Subscription Stories: True Tales from the Trenches

Building a new subscription model in a large, successful company is hard enough, but when your company's core competency is manufacturing and the subscription involves content and software, you have to do more than build the new business model. You have to change the way the organization thinks about product management.

With experience, both at PlayStation and at Ford, today's guest, Ross McGregor, will shed light on how to build a service orientation across a product team. Something critically necessary if you're going to build a forever transaction with your customers. In this conversation, he talks about how to put together the business case that merits a strategic bet on subscriptions, how to build support across the organization from the beginning, and when it's time to scale the experiments.

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You're in for a special treat today. My guest, Dr. Tacy Byham, is the CEO of Development Dimensions International, or DDI, a global leadership consulting firm that helps organizations hire, promote, and develop exceptional leaders. A few years ago, I worked with Tacy and her team as they incorporated subscriptions into their business model. The results have been extraordinary. Three years into the launch, over 50 percent of DDI's revenue comes from subscription clients.

I've been asking Tacy to share her journey for quite some time, and I'm thrilled that she finally agreed. In today's conversation, we'll talk about how subscriptions can smooth out the lumps in B2B services, how to put together the right team with the right mindset for subscriptions, and how to keep up the momentum after the initial experiments with subscriptions are over.

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The world of B2B subscriptions has changed a lot since companies like Salesforce first paved the way for what would become known as Software-as-a-Service. And while there are hundreds of marketing and sales-oriented SaaS products, it's taken a lot longer for the subscription model to be fully embraced in the CFO's office.

Randy Wootton has seen the evolution of SaaS and understands the changing role of the CFO better than most. He's led businesses focused on sales and marketing solutions at companies like Salesforce, Microsoft, and Rocketfuel, but more recently took over the CEO role at Maxio, a leading provider of billing and financial ops solutions for B2B SaaS companies.

In this very rich and full conversation, we talk about why pricing and packaging of subscriptions is so hard, the power of a pricing council, and the changing role of the CFO in a SaaS world.

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If your subscription uses a freemium model, it can be tricky to decide what’s always free, what’s free for a while, and what’s always behind the paywall. Knowing how to manage people at each stage of the funnel can be really challenging.

Today’s guest, Ken Houseman, is an expert on both the strategy and the technology required to monetize the funnel for acquisition, upsell, and retention. Today’s conversation isn’t based purely on Ken’s work as VP of Product for The New York Times, and in no way represents the editorial perspective of the organization. Ken’s experience there, as well as his work with organizations, including Oracle, Nike, and even the US military, have shaped his perspective on managing the customer relationship.

In this conversation, we discuss why retention is the next obsession for subscription leaders, what needs to be different about how to optimize your ERP for subscriptions, and a few of the less obvious things that can go wrong on the path to conversion.

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Season 6 is launching soon, but while you wait, catch up on our most recent season. Some of Season 5’s most popular episodes include Mighty Network’s Gina Bianchini returning to subscription stories for a second time to share her wisdom about building purpose-driven communities, as well as Dan Zavorotny of Nutrisense talking about blending hardware, software, and services into a single subscription, and Anne Janzer on subscription marketing.

We went deep on customer success with Rod Cherkas, author of the Chief Customer Officer Playbook, and about scaling membership with Pavilion Founder, Sam Jacobs. We talked a lot about subscription product design with Silicon Valley Product Builder, Tom Willerer, Samsara’s CPO, Jeff Hausman, and Mailin Jappé of Acer.

I always love conversations with academic researchers with a strong practical mindset, and this season I was happy to host Harvard Business School’s Ava Escarza and Columbia’s Rita McGrath. And we got into the details of two of the trickiest parts of subscription design, pricing and the law, with respectively Mark Stiving, author of Selling Value, and Paavana Kumar of Davis+Gilbert.

If you haven’t listened to these episodes, I encourage you to check them out. And if you really like them, please be sure to rate and review them on Apple iTunes or Apple Podcasts. I always ask because it helps us get the word out.

Guests for Season 6 include Ken Houseman, who leads product management for the New York Times, Tacy Byham, CEO of the leadership consulting powerhouse DDI, and Randy Wootton, CEO of Maxio.

