Episode Transcript
Speaker 0 00:00:00 For context, this interview was recorded in April of 2020 amidst the COVID-19 pandemic.
Speaker 1 00:00:11 We all want a business like Netflix or Amazon prime businesses, where once a customer engages with them, it becomes automatic and part of their lifestyle from then on. But how do you build that forever transaction? Robbie Kellman Baxter has been studying subscription and membership models for nearly 20 years. And in this podcast, she uncovers the secrets and strategies of the membership economy. Join us for subscription stories, true tales from the trenches
Speaker 0 00:00:39 I'm Robbie Kellman, Baxter today's subscription story features Piper Rosenshine Piper has been working with subscription businesses for most of her career, including at the New York times, Barnes and noble, and most recently at A&E networks where she's vice president of subscription video services, having a half a dozen people work on this on the side, wasn't really giving it the attention. It deserves. Second, there were just certain functions that hadn't been thought of before, because it wasn't a direct consumer business. We're going to talk about what it takes to operationalize digital subscriptions. How do we evolve culture metrics and expectations, and how to minimalize cannibalization in a business that already has a successful model. Since we're recording in April of 2020, we're also going to discuss how to manage your recurring revenue business in times of great change.
Speaker 0 00:01:37 Welcome to the show Piper. Thank you. Thanks so much for having me. So let's start with telling me a little bit about your experience with subscription businesses. Can you take me on a journey and kind of show me the breadcrumbs that have led you to where you are today? So I started my career in email marketing. Most of my clients were financial services and retail. And over the first several years of my career, I moved around a bit among those industries, including an American express, which although it is a financial service company really is a marketing and membership organization. And a lot of the principles there are around building loyalty and building longterm customer relationships. After leaving American express, I was at Sachs where I managed the credit card program there, the sax MasterCard, another example of a loyalty program and building longterm customer relationships.
Speaker 0 00:02:22 But my first true experience managing hands on a subscription business was at Barnes and noble where I manage the membership program. And that business was going through a lot of transformation. We were competing with Amazon and asking people to pay us to become members. So we had to be very thoughtful about giving them benefits that would encourage them to stay with us as there was now more and more increased competition in the marketplace. After being in that role for several years, I moved to the New York times where I ran retention marketing for both the print and digital business at a time where media and news in particular was going through quite a transformation. So prior to my role at the company, there hadn't been anyone running marketing. It was all about acquisition because it's the New York times. Once you subscribe, you tend to stay. And that was true in the print business, but once digital really took off and there were so much free digital news, it became much more competitive and much more important to keep the people who were your paying subscribers for both areas of business.
Speaker 0 00:03:17 And now for the past three years, I've been at A&E networks. So I manage our subscription video products, which is still a relatively new industry and a new product for a large linear television network, like a and E which traditionally had not had direct to consumer relationships, but now in the world of Netflix and Hulu and you know, the Disney pluses of the world, we are also in the game of having direct relationships with consumers. And that's where my experience has come very handy at a company like Annie. It seems like, I mean, your whole career has been around, you know, deeper and deeper engagement and understanding of customers with digital marketing and then loyalty programs. You know, I featured, uh, American express in my first book, the membership economy, because they're one of the organizations has been around a really long time and has always had that member mindset.
Speaker 0 00:04:04 What is it that's attracted you and kept you in this space? I mean, I think part of it is my personality. I joke I left American express 10 or 12 years ago and I still use my gold card pretty much exclusively. So I am a loyal person. I am someone as a consumer who, I don't know, I like getting points. I like getting loyalty memberships. I think part of it is just appeals to me as a consumer. I joke marketing works and it works on me, so I get it. And I think that actually just makes this more interesting to me professionally, but I've also worked in e-commerce retail. And to me, you know, when you think of the difference working at a Barnes and noble or a Sachs, you're kind of sprinting from one season to another it's it's holiday, then it's Valentine's day, then it's mother's day, then it's father's day and it's this constant sort of start and stop and that you have a strategy for each season while there's a lot.
