a lot of subscription businesses is the manufacturer wants a direct relationship, wants to bypass the intermediary.

Figure out what your goal is, and then start simple with a single problem that you're solving for a specific group.

For example, if you're trying to keep an ongoing relationship with your customers, right, and they're buying a fifty thousand or a twenty five thousand dollars product every five to ten to fifteen years, you might say, okay, what is something they're gonna use all the time?

And how am I going to build it? And, also, how am I gonna build support internally? And this is something that's often overlooked. So, you know, you have a company, a big automotive company.

Right? They're used to selling a physical product once every five, ten, fifteen years for tens of thousands of dollars. And suddenly you have somebody on the subscription team who's saying, hey. We want you to upsell those people at the point of purchase with a product that's fifteen dollars a month.

Right? It's like it's it's not gonna generate enough revenue in the moment to be worthwhile. It's gonna upset the current selling process, and they're not really set up to do it. So you wanna make sure that you optimize that first subscription for success, both in terms of the model itself, how you onboard, how you engage, what problem you're actually solving, all of that, and also that you have support internally.

Once you have a foothold, that's when you say, oh, we have subscribers that are pushing and they want even more services. Let's add a higher priced offering. Or we have subscribers in a different market that we weren't able to serve first. Let's adjust for the European market or the Asian market or the truck market or the enterprise market or, you know, any one of the the many, many opportunities that an automotive manufacturer has for subscription.

But to summarize, you wanna start by saying whose problem are we solving? What is the problem we're solving? What is the problem we're solving for ourselves and our own business model? What's at that intersection? And then how can we create one through line subscription from awareness to onboarding to engagement to expansion, before we, you know, go for world domination?

That's Alaska Airlines is one of our customers, and I think they've done an amazing job. And Taylor, shout out to Taylor. She's, listening in. Yeah.

But, they built just like that. Keep it simple. I think that is. And I'm gonna a final couple of questions that I wanna talk about personalization because I know that's, like, a really hot topic and personalization from, like, a price perspective, from a plan perspective.

And I think sometimes it can feel really exciting and, you know, the board likes to hear it kinda thing of, like, let's lean into all these technologies and personalization and AI and this one to one model for subscriptions, but sometimes, like, simple is best and, like, building, like, a really solid program, learning from that, and and then having, like, an agile model where you're tweaking and optimizing that core kinda subscription plan, can be better. But, yeah, I'd love your thought your thoughts, on personalization and, whether it's, like, personalization at scale through technology.

What I'll I'm very passionate about is actually more like self enabled personalization. So it's kind of when you log in to Netflix and you let me personalize versus the technology picking my watch list, and how you balance those two approaches.

Yeah. Yeah. This is such a such a big conversation, but I'll I'll I'll just say a couple of things.

I agree with you. I think that personalization needs to be for the consumer, and it needs to be, it needs to make sense. I think, you want it to be easy for your buyer to buy. And the more personalized it is, when you talk about personalized pricing, the more the consumer has to think about whether they're getting the right value because they're saying, okay. Every time I tell them something about myself, they change the price. I mean, just think about that as a consumer. You're like, every time I say something, the price moves.

I'm gonna have to figure out how to talk to the machine so that I get the price I want. And I don't even in many cases, the consumer doesn't even know what they need, at the beginning. Right? So if you came to Netflix, for example, and you said, what, what kind of content do you wanna watch?

Right? I might say, I like dramas and comedies. But the truth is I also watch documentaries and sports and, you know, when we have friends visiting, kids programming. I mean, there's a lot of other things that I use, and so I'm not really reliable when I tell them what I want.

So that's one thing. And and when I'm thinking about it, my if I if if the pricing keeps changing, I have to keep my wits about me. I have to keep my consumer hat on because I have to make sure that I'm gonna pay for what I really need, and I'm gonna get value, and I'm not getting taken advantage of.

There's a lot of credit I think predatory pricing that happens in the news industry right now.

There's some very sophisticated pricing experts working at a lot of the big news media organizations.

And we can be in a situation where you and I live next door to each other in houses that cost the same amount with very similar jobs and very single similar, demographics. But I've been a subscriber for five years and you're new, and you get a free subscription for a year followed by a really low price. So the two of us go out and, you know, are are accessing the same content, and we're paying radically different prices. Not because we need different things and not the personalization that consumers think they want, but because the organizations are pricing about our willing against our willingness to pay, which is great until we have transparency and then we feel, again, we don't trust the the company. So that I think Yeah. There's some issues, I think, for the organizations to figure out. Is the personalization for the consumer, or is it against the consumer?

And do they really know what they want, or are they really gonna depend on you to help expose them to what they need, and see around corners for them?

Yeah. And I think my final question is around kinda the future of the industry, where things are heading, what you're excited about, what you're seeing clients invest in. And I think that, yeah, that consumers in general, and we're seeing this in our data, are becoming a lot savvier. Right?

Even just you and I. Right? Like, think of where in eight years ago and, like, this number of subscriptions I had, and now, like, you see what they're doing. You see what, like, they're trying to do with the emails.

You see the price changes. You see what's happening in the market. I think we're all becoming a lot savvier.

So, yeah, what what are you seeing in terms of, like, the future of the space and, where subscriptions are heading in general?

I think we're as consumers, we're savvier, and we're also, in some ways, more accepting. So the idea of subscribing to a car or, you know, I I know, you know, some of my kids' friends subscribe to furniture, that's totally acceptable. That seems very reasonable to people. The idea that you don't need to own things, you can access them. The idea of of, you know, accessing catalogs rather than owning your own libraries, all of that is great news for the world of subscriptions.

And I'm seeing subscriptions enter, you know, the last kind of strongholds of transactional pricing.

So that's, I think, really exciting.

I also see, that subscriptions can't work if they don't make sense.

And there's still a lot of, we gotta have a subscription, without really thinking about is that really in the in the customer's back best interest. And so I'm seeing some organizations either pull back on subscription or refocus on subscription in a way that is more sustainable.

There were lots and lots of companies. I know you saw them at Recurly. I certainly saw them that were just throwing money at subscriptions without having a great model and without actually, having unit economics that made sense.

There's a lot less of that now. There people are more thoughtful. Subscriptions are I think they're just one tool in the toolbox now as opposed to a shiny new toy. Like, people know how to use it.

They use it regularly, but they don't, like, try to use it. You know, it's not like you have a fork and you're trying to use it to cut your meat. Right? You you understand where the tool makes sense and how to use it.

I've already gone way over time. And there are so many more things I wanted to get to, but, unfortunately, we don't have time today because there's a lot of great sessions we have, throughout today's event. But I Robbie, thank you so much for joining. This was amazing conversation. I could geek out with you all day about subscriptions.

If there's any questions we didn't get to in the chat, we'll follow-up over email. But thanks again for your time, and have a great day, everyone.