Hi Lenny, having spent quite a bit of time in B2C space, I want to say the post is just awesome! However, it does not mention b2b2c at all, while for many consumer apps (eg Spotify) it’s crucial (or at least it was at a certain stage), as it’s a proper tool to mitigate some of the B2C pains and go through a plateau when churn and cac balance each other. What do you think about b2b2c?
Konstantin, that's a great callout and I considered adding B2B (and/or B2B2C motions) as one of the Top 10 growth levers, but ultimately it didn't make the cut because it's simply not an option for a lot of consumer subscription apps. But for the ones where it does represent a good fit, and where they have sufficient scale to execute it successfully, it can be a huge accelerant. Recent examples beyond Spotify include Grammarly, Headspace (fueled by their acquisition of Ginger), Calm, etc. I'm a big proponent of this for the right companies.
Just cool. It seems every week, Lennys' content applies to my stealth startup.
Re: Subscription model. I have another name that I can't disclose for confidentiality reasons but imagine 50-70M MAUs on a Web2/3 market-network model. That's a marketplace, social network, and SaaS workflow all in one consumer marketplace on mobile. It has its own viral valuation loop because of the patented product UX of the entire value chain in its own new market category.
Web2/3 ownership to the masses will rule. But there are no models anywhere in the world. Farcsater isn't one IMO.
Perks, irresistible offers, and an embedding strategy to the user/owners will play a central role, but it will be the humanity of the product UX that will lead an LTVB(life time value brand)
Thanks for commenting, Phil. When I can, I'll let you see a new subscription model that isn't a revenue stream. New business and revenue models are coming to new vertical marketplaces.
Phil, this is a great post. Would you recommend a good source that outlines some of the core objectives of launching a subscription program? (Especially from a B2C platform lens. Ex: Doordash)
I'm so glad you found it valuable, Sharad! I'm not sure I have any additional sources beyond those listed under "Further Study" above that specifically highlight the core objectives of launching a subscription program, but in general, I think the most important ones are:
1. Convert one-time transactional revenue into recurring subscription revenue, which tends to be higher quality and can also increase a company's revenue multiple among investors
2. Improve customer retention, since your best customers are now engaged in a recurring relationship with you vs. a one-time transactional relationship
3. Reduce customer acquisition costs by reducing the degree to which your company needs to "re-acquire" the same customers (which is a common problem for eCommerce companies)
This is an incredibly thoughtful, useful, and actionable post. So much of this is pure gold - l especially love points 2 and 6, which are often either not done at all, or just an afterthought. The revenue impact of fairly simple A/B tests on pricing experiment cohorts can be a game changer. Thanks for showing us under the hood :)
Perhaps you see what few can imagine until they see it. Flat-out consumer subscription models will change. They will be forced to or die. You need a true marketplace first for long-term sustainability.
I predict this new subscription model will come from a Web2/3 ownership abstraction layer.
A new rethink is in order. Why can't there be a 150M MAU subscription model for ??????. Then global. The customer audience is all in place.
Phil's course on consumer subscription growth is incredibly valuable. I highly recommend checking it out: https://www.reforge.com/courses/consumer-subscription-growth/details
Thanks for the kind words, Nick!
As someone responsible for sales and retention of subscription-based services for decades, I can say I'm impressed of this post.
Hi Lenny, having spent quite a bit of time in B2C space, I want to say the post is just awesome! However, it does not mention b2b2c at all, while for many consumer apps (eg Spotify) it’s crucial (or at least it was at a certain stage), as it’s a proper tool to mitigate some of the B2C pains and go through a plateau when churn and cac balance each other. What do you think about b2b2c?
Konstantin, that's a great callout and I considered adding B2B (and/or B2B2C motions) as one of the Top 10 growth levers, but ultimately it didn't make the cut because it's simply not an option for a lot of consumer subscription apps. But for the ones where it does represent a good fit, and where they have sufficient scale to execute it successfully, it can be a huge accelerant. Recent examples beyond Spotify include Grammarly, Headspace (fueled by their acquisition of Ginger), Calm, etc. I'm a big proponent of this for the right companies.
Just cool. It seems every week, Lennys' content applies to my stealth startup.
Re: Subscription model. I have another name that I can't disclose for confidentiality reasons but imagine 50-70M MAUs on a Web2/3 market-network model. That's a marketplace, social network, and SaaS workflow all in one consumer marketplace on mobile. It has its own viral valuation loop because of the patented product UX of the entire value chain in its own new market category.
Web2/3 ownership to the masses will rule. But there are no models anywhere in the world. Farcsater isn't one IMO.
Perks, irresistible offers, and an embedding strategy to the user/owners will play a central role, but it will be the humanity of the product UX that will lead an LTVB(life time value brand)
Glad you liked it, Gene! Best of luck with the startup.
Thanks for commenting, Phil. When I can, I'll let you see a new subscription model that isn't a revenue stream. New business and revenue models are coming to new vertical marketplaces.
Phil, this is a great post. Would you recommend a good source that outlines some of the core objectives of launching a subscription program? (Especially from a B2C platform lens. Ex: Doordash)
I'm so glad you found it valuable, Sharad! I'm not sure I have any additional sources beyond those listed under "Further Study" above that specifically highlight the core objectives of launching a subscription program, but in general, I think the most important ones are:
1. Convert one-time transactional revenue into recurring subscription revenue, which tends to be higher quality and can also increase a company's revenue multiple among investors
2. Improve customer retention, since your best customers are now engaged in a recurring relationship with you vs. a one-time transactional relationship
3. Reduce customer acquisition costs by reducing the degree to which your company needs to "re-acquire" the same customers (which is a common problem for eCommerce companies)
Excellent stuff..
Thanks, Ankur. Glad you liked it!
Just came across this tonight and love it.
This is an incredibly thoughtful, useful, and actionable post. So much of this is pure gold - l especially love points 2 and 6, which are often either not done at all, or just an afterthought. The revenue impact of fairly simple A/B tests on pricing experiment cohorts can be a game changer. Thanks for showing us under the hood :)
Such an amazing read!
It's worth revisiting every so often.
As a product-oriented engineering executive and an enterpreneur, many examples where very reasonable yet very new to me.
I'm so glad you enjoyed it, Andrey!
Hey Aditya.
Perhaps you see what few can imagine until they see it. Flat-out consumer subscription models will change. They will be forced to or die. You need a true marketplace first for long-term sustainability.
I predict this new subscription model will come from a Web2/3 ownership abstraction layer.
A new rethink is in order. Why can't there be a 150M MAU subscription model for ??????. Then global. The customer audience is all in place.