Speaker 0 00:04:53 That's interesting and exciting about that. It can also be a little bit exhausting and it's not, at least for me, wasn't looking at things as big picture longterm. And when you think about something like a subscription business or a membership, which is more of a marathon, it's a constant ongoing relationship with the consumer. It almost doesn't matter what holiday or what season you want that person thinking of you and coming back, whatever the next time they're making a purchase. And so I think the strategy of that longterm game has just appealed to me professionally. And I just find it interesting and fun and gives me more opportunity to be creative rather than that sort of holiday to holiday sprints. Yeah, that's a really good metaphor, actually, the difference, you know, the kind of sprinting versus marathon of a subscription in the understanding that it takes a while for a subscription business to really kick in, but then it's the gift that keeps on giving, right?
Speaker 0 00:05:41 I've actually also in the past described a subscription business, like a relationship or a marriage where there's usually not, you know, one great date doesn't lead to a marriage and one fight. Usually doesn't lead to divorce. I'm guessing there's some exceptions, but generally speaking, it's kind of this ongoing sequence of events that builds a relationship or that damages our relationship. And that I think is, is the way I think of a subscription or direct to consumer business. Whereas again, if you think of retail, it's a point in time, you're trying to make a decision what you're buying your mother for mother's day, and that may or may not have any influence on what you buy your father for father's day, but in a subscription business, you're always thinking about the next time the customer's going to make a decision about their relationship with you.
Speaker 2 00:06:24 It is, it is very much about the relationship and like, like a marriage or another longtime commitment. It really is about trust as well. So you're at, at a and E now. And you mentioned in your opening that your skills and experience are really helpful that even though Annie is a, you know, a large successful business subscription is relatively new for them. So where were they with their subscription business when you joined? And what were the big challenges that you were asked to take?
Speaker 0 00:06:53 So I joined the company in may of 2017 and at that point, and he had already launched two subscription video products, lifetime movie club and history vault. They had launched about a year or two a year and a half before I joined the company. And they were launched somewhat of a proof of concept. So we as a brand have the benefit of owning a lot of our content. And so we had an asset in our archive content and we believed there was a market for it, but there were some people in the company who thought this was a gamble. It may or may not work. So they didn't actually hire a team to manage this business. They had some internal development and product resources, but it was largely a team effort across marketing CRM, digital,
Speaker 2 00:07:33 It's a very common issue with, with businesses that are already successful. And then they're experimenting with subscription off to the side. There's a risk that people see of, you know, investing too much and having it take away from the core business. And also there's a real focus on the core business, getting all of the,
Speaker 0 00:07:52 Yeah. So the company just wasn't sure there was people who thought in six months, this would end, there were people who thought there was a longterm future here. So initially they didn't hire anyone to run the business. And about a year into it, they realized that there was an actual business opportunity here. So both products had started growing organically on their own. There was positive customer feedback, but there was also a recognition internally that first of all, having a half a dozen people work on this, on the side, wasn't really giving it the attention it deserved. And it was actually taking those people off of other things that were also a high priority for the business. And that there were second, there were just certain functions that hadn't been thought of before, because it wasn't a direct consumer business. So things like customer service, things like recurring billing, things like ongoing email communications to people once you've actually got them to sign up and that somebody with subscription experience who could bring all of those things to the table could effectively run these businesses. And they're pretty small businesses at the time. It was a one person job. So I was hired essentially as the general manager of these direct to consumer businesses to come in and really look at what had been done, figure out what was working, but, but even importantly, figuring out what's the opportunity here, what scale could we achieve and what do we need to do together?
Speaker 2 00:09:00 And how are you received when you came? And you said that some people really believed that there was potential here. Other people either thought it wasn't a big opportunity or actually worried that it could cannibalize the healthy business that they already had. How has your reception and culturally, what did you notice when you got there?
Speaker 0 00:09:18 Yeah, so I would say overall, you know, Amy is a very warm company and I think personally, everyone is very welcoming and we're excited that there was somebody who came from a different background who brought something new to the organization. I would say in terms of professionally, the people, those, those, you know, half a dozen people that have been doing this as a side job, we're thrilled that they could now go back to their full time job and have someone to really take this business that they put a lot of energy into and see it's forward. And then I think there were some other folks that while they were personally very welcoming, there was an element of nervousness that all of a sudden somebody was here to really drive these businesses forward. And what if that meant, you know, taking resources or cannibalizing the larger business. So, you know, I think there was a balance of excited that I was there and that I brought a new perspective and a new background, but also a little bit cautious, you know, is my being, they're going to now take things away from their business.
