Join the club

If you’re looking for a great business model, look no further than to the subscription model. The idea of having a customer pay for your product or service on a recurring basis over and over again for all eternity is mouthwatering. Of course customers seldom stick around for that long, but I am sure you get my point; the subscription business model is where you want to land in terms of both profitability, predictability and viability.

But the subscription business model also has its huge risks. And the primary one at that is the obvious risk that some day your customer will wake up and for whatever reason decide that she doesn’t want your product anymore – and then she cancels her subscription and leave. Gone is the ongoing revenue, the nice profit margins, the predictability of your business growth and the viability of your business model. You’re left with wondering what went wrong, a challenge to replace the customer with a new one – and cost you won’t get covered in the short term.

Nevertheless the subscription model works. It has mechanics that works like clockwork; smaller customers love the ability to stay on one month at a time and have the flexibility to say yes and no, when they need to access your product. Bigger customers love the ability to sign longer term deals, so they don’t have to spend time on handling the expense every thirty days. There are winning scenarios for all.

The question thus becomes if there is another way of looking at the subscription model from another angle than one of pure financial mechanics and convenience? Potentially one that lets you work with the model in the context of your startup and enable you to build an offering around your subscription model that will add rocket fuel to the value of the offering, while significantly reducing the risk of customer churn?

It can be little surprise that I think there is. And basically it has to do with framing the model in a slightly different context; moving it from a pure business model to a strategy about creating a sense of belonging with customers.

If you want you could call it a club. I have always been fascinated with clubs and their ability to get people from different walks of life together in supporting the same cause or team. I am especially fascinated when that sense of belonging to and supporting something endures during times of hardship. Times where you might have every reason to walk away, but you decide to stay because you are addament or perhaps just hopeful that better times and success are just around the corner.

Those dynamics have power and real merit, and I think it could make sense to try and work on transforming those into a startup context; i.e. how can you create your own ‘club’ and a sense of belonging with customers, where they will stay with you almost no matter what because what you’re delivering to them is above and beyond the product or service as it is right now.

In order to become a club, you need to define a mission and a sense of purpose that customers will want to buy into. While I realize that most startups – and other companies for that matter – have vision and mission statements ad nauseam, this is different.

This is no afterthought. This is absolutely core. This is what you and your customers need to believe can become true at some point in time that is not too distant out in the future. Where do you plan to take your customer? What’s the promise, you deliver to them? How does ‘the promised land’ look and feel once you get there? Is the attraction, benefits and value of it enough so that customers will buy into it, because they can already sense it now?

Next up you need to figure out what the perks of belonging to this club are, as you embark on your journey together. Just as with any other form of endeavor, you cannot succeed without gas on the engine, so what is your gas? How are you going to keep the engine running and provide your customers something that is more than enough to keep them engaged and believing in the ultimate destination? And, importantly, what is the cost of keeping them happy along the way? Is it at all tenable, and if not what can you do to ensure it becomes so?

It is about creating fans of what you do. Kevin Kelly described the 1000 true fans theory years ago that basically says that if you can find 1000 true fans, who will buy whatever it is, you produce, you’re set. At least as an indenpendent provider. But there is no reason why that shouldn’t be scalable to a startup scenario; consistently building a following that is passionate enough about the quest you’re on that they will be buying into everything you do the path towards the end goal.

When you manage to do that you not only delight fans and retain them for the onward journey. You also have the potential to look into decreasing price sensitivity, aka you can start working with your pricing. Fans are not necessarily that picky – they will support you a long, long way before they start being concerned – and most of them will (at least if you operate in the B2B space) be deploying other peoples money. For them the price concern will be even less important – provided of course that you stay the course and stay loyal to what keeps you together.

That in turn will enable you to get to predictable growth. You will start being able to pretty accurately model the potential of adding new things to the mix and as a part of that also figure out when the timing is right to adjust the price in return for added benefits from the ‘club’ membership. I am not suggesting it becomes easier as such, as these things are still very complex to get right. But I am suggesting that it should be much more fun, since you have got the mechanics of the model working on your behalf.

So with all the above things being said, what do you need to create a ‘club’ feeling around your product or services and give customers the sense of belonging and wanting to belong to your cause? The answer, of course, is the right mix of talent and the financial means to get there.

To address the finances first, I am pretty bullish that if you can come up with a model where you can show investors the predictability, reliability and viability of your model from a financial perspective, they will be keen to support it. Investors are always looking for growth opportunities, and if those come in tandem with manageable risk at an acceptable level, it starts getting interesting for them. So that will most likely not be the biggest challenge.

The bigger challenge is likely going to be to find and attract the talent that will make the model work for you. Because it takes some special skills both within storytelling but especially within customer success and support. Furthermore it also takes a mindset that gives above and beyond the short term optimization one. If you are looking to making this model work and base your startups growth and future success on it, you need to be clear with both the team and your investors that you’re in it for the long term.

That’s what it takes to create a real movement that is above normal considerations for retention and will deliver the predictable growth and bottom line year after year; a club people will feel passionate about.

(Photo by David Jackson on Unsplash)

Hyperlocal belonging

The other day I saw a survey that claimed that 44% of all Danes would like to know their neighbors better.