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Subscriptions are going beyond software, content, and community, and increasingly are providing access to the physical world. The internet of things lends itself well to providing subscribers’ ongoing benefits, blending data from sensors and cameras with sophisticated software. This type of subscription can be complex to build, but has to provide value that is simple for subscribers to understand.

My guest today, Jeff Hausman, is the Chief Product Officer at Samsara.

Samsara provides an integrated subscription-based platform to increase safety, efficiency, and sustainability in the physical operations world. Think trucks, cargo, oil fields, and construction sites.

I invited Jeff to talk about how his team uses customer input to develop his product roadmap, how they bundle hardware and software to deliver on their forever promise, and how they've partnered across the ecosystem to keep things simple for their subscribers.

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 To launch a successful subscription business, you need to think like an innovator. But what does that really mean?

Rita McGrath is widely recognized as the premier expert on leading innovation and growth, particularly during uncertain times. A longtime professor at Columbia Business School, Rita is also the author of several bestselling books, including Discovery Driven Growth, The End of Competitive Advantage, and her most recent book, Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen.

In today's episode, we talk about the right skills to launch, scale and lead a subscription initiative, the neuroscience of the status quo, and the seven archetypes of Innovation.

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Pricing is one of the trickiest elements of good subscription strategy and one that most practitioners feel unprepared to tackle. Coming up with a simple and clear pricing strategy is really complicated. That's why I invited Mark Stiving to the podcast. Mark is an educator at heart as well as a pricing expert, and in this episode, I ask him all kinds of questions about how to determine, test, communicate, and adjust pricing.

In this conversation, we talk about:

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Do you believe in the adage "Kind Folks Finish First"? Entrepreneur Sam Jacobs certainly does, and it's the driving force behind his successful organization, Pavilion.

Sam is the Founder & CEO of Pavilion. In 2016, he started Pavilion, originally named Revenue Collective, and bootstrapped it to an impressive $10M in ARR.

In 2021, he secured a $25M growth financing round, with Elephant Ventures and GTM Fund leading the way. With 15 years of experience as a senior revenue leader at various VC-backed companies in New York, including Gerson Lehrman Group, Axial, Livestream/Vimeo, The Muse, and Behavox, Sam has a wealth of expertise in the industry. He resides in the West Village of Manhattan with his wife and two dogs, William and Oswald, and fondly remembers his beloved Walter who passed away in the Summer of 2022.

In this episode, Sam shares his belief in playing the long game when it comes to business growth. He also shares his experiences as the founder of Pavilion, a paid membership community for revenue executives, and how the key to success lies in creating human connections and continuous learning.

He also tackled the challenges of balancing investment in community versus learning, and the importance of aligning incentives for growth.

Is there a different way to do business that leads to both success and peace of mind? Tune in to find out!

Key Takeaways from this episode: 

3:48 Different ways to do business

9:25 What is Pavilion?

17:45 The constant battle of centralization vs decentralization, consistency vs quirkiness, and how to have intimacy with consistency

24:20 The difference between Acquisition and Retention

29:49 Why bootstrapping is a strategy to achieve success

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If you haven’t been focused on subscription compliance before, you definitely need to start paying attention now. 

The Federal Trade Commission (or FTC) is getting serious about cracking down on “dark patterns” in the world of subscriptions.  They recently filed a lawsuit against Amazon for enrolling consumers in Amazon Prime without consent and for what they call “cancellation trickery. They’ve also announced plans to increase stringency around subscription rules. 

Today’s guest on the podcast, Davis + Gilbert partner Paavana Kumar, is a legal expert on eCommerce, with an emphasis on subscriptions.  In today’s conversation, we talk about some of the key elements in subscription regulations, the planned changes being proposed by the FTC in the US, and specific actions every subscription-based business should take if they want to stay on the right side of the law.

Excerpt:

One of the great things about the subscription industry is that you don't have to be super technical to break into it. You don't have to be a coder. You don't even have to have tons of VC money. You can be an industry disruptor if you have a great idea. Paavana Kumar is a Davis + Gilbert partner and a legal expert on eCommerce with an emphasis on subscriptions. She explains the proposed regulations changes in the Federal Trade Commission that will push many to pay attention to subscription compliance. Paavana also discusses the best actions to be taken to follow the law, especially with a lot of subscription-based businesses not aware of such legalities.

https://www.dglaw.com/

https://www.linkedin.com/in/paavana/

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