Speaker 2 00:10:07 Yeah. Like a zero, zero sum game and cultural worry when you were new to any, and you were working to win people over and build support for your nascent endeavor. Um, what were the metrics that you focused
Speaker 0 00:10:21 Early on to show them? One of the benefits of a direct to consumer business is that you have data from every step of the journey. And when you think about a traditional cable business, we get ratings, but we don't necessarily know as much about the individual customer experience. So it was a great opportunity for me, was to educate people about the customer funnel and be able to share with them data from each step of the way. So how many people came to our landing page to learn more about their products? How many of those people actually converted to free trial? How many of those people then converted to patients paid subscriber? How many of those people stay on a month, over month basis? And then why are they leaving? What are they telling us and how can we learn from it? And that data is just more granular insight than we have from some other areas of business.
Speaker 0 00:11:07 And it was really interesting to people and it was also helpful for us in making business decisions. When I was relatively new to the organization, um, there was more concerned about cannibalization, both actual in terms of people literally deciding to cut the cord, but also in the perception amongst the cable community and amongst our, um, distribution partners, we didn't want to appear that we were taking viewers away from linear and moving them over to a lower priced product. So we started out more conservative. When I joined the company, we had 50 movies live in lifetime movie club, and it was growing. People were signing up and people enjoy the product, but we heard a lot of feedback that people were like, I want more, I know you have more. I remember this movie that I watched 20 years ago, why isn't it there? And so what I did not do was walk in and say, we need to go from 50 to 500 because that just wouldn't have happened.
Speaker 0 00:11:58 So what I did was I over time gathered data, we did surveys, we, we got feedback and we then shared that with the organization and said, you know, people are looking for more. We believe there's more opportunity to grow this business and we've taken baby steps. So we went from 50 to a hundred movies, and now we're up to 200 movies, but it's taken us over two years to get there. And each time we made a change, we, we sent those surveys again. We watched the data, we looked for feedback. We look for any indication, positive or negative about the change that we had just made. So we're very mindful of it. And we also make sure that we are talking to the right stakeholders in the organization so that nobody's caught off guard so that nobody gets a phone call from a partner that they didn't expect or that they weren't prepared for.
Speaker 0 00:12:40 It's always a decision that's cross-functional, that's based on data, but also based on customer feedback and based on the world around us. So we were one of the first kind of smaller S VOD players in the space. And now when I look at, you know, something like an Amazon channels, I think they have over 120 Amazon channels. And some of them are the large players, but some of them are also smaller players like we are. So I think part of the, our change has come from data and from learning. But I think part of it's come from just the world around us, realizing a lot of different players are now in the game and they're taking measured risks. And if we're able to take those risks and measure them and be smart about them, we're more comfortable making changes as we go.
Speaker 2 00:13:21 I wanted to ask you about your linear audience versus your subscribing audience, and whether you see differences in their behavior and their who they are. Are they different segments? Is it the same people? What's the relationship between linear and subscriber.
Speaker 0 00:13:38 We found in a lot of this again, is through surveys and direct customer feedback that we essentially have two audiences in the product. You do have people that are cord cutters that have chosen for whatever reason, to no longer pay for cable. And they are looking for history or lifetime or a, any content in an over the top or S VOD world. But those people have an affinity to our brand. So at some point they were watching on linear. At some point, they have that memory of the movie or the documentary that brought them to us in the first place. The other audience are people who are still heavily watching linear, who are really our brand super fans, and they want to see what's on television and they want to see more than that. So the way I often talk about our products is we don't have a 24 hour schedule like you do on television. We're endless, we can have hours and hours of content because we don't have 24 hour schedule. So for somebody who just loves lifetime movies,
Speaker 2 00:14:27 You know, she may watch what's on TV,
Speaker 0 00:14:29 TV on a Sunday night, and she's still looking for more. And that's where we're able to supplement and complement what she's watching on our linear with additional content, you know, wherever, whenever she can
Speaker 2 00:14:40 You're just to watch. Yeah. So you bring up, there's a whole bunch of really important points. I think that you brought up there. I love this concept of, you know, test and learn, test and learn, build your learning so that you, as the general manager are more confident in your decisions. And also so that you have more leverage and more of a way to explain and make your case with both colleagues, for, you know, competing for limited resources and to explain and convey your decisions to your partners, the cable companies, and so on. And so I like how you did that in a very measured way. I like how you brought in the fact that what's going on in the larger world. I mean, streaming services have exploded in the last couple of years and evenly people are starting to understand what S VOD is and what OTT is. And you know, how most businesses that have content or that have channels to distribute content are trying to control the whole thing direct to the consumer. So what's on the horizon has really changed. And so I love that you're keeping an eye on the horizon with your telescope, but you're also using your microscope to really understand how your subscribers behave and how your linear customers that go through a third party are behaving and being very cautious about how you evolve your business model.
