Insights on Subscription Value Creation

Nov 18, 2024

Podcast Episode Notes: Subscription Value Loop

Hosts: David Bernard, Jacob Eidinger

Guest: Phil Carter, Independent Growth Advisor and Angel Investor

Introduction

  • Phil's background: VC and product leader roles at Fair, Quizlet, Ibotta.
  • Discussion on subscription value loops and creating robust customer value.
  • Insights into why A/B testing isn't the first step in price optimization.

Phil's Journey and Experience

  • Initial career in consulting, then first employee at car-sharing app Wheels.
  • Venture Capital role focused on consumer mobile investing.
  • Move to Colorado for lifestyle reasons, subsequent roles in product and growth leadership.
  • Joined Quizlet to lead growth team, attracted by product and business model.

Quizlet's Growth

  • Quizlet's low-cost user acquisition: Word of Mouth and SEO.
  • Focused on replicating growth in international markets.
  • Developed a quantitative growth model: 6 key actions and 4 growth loops.
  • Importance of tailoring models to each company.

Subscription Value Loop Framework

  • Value Creation: Robust, Rapid, Repeatable, Remarkable.
    • Robust: Strong product-market fit.
    • Rapid: Quickly convey value to users.
    • Repeatable: Sustainable, ongoing user engagement.
    • Remarkable: Generate word-of-mouth and community.

Value Creation in Detail

  • Robustness: Solve a real pain point and achieve strong product-market fit.
    • Example: Superhuman's iterative approach to product-market fit.
  • Rapidness: Engage users early; achieve 'aha' moments quickly.
    • Examples: Rise and Noom demonstrating quick value realization.
  • Repeatable: Long-term engagement and retention strategies.
    • Example: Fitness trackers and subscription content offerings.
  • Remarkable: Create a remarkable product that drives word of mouth.
    • Examples: Tinder's swipe feature, Strava's community.

Value Delivery

  • Efficient acquisition of users through organic methods.
  • Examples: Quizlet's SEO, AllTrails' local search advantage.

Value Capture

  • Essential for sustaining and growing the business.
  • Must balance value creation with capture, reinvest in product.
  • Five Ps of Value Capture: Paywall, Pricing & Packaging, Payments, Promotions.

Paywall Strategies

  • Make paywalls visible, align them with key product experiences.
  • Customize paywalls based on user entry points.

Pricing and Packaging

  • Use Van Westendorp and Conjoint Analysis to determine optimal pricing.
  • Segmentation and survey tools help refine pricing strategies.

Payments

  • Consideration of alternative payment methods.
  • Transparent purchase flows and ethical subscription practices.

Promotions

  • Effective use to align price with user willingness to pay.
  • Need for targeted and thoughtful promotions.

Conclusion

  • Phil's contact info and upcoming course with Reforge on consumer subscription growth.
  • Reflection on the value of building community and sharing knowledge in the subscription app space.