Why Your Subscription Model Isn't Working

While the benefits of a subscription model are clear, the shift can be emotionally taxing for employees.

This is especially true for long-time employees and senior staff who might experience fear and uncertainty about what the change means for them.

They may resist learning new skills, fear losing their influence, or simply prefer the old way of doing things.

This resistance can manifest as logical objections, delays, or lack of enthusiasm in implementing the new strategy.

What are the common emotional roadblocks to transitioning to a subscription business model?

Employees from different departments may exhibit resistance for different reasons:

• Product Teams: May resist a customer-centric approach if it means they won't be creating products that earn industry recognition.
• Sales Teams: "Hunters" used to closing big deals might resist the "farming" approach required for subscription sales, fearing smaller commissions and potential clawbacks if customers cancel.
• Operations and IT: Might feel their role as gatekeepers diminish with the rise of SaaS offerings that require less IT involvement.
• Marketing Teams: May resent the shift from creative acquisition campaigns to data-driven engagement and retention strategies.
• Finance Teams: May worry about the initial revenue dip during the transition, the potential for investor backlash, and the complexities of new revenue recognition rules.

How long does it typically take to successfully transition to a subscription model?

For mature public companies, the transition can take 5 to 7 years to fully implement. Smaller, more agile companies might see significant results within a year. The key is to understand that this is a long-term process that requires sustained effort, investment, and a willingness to adapt along the way.

What are some signs that a company's culture isn't aligned with a subscription model?

Look out for these red flags:

• Salespeople still prioritize large one-time deals over recurring subscriptions.
• Mid-level managers refer to the subscription strategy dismissively, as a passing trend.
• Concerns about cannibalizing existing revenue streams are widespread.
• Teams prioritize the needs of declining long-time customers over attracting new ones.
• The company relies on frequent promotions and discounts to meet short-term targets.

How can companies foster a "member mindset" throughout their organization?

• Leadership Buy-in: Secure visible and consistent support from the C-suite for the long-term vision.
• Shared Vision: Clearly communicate a compelling mission that resonates with employees and ties their work to a greater purpose.
• Customer-Centric Metrics: Prioritize metrics like Customer Lifetime Value (CLV) and customer satisfaction over transaction size and quarterly revenue.
• Empowerment and Trust: Give employees the autonomy to make decisions that benefit the customer, even if it means deviating from standard procedures.
• Continuous Learning: Educate employees about the subscription model, its benefits, and how their roles contribute to its success.

What's the "Make Mom Proud" test and how does it relate to customer-centricity?

The "Make Mom Proud" test, advocated by customer experience expert Jeanne Bliss, challenges companies to consider how their mothers would feel as customers. This encourages a focus on building long-term trust and loyalty, as one would with a family member, rather than viewing customers as transactional entities.

How can companies measure their level of customer-centricity?

Evaluate your company by answering the following questions:

• Do you prioritize the customer relationship over individual transactions?
• Are CLV and customer happiness your top metrics?
• Do employees speak about customers as if they were present?
• Are employees empowered to go beyond standard procedures to take care of customers?
• Do employees know your best customers by name?
• Is your organization structured around the customer journey?
• Do you collect and analyze diverse customer data beyond basic demographics?
• Do your customers feel recognized and appreciated through personalized experiences?
• Are all your processes aligned around the customer?
• Do you focus more on the post-sale relationship than acquisition marketing?
• Does everyone in your organization understand what customer-centricity means?

A high number of "yes" answers indicates a strong customer-centric culture.

8. What are the crucial steps for leaders to successfully implement a subscription model?

• Honestly assess your current culture and identify any misalignments.
• Review your mission, vision, and values to ensure they reflect a customer-centric approach.
• Address any structural, budgeting, or compensation issues that might hinder the transition.
• Identify who will be most impacted by the change and address their concerns.
• Develop strategies to manage potential resistance and communicate the benefits of the new model.
• Secure consistent support from leadership and communicate a shared vision.

P.S. I created this article by putting Chapter 8 of The Forever Transaction through Google NotebookLM -- took all of 5 minutes. What do you think?

About Robbie Kellman Baxter

Robbie helps companies leverage subscription pricing, digital communities, and freemium models to build deeper relationships with customers.

Over the past 23 years, she has worked with over 100 organizations in over 20 industries like the National Basketball Association, Hagerty, The Wall Street Journal, Microsoft, and Ingram Micro.

As a keynote speaker, Robbie presented globally at major conferences, association meetings, trade shows, and elite universities as well as to private audiences at many of the world’s most well-known companies.

Robbie has developed and led over a dozen courses for LinkedIn Learning including Become an Entrepreneur Inside the Company and Sales: Customer Success.

She hosts the podcast, “Subscription Stories” , where she sits down with business leaders to discuss how they’re using subscription pricing and membership models to redefine the biggest industries and generate predictable recurring revenue. She also developed and taught nine video courses for LinkedIn Learning on business topics ranging from innovation to customer success and membership.

Robbie’s first book, “The Membership Economy: Find Your Superusers, Master the Forever Transaction & Build Recurring Revenue” , anticipated and defined the massive transformation from ownership to membership and the rise of subscription pricing. It was named a top 10 marketing book of all time by BookAuthority.

Her second book, “The Forever Transaction: How to Build a Subscription Model So Compelling, Your Customers Will Never Want to Leave" takes readers through every step of the subscription business process – from initial start-up or testing of a new model to scaling the operation for long-term growth and sustainability.

Prior to launching Peninsula Strategies, Robbie was a strategy consultant at Booz-Allen & Hamilton, a New York City Urban Fellow, and a Silicon Valley product marketer. She received her MBA from the Stanford Graduate School of Business and graduated with honors from Harvard College.

Find Robbie on X @robbiebax ,?on Instagram @robbiekellmanbaxter , and on?Facebook @robbiekellmanbaxter .

To get Robbie's "3 Tips for Onboarding New Subscribers", click here .

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