It’s Monday — that means it’s time to open up the mailbox and answer YOUR questions!
I have a love/hate relationship with selling subscriptions…
I’ve been in the subscription business, in one form or another, since 2005.
There’s nothing like it for the recurring revenue and predictability it provides.
But, subscriptions can be really hard to sell…
Which is the topic of today’s Mailbox Monday question.
Here’s today’s question…
—
Roy,
I am going to sell a monthly subscription for $49 a month that includes a print newsletter as well as some VERY limited coaching via email only. I will be doing this in a limited geographic area. The topic is sales and marketing. The niche is small business owners.
My question…
- What’s the best way to sell it with a limited marketing budget?
- If I attempt to sell it via direct mail (I know Dan Kennedy did this successfully back in the day)…offering a lengthy valuable report on the subject along with a sales letter that sells the membership…how big of a market would I need to successfully get to 100 members eventually?
Thanks,
– K
—
The answer to all of this is that it depends… And it will be harder than you think…
Once upon a time I heard a number floated out there about how much money Dan Kennedy spent to acquire customers for his No B.S. Marketing Letter.
Somewhere in the $1,000 to $1,500 range.
To get someone who will pay $60 per month.
Let me make the economics of this really clear.
Let’s say the acquisition cost was at the bottom of that range. Let’s say they were spending $1,000 to get a new customer for the newsletter.
And let’s say that was the only profit center — in other words, the newsletter subscription had to cover its own cost.
At those rates, it took 17 months just to make up the acquisition cost.
Factor in printing and postage, and we’re talking about going negative for upwards of two years on getting that new customer in through the door.
What you need to know: Selling general marketing advice is HARD…
You will make your own decisions, of course.
But for the vast majority of marketers, I’d recommend finding a niche.
Don’t try to sell marketing advice to small business owners. That’s about as general as you can go.
Instead, pick a market, and pick a topic.
Facebook lead generation for single-location restaurants. Listing lead-generation advertising for real estate agents. And so on.
The more niche you are in your topic and targeting, the easier it will be.
Easier, one, because having a niche audience allows you to target ad spend.
But also easier because having a topic that people are interested helps with increasing the appeal and perceived value.
How big of a market will it take to execute this plan?
There are so many unknowns in that question, that I really can’t answer it.
When you’re going to a completely cold audience that doesn’t know you at all, the market will have to be much bigger.
If your topic is more general and less specific to them, the market will have to be much bigger.
Depending on the quality of your selling message, the market may have to be much bigger.
Again, there are so many unknowns here that I really can’t predict this with any certainty.
Not only that, you’re creating a bigger challenge by leading with a subscription…
You’re a student of Dan Kennedy, so I’ll reference some of his work.
Have you ever noticed how you can’t actually sign up just for Dan’s newsletter?
You have to get to it via some other offer.
So, for example, recently he’s been offering a $1 copy of his No B.S. Direct Marketing book.
Interesting. But when you sign up for it, you’re given an upsell to include a 60-day free trial in his GKIC Gold Membership.
And that includes his “Most Incredible Free Gift” offer with a huge package of additional materials, given a $633.91 value.
All of this is built to offset the fact that it’s really hard to get people to agree to a subscription. So he gives them a TON of “free” information with a 60-day trial to start to appreciate the subscription, and then and only then does he charge them for it.
Even then, attrition will kill your subscription revenue projections…
Keeping a customer is easier than getting them new.
That is, assuming you’re actually really delivering on the value you promise.
But there’s constant churn in any subscription business. Credit card numbers change. They expire. People move on. The newness wears off. And on, and on.
There are a million reasons people move on from a subscription, even when the value is incredible.
Don’t expect to get to 100 members in a subscription and coast.
Assume that once you start it, it’s either growing or dying. You need to aim well beyond that 100, and have a plan in place to keep bringing folks in. Without that, even if you hit 100 it’ll be the high water mark and you’ll soon be back where you started.
An even better idea?
If I were you, and starting this today, I’d start by testing online.
I’d start by trying to build a list using paid online advertising.
I’d create anywhere from 5 to 10 separate very topic-focused free offers that people could take you up on.
Free reports would work, as would checklists and other similar “tools” that might be useful to the target audience.
I’d also try to get as specific with the targeting as possible, so that I was targeting a very small group of potential buyers who I could speak to in their own language.
I’d test those 5 to 10 messages to that audience, and see which attracted the most interest.
Then, I’d reach out to the people who took me up on the top offers, and have conversations with them. I’d try to figure out what their biggest challenges and most pressing problems were, that they were still looking for solutions to.
Then, I’d adapt everything I could offer to solving those problems in a definitive way, via a lower-priced offer that was a one-time charge (probably less than $50, maybe less than $20).
Then, I’d test that, get buyers, and get feedback from those buyers.
Assuming success, I’d have both a free offer and a single-pay offer that I knew my target audience was interested in, plus some experience targeting them with paid advertising.
I’d try to scale that a bit.
Then, once I had between 100 and 200 buyers of the single-pay offering, I’d launch the subscription.
I don’t know the conversion rate on the free to paid. But on the paid single-pay to the paid subscription, I’d assume you could get between 10% and 30% into the subscription with strong and persistent marketing.
In which case, if you really wanted to get 100 people signed up for your monthly subscription, you’d need at least 1,000 buyers of the single-pay product.
Warning: All of this could be wrong…
Here’s the thing. The question was very general. So my answer had to be as well.
And, it may not even be the best path for you.
I don’t know what else you do in your business. I don’t know how this serves your greater business needs.
But in general, the more general your advice, the harder it is to sell, and the less you’ll make for it.
The more specific, to a more specific audience, the easier it is to sell and the more you’ll make for it.
If you pick a best prospect, have a perfect solution to their biggest pain, and speak to them using the language they speak to themselves in, you may find everything easier than I warn you about…
The key? Start from best practices, and test, test, test.
Yours for bigger breakthroughs,
Roy Furr