Speaker 0 00:15:54 Also been interesting is one of the things we've learned also through survey feedback is that some of our customers have actually told us that after signing up for one of our S VOD services, they're not only watching there, but they're actually watching more on linear because it's just reminding them how much they love the brand and how much they love the content. We feel like in some cases, not only are we not cannibalizing, we're actually strengthening because we're creating a super fan for the brand at large, and that we're just giving that person more options of where he or she chooses to watch. And that super fan there's just more stickiness with the brand overall, if you're giving them what they need.
Speaker 2 00:16:28 Yeah. I imagine that was a surprise to find that it was
Speaker 0 00:16:31 It's one that I think has been really eyeopening and really comforting as we thought about making changes to the product. I talk about data a lot in as much as metrics and viewing data and actual hard numbers are important. I think survey data and customer feedback is just as important because in data, you know, you're looking for what you're looking for, but sometimes a comment, something somebody says in a survey is not something that you ever would have thought of until someone pointed it out to you. And that's where you can find a real nugget that changes how you think about the business.
Speaker 2 00:16:59 Great. We've used some terminology here, S VOD linear subscription. Can you explain what those different terms mean? And also what it means to cut the cord?
Speaker 0 00:17:09 Sure. So when we talk about the cord, we're talking about cable, so your cable connection. So if you're someone who is a cord cutter, you have cut that cord and you are no longer paying a cable provider for your television access. Linear viewers are people who are still watching television through their cable provider. And then when we talk about a subscription video service, those are people who are paying either through an app store or paying us directly through our website or paying through a channel environment like Amazon channel for complimentary video content.
Speaker 2 00:17:40 So Piper, when you introduced yourself, you mentioned the vault at a and E the, these assets of content that are so valuable and that love what has been the role of that vault in building out the subscription. Yeah, it's been a huge role. So being that we are still
Speaker 0 00:17:58 A smaller business relative to the company at large, and that we, as an organization are very focused on profitability. Had we needed to spend millions of dollars to acquire content for these services. I think it would have been very difficult if even possible to get them off the ground, because you would have been making a very large upfront investment on essentially an experiment that may or may not have paid off. And in our case, because our leadership team many years ago had the foresight to own a lot of our content or in the cases where we acquire content to acquire those with longterm digital rights, we actually had an inventory to work with that didn't cost us anything incremental, or in some cases, a modest, incremental cost. But we weren't looking at having to spend a large sum of money to build a library of content.
Speaker 0 00:18:45 So we literally, in some cases were taking things that didn't sitting on a shelf for years, that hadn't been monetized, but that we believed was an audience because they had remembered this content from when they were younger. They watched the movie with their mother 20 years ago. What we have found is that we have very loyal, super fans of our brands, and we see it in customer feedback all the time. I, I joke that some of the feedback we get is so specific, right? I'm like, wow, I don't remember anything that detailed about any movie I've ever watched, but we have really loyal customers. So finding that content that they remember fondly from years past really appealed to them. And it didn't cost us a lot of money to get that content off the ground.
Speaker 2 00:19:23 I want to move to this environment that we're in right now, April of 2020, uh, most people in the United States and actually globally are sheltering in place staying at home. And I'm sure that's had a big impact on your business. Can you talk a little bit about what you've seen and what challenges and opportunities it's brought for you? Sure.