In a globalized world, where we’re so busy figuring out when and how to travel somewhere next, this is somewhat a mind-boggling number.

You may say that you’re global. But the fact of the matter also is that most of us (not me though) live alone – many even single. We venture out to meet people, but when we are at base, we’re most often alone.

To more and more people that turns into a feeling of anxiety and even depression. The Covid-19 pandemic certainly hasn’t helped with psychiatrists reporting a large influx in ‘new’ patients who all have in common that just a year ago they would have been deemed far from in need of seeking help with their mental health.

So, having said all of that, it is comforting to see that once again there is a surge of interest in the hyperlocal space. In building local (mostly) digital communities, where people who might otherwise feel slightly isolated and alone can get a sense of belonging.

That’s the good part.

The not so good part is that for all the initiatives, I see being announced especially in Denmark, I have a feeling that they will be missing the target and the real opportunity.

Both Jysk Fynske Medier and JP/Politikens Hus have announced that they will be rolling out new hyperlocal mediainitiatives in select geographies in the coming months. It should be applauded. It not for anything else then for the jobs it’s going to create in a media industry that is by now more infamous for its frequent job cuts.

But is a hyperlocal NEWS site really the answer to the question of hyperlocal belonging? Maybe. But I am guessing ‘no’.

It will most certainly be able to fill a need to be informed about what’s going on around you. But is that enough to make you feel connected too? I doubt it. I think that in order to achieve that you need something more.

Considering all the issues with people feeling lonely and borderline depressed, the opportunity to find new ways to connect people and by proxy help build mental stamina and health seems both really good, worthwhile and as something that could have some interesting positive business consequences.

Because people are more than willing to pay for services and products that give them a feeling of being substantially better off on a personal level. And what is more personal than the sense of belonging, being part of something bigger, being seen, heard, appreciated and connect with likeminded people for various activities?

Not really that much.

So I will be curious to see who the first ones will be who make the bet to build a hyperlocal model not based on information as the primary thing but on the psychological levers to make the individual feel better as it’s core.

That’s a really intriguing and cool opportunity.

(Photo: Pixabay.com)

WFH? Not so fast

A movement is forming around the future of work; saying goodbye to the office in return for unrestricted flexibility to work from wherever whenever and however you might choose. It’s the future, damn it!

First of all, I will always be very reluctant to base any long term strategy on a short term experience of what happens, when you make the switch. Add to that that the switch was forced due to Covid-19 and add all the stress elements of anxiety, having to keep kids at home while trying to work etc, and to me it is just a big NO GO!

It’s just a poor way of using data. Almost fraudulent. Especially if you have the well-being of the people, you’re trying to determine the future of work for at heart.

Second, I strongly believe in working together – also in a physical sense. A lot of the work I do and do with others is centered around creativity, open discussions, listening to arguments and finding the best course of action going forward. I find it super hard to replicate sitting at my kitchen table versus being present in the office with the others on our team. But that’s just me.

What is not just me is the thing about workplace culture.

Let’s for a second forget that going completely WFH effectively eliminate all discussion about work-life-balance, because we take away the one thing that keeps things kind of separate for us – the commute. That’s a problem in itself.

No, the real problem is how we create a great company culture, if we’re never together? Culture is not something that happens at bi-weekly all hands meetings or the annual company picnic. It happens every day in your interactions – little and big – with your colleagues around why it is you come to work every day:

You need to see your great colleagues, your need to figure out great solutions together, your need to know and really FEEL that you’re together in creating whatever it is that your company is working to create – the big “why?”

Even though a lot of leaders talk about the importance of having a great company culture, a lot of companies still ultimately rely on people figuring the culture part out themselves and keeping it alive at the water cooler, the small chit chats and whatever else you have, where you can meet informally and bond.

That is super, super hard to do remote. It least if you care about having a team where the “why?” matters.

And that brings me to the final point:

There are lots of roles, where it makes sense to go predominantly WFH; some very well-defined roles, where you essentially have a tasklist, you can work yourself through on a daily basis, be done and call it a day knowing that somehow your contribution fits into the corporate hamsterwheel of things.

But by and large – for ordinary jobs in ordinary companies (and be honest, those are the 99,9 % of all companies) – the “why?” goes out the window during this process.

You can give people all the flexibility in the world that you want. But once everybody starts doing that, it seizes to be an advantage.

And you will be stuck with the downsides;

It will be as easy for your employees to leave as it was to onboard them. Because nothing is going to be holding them back:

They don’t have a real relationship with your company. They don’t really know the people they work with. They (probably) have an even more crap manager than in the office, because managing remote is even harder than in the physical space). And they are distanced from the mission, the “why?”

What’s not to leave behind for greener pastures?

A WFH defacto for work going forward will do nothing else than (1) make it harder for the vast majority of mediocre companies to make great things happen and (2) make it near impossible to keep the people that go the extra mile to see the vision come true as a true team effort while (3) all along giving the false sense of relief that everything is flexible, fine and dandy.

Choose WFH at your own peril.

(Photo: Pixabay.com)