Episode Transcript
Speaker 0 00:00:00 For context, this interview was recorded in July of 2020 amidst the COVID-19 pandemic. We all want a business like Netflix or Amazon prime businesses, where once a customer engages with them, it becomes automatic and a part of their lifestyle from then on. But how do you build that forever transaction? I'm Robbie Kellman Baxter, and I have been studying subscription and membership models for nearly 20 years in this podcast, my guests and I share the secrets and strategies of the membership economy. Join us for subscription stories, true tales from the trenches.
Speaker 0 00:00:47 Welcome to the show. It's your host, Robbie Kellman Baxter sharing subscription stories with you. Today's guest is MZ. Goodman Emsi is a true innovator. Bringing the best practices of subscription, engagement and brand from her work at the New York times, Ralph Lauren, plus CA and goop to charity water, a nonprofit that provides clean water to people in developing nations. The organization has been phenomenally successful by taking a different approach to fundraising. The 14 year old organization has raised over $450 million. Join us as MZ shares the secrets of charity water's success and how to bring these principles to any organization.
Speaker 1 00:01:30 <inaudible>
Speaker 0 00:01:39 Welcome to the show and Z. Hi Robbie. Thanks so much for having me now, your title at charity water. Can you tell me what your title is? Sure. So I'm SVP of subscription. That is not a title that I'm used to hearing at nonprofit. How did that happen? And what is a subscription to a nonprofit? I think it was leadership was incredibly smart. Um, when they decided to pivot the business at the nonprofit in this direction, in that our COO Lauren Letta who's incredibly visionary, she was already evaluating whether it made sense to create a subscriptions team focused on a North star metric of predictive revenue. So as to enable significant growth across the organization and our is very complicated, but it took a lot of, a lot of moving parts. So it was, it was a very intentional move on the part of leadership to, to create a cross functional team focused on a North star goal of building membership and growing recurring revenue. Got it. How would you define the mission of charity water? We work closely with local partners to bring clean water solutions to people in developing countries. And how would you describe your promise
Speaker 2 00:03:00 To your members? What's your promise to them?
Speaker 0 00:03:02 That is such an interesting question. So as an organization, we have really built our promise and our reputation on transparency. We go to great lengths to connect our donors to their impact and to demonstrate their impact to them. And I would say we've done that extremely well on the key relationship side of the business.
Speaker 2 00:03:27 What is a key relationship? The, the high net worth
Speaker 0 00:03:30 With cultivation side of the business.
Speaker 2 00:03:33 Okay. So just to make sure that we're following along, can you explain what it means to have subscriptions at charity water, what the script's subscription is to and whether you have different tiers or whether you treat all of your members the same?
Speaker 0 00:03:48 Sure. It's a great question. And some of that, we're still trying to figure out my team is essentially consumer revenue. So we are accountable for all one time donations received by the website or on the website, as well as subscription revenue. So our high net worth donors give on a recurring basis. The particularly the ones who support the operations of the organization make a three year commitment to that support, but it's not a subscription product. So ours is the only subscription product and it is a mass consumer product.
Speaker 2 00:04:23 And what do subscribers get? What is the promise to them? You, you give us money every month and we will promise that,
Speaker 0 00:04:31 That we will steward it appropriately. We will make sure that a hundred percent of it goes to the field to where it's most needed. And beyond that, honestly, you don't get a ton yet, although we are working on evolving that. So we historically spring members, our subscription program is called the spring spring members have gotten a monthly newsletter with some stories from the field showcasing where spring dollars have gone and who some of the people are, who are recipients and beneficiaries of, of the programming. And that's pretty much been it. But we have been doing a lot since the beginning of the year to test events. We have a lot of plans, um, around how to expand the value proposition, but like that to me was what was super interesting when I was evaluating the opportunity. Obviously, if you sign up for a subscription to the New York times, you know what you're going to get. If you sign up for a subscription to Quip, you get a toothbrush in the mail every month. What do you get when you subscribe to charity water? And fortunately for us, we have a group of extremely generous