Speaker 0 00:19:45 It's a little different for our different products. So with the history vault, we have what we consider to be kind of educational entertainment content. And with so many students, really of all ages at home. Now, we felt there was an opportunity to just give people more access. Our content is really more for like the high school student, right? So we're not competing with noggin. We're not there for the five or six year old. And it felt like in the first week, there was just a ton of content for a younger elementary school child. So our content appeals to a different audience, but still an educational audience. So outside of just history, vault is something we're calling history at home. So if you just go onto history.com, you can find a bunch of educational content group by topic. So that even if you don't want to start a free trial, if you, for whatever reason, just are sampling the content, we've put more available in front of the wall that we feel meets that educational need. And we've seen a lot of positive customer feedback, both again in terms of comments and post on social media, as well as engagement. So both history at home, as well as history vault have seen a nice growth in over this time period where people are at home.
Speaker 2 00:20:50 One of the things I've been asked a lot is what's the role of free in a crisis.
Speaker 0 00:20:53 And what's your obligation to your existing subscribers. What's your obligation to tomorrow's subscribers. And what's your obligation with your community at large. So I guess the question I want to ask you is, and I don't want to put you on the spot here, but how much of this is like what I would call altruistic. We're taking care of our community. We know the kids need the history content and how much of it is smart marketing. I mean, I think we're trying to find the balance of both. Truthfully, we debated internally whether or not we should remove credit card from the free trial sign up flow. And ultimately we decided to keep it in there for a few reasons. One, we wanted to get this up soon. We want it to get the content available to people at the time that this started. We didn't know if we'd be home for two weeks, two months, you know, who knows?
Speaker 0 00:21:40 It's, it's been what now? Six or seven weeks. And I don't see us running around outside again anytime soon. So we just want it to move quickly. And there was a logistical question of, Hey, we're all remote right now. Is this the time to start changing our backend registration flow? But the other consideration was whether without a credit card, people might not want to go through a signup process. They may just want to get straight to the content. And so that's where we thought of this sort of hybrid approach, where we did the extended free trial, still with a credit card, but we also made a lot of content available in front of the wall. So that if you really just want to watch America, the story of us, which is a documentary series about the history of this country with your children, you can do that without having to sign up.
Speaker 0 00:22:20 But after watching that, if you want to watch more content about American history or ancient history or any topic, then you can go through, sign up, you get 30 days free. You can cancel at any time, and then you can watch more content. So we felt like we were trying to give you both the kind of altruistic educational, no strings attached opportunity, but then for ourselves still give ourselves some business outcome in the future by asking people to sign up and give us a credit card. Again, cancel any time we haven't charged you until your 30 days are up. Now. I'm pretty sure you don't have a crystal ball, but I'm sure you've tried to forecast what is going to happen when things go, you know, back to the new normal or forward to the new normal and kids aren't necessarily at home setting, plus summer's coming up.
Speaker 0 00:23:06 How are you thinking about onboarding for engagement and what are your expectations around that with this totally unprecedented spike in usage? Yeah, we, to be honest, went into it focused first on history. We then added lifetime movie club. Our hypothesis at the time was education is where people will be looking first. And in a few weeks, if this continues as it has, and people are home, they're going to be looking for more than entertainment content. And that's actually exactly what happened. We saw a really big spike in the beginning for vault. And then a couple of weeks later, we saw it for lifetime movie club. So it was like, people were like, you know what? I've seen the documentaries. I need to just tune out and watch something, you know, a little bit more an escape. We've just tried to be as nimble as we can be.
Speaker 0 00:23:47 So we went into it with a thought of how long we'd run the free trial. And we've already extended it twice because we just felt like what we were seeing in the marketplace, what we were hearing from our distribution partners. It just wasn't time yet to, to stop the free trial. So it's actually still running and will be for a bit longer. And we're evaluating as we go. We are, we've been really pleased with the number of people in free trial. And we feel like we do have an audience that's clearly come to us for content. The next big question is how many convert and choose to pay at the end of their free trial? And even for people who pay, how long do they stay? Are we looking at perhaps a shorter lifetime for people? Because after a few months, once hopefully we are able to go back to some semblance of normalcy.
