On a marketer’s bookshelf…The Forever Transaction by Robbie Kellman Baxter
When I first met Robbie Kellman Baxter (RKB), I had just finished giving a talk about The Times of London’s retention and engagement strategy at the 2018 International News Media Association’s London Study Tour in 2018. I won’t lie—I hadn’t read The Membership Economy and I had no idea who she was but I immediately liked her.
She introduced herself and started asking me all sorts of detailed questions so I knew right away that she wasn’t just paying me lip service, but rather genuinely interested in that next level of detail. The Times had just gone public with the news that our strategy had reduced churn to its lowest ever levels, both for The Times but also to the lowest levels of any News Corp title globally. When she mentioned that she was working with one of my former colleagues who had moved to The Wall Street Journal I was equally intrigued and we exchanged LinkedIn details.
When I got away from the conference I looked her up and realised that I had been speaking to a luminary in our industry; her client roster proves it: she’s worked with the likes of American Express, Microsoft, Weight Watchers and Dow Jones, to name a few. If that doesn’t convince, there is of course her first book. RKB may not have invented subscription models but she is the one that brought them into the 21st century. In The Membership Economy, she explained why organisations were turning toward subscription models to generate recurring revenue and detailed how that turn could be wildly profitable. She was at pains to stress however that pivoting to a subscription model alone wouldn’t bring the cash rolling in—to really make them work, to participate in that membership economy, brands needed a forever promise, which she defines as the commitment to “deliver a result, solve a pain point or achieve an outcome for your members forever, in exchange for their loyalty” (Baxter, X).
RKB’s latest book, The Forever Transaction explains how to deliver on this promise. It’s a blueprint for the successful delivery of your business’s forever promise and is chalk-full of examples from her work with clients. This type of customer-centricity matters because it’s profitable; articulating that promise is what we did at The Times to bring churn down and what we’re doing at TMAC with our current clients in a range of sectors. We believe that brands need to demonstrate empathy for consumers across every touch point of the experience, and it’s only by doing this that firms will sustain profitable growth and increase CLTV. It’s actually stunning how many C-level stakeholders I’ve spoken to that seem unaware of this—in the wake of COVID-19 profitable customer-centricity has only become more important so I’ve been keen to read this and post about it since it came out in April.
The book is split into three parts: launch, scale and lead. Launch addresses the foundations required to build your forever transaction: how close is the organisation to being in the membership economy? What kind of support from C-level exists? Who are the right people to lead the different phases of transition launch? How far is the culture generally from being truly customer centric? RKB offers approaches to diagnose these questions quantitatively and always with a brisk dose of reality—there are no rose-coloured glasses here. The first step is a realistic business case; Baxter is upfront about the challenges that organisations face and reminds us that we must build support, define our goals, start small and learn from our mistakes all whilst sustaining the inertia of change. This is typical of her direct style, here discussing business casing and the need for a clear justification for a pivot:
“You may decide the business case isn’t powerful enough to justify moving forward. That’s useful. If your business doesn’t have sufficient resources and needs to prioritise investment over short-term cash flow, that’s OK. It’s important to get clarity and not waste time doing more research, testing and implementation than you need to move forward.”
Although you could argue that this is Business 101, my direct experience managing teams reminds me that there are a remarkable number of folks that do not share this approach. Good business casing is also a real art and Baxter offers a wonderfully comprehensive template of questions to answer as a starting point if you struggle with this.
Baxter’s realism is something that continues into the second part of the book, Scale. Once a firm has a clear plan, robust results from tests, the right people in place and a growing culture of change, it’s time to consider more seriously different routes to market and preparing for common pitfalls. You don’t need to look very hard for some extremely valuable nuggets of information in these chapters. Baxter addresses first the resistance different departments or individuals may express during a transition to a subscription model and identifies different proxy behaviours for the “fear” that may be driving them. She rightly concludes this chapter on managing emotions and cultural transformation with a truism, especially applicable in large companies: “Without clear, consistent support from the C-Suite, you’re likely to fail.”
Throughout she makes use of several clever (and funny!) analogies along the way, from wading through a mosquito-infested swamp (preparation for pitfalls) to tasting filet mignon (free trials)-These help to bring some of the more complex concepts she discusses to life and nowhere are the concepts more easily misunderstood than in the chapters on pricing and metrics. It’s so refreshing to see how much time she spends on discussing the importance of data-driven decision making and how it can be used to “keep the customer front and center.” She also spends a great number of pages discussing churn, cohort analysis, CLTV and the LTV/CAC ratio; the book is worth buying for these two chapters alone, especially the tables detailing the construction of these metrics and their uses.
The final section of the book is called “Lead” and is focused on staying on top once you’ve arrived at the peak. Baxter provides more useful advice and discusses the “Growth at All Costs” problem; firms shouldn’t be taking shortcuts to growth, but sometimes the structure of the subscription business can be used to prioritise the short-term over the long. Here her advice is to “[f]ocus on the long-term and avoid strategies that conflict with forever.” One means of doing this is to continually evaluate the PMF, or product-market fit, a new type of accounting that has its origins in VC and can also help investors more accurately judge business health, rather than simply relying on revenue multipliers (which may misrepresent the reality of high-churn businesses, for example).
I want to focus in on the cultural threads Baxter weaves in and out of her overall narrative, first in the “Scale” section but again in the “Lead” section. To highlight a point she makes several times, transitioning to a subscription model and maintaining it are not just operational challenges, they are cultural. It’s the part of her book that I wish Baxter had given us a little bit more insight into how to tackle some of these challenges in greater depth, like those colleagues that cause “an undercurrent of resistance” (78). Obviously it’s not the core topic of her book—and there has been much written about influencing in change situations elsewhere—but I get the sense that RKB has experienced her fair share of difficult situations throughout her career and I think there is probably an audience out there eagerly waiting to listen to her wisdom (myself amongst them!). Maybe a topic for the next one?
If the plethora of detailed information and the high usability of the book weren’t enough to sell me on it (they are), the final aspect that seals the deal would be RKB’s tone. It is one of quiet optimism: in which, several times over, she continually reminds us that nothing is impossible as long as the firm is guided by data, pragmatic decision-makers and a laser focus on building consumer trust by delivering on that forever promise. If you haven’t already, go buy her book(s).