Speaker 0 00:24:27 Nobody's going to want to watch TV because that's all they've been doing for however many months at that point. So I would say from a financial forecasting perspective, we're being very conservative. So I am not calling my finance partners and saying, Hey, we're upping our numbers because all of these people are in free trial. We just don't know. And I think the way we're thinking about it from that point of view is any upside is, is just that it's going to be a pleasant surprise. It's going to be upside, but we're happy that we've been able to offer our content. We we're happy that we have an audience. We hope that these people choose to stay with us. And if nothing else, we hope that when they think back to this time period, our content somehow help them through it either because it helped them educate their child.
Speaker 0 00:25:04 It helped them escape from reality for a few hours. So if there's upside financially, that would be great. If there's more loyalty to the brand, that would also be a huge one. What are some of the nonfinancial reasons and how do you track whether or not you're achieving those goals? Sure. So financially, obviously we're looking to grow the number of paid subscribers, which ultimately results in increased revenue from a nonfinancial perspective viewership, having people watch our content, having positive feedback about our content. So we, we look at things like reviews on social media sites. We look at app store reviews. We want people to engage positively with our brands and to think of our brands as part of their life and part of their decision making process when they're going to go watch television. So in this time, again, we're hoping that some of these free trialists or a lot of these free trialists convert and choose to stay with us.
Speaker 0 00:25:55 But if we don't, if we've had more people watching our content, if that resonates with them and perhaps they choose to come back at a later time, either in a subscription world or in our linear world, we've still helped support our brand and expand our audience and reach, okay. Are you ready for a speed round? Okay, let's do it first subscription. You ever had probably highlights magazine when I was a kid, your favorite subscription now, Spotify, your super power. I'm pretty diplomatic. And I think that serves me well, especially in my current role. What are your employees and colleagues love about working with you? I'm honest. Um, I give constructive feedback where I have to, but I also, you know, don't beat people up. I try and balance the positive with the negative. I cracked jokes at the right moment in a meeting. Um, I think I'm generally pretty pleasant to work with and I'm really about what I do.
Speaker 0 00:26:44 And I think that comes through what don't they like about working with you? I'm pretty persistent when I have an idea and I think it's the right thing for the business. I don't give up easily trying to get my way. So if there's one thing that you want people to, to do, or think as a result of learning from you, what would you teach them? I would teach them to think about the sprint and the marathon. As I talked about earlier, I've learned something valuable from every job I've had in my career. And I think after working several years in the eCommerce retail, the holiday seasons wore me out a little bit and I loved the business part of it, but it was challenging in my personal life. And I was able to take that experience and sort of flip it into something else. And now I'm running a subscription business and I love it.
Speaker 0 00:27:28 And I think what I learned from my e-commerce retails days have really paid off here. So I think my lesson is, you know, every career opportunity is going to teach you something and it's, it's like a stairway, right? Like if I hadn't worked at Barnes and noble, starting off on the eCommerce side, I wouldn't have run the membership program. And if I wouldn't have run the membership program, I wouldn't have had my job at the New York times. And if I hadn't done that, I wouldn't be here right now. Just take every opportunity, learn from it. And you never know where you'll land next. I love it. Thank you so much Piper for being our guests, we covered a huge amount, you know, best practices in subscription, how to transition an organization towards subscription and how to make the most and provide the most value in this very unique time that we're in right now. Thank you so much for being my guest today. Thank you so much for having me and go home and watch a lifetime movie or a history documentary. We'll do
Speaker 3 00:28:16 <inaudible>
Speaker 0 00:28:20 I'm Robbie Kellman Baxter. And this has been subscription stories today. My guest was Piper. Rosenshine vice president of subscription video services at a and E networks to hear more success, stories of entrepreneurs, creating their forever transaction in this new and exciting membership economy. Subscribe to my podcast, wherever you download your podcasts. Also, please give me a rating or review to help me better understand exactly what you want to hear to learn more about the a and E network. Please go to eight E T v.com are not good. And Mark Kirschner where the audio engineers for this podcast are not edited this podcast. I'm Robbie Kellman Baxter. Thanks for listening. And for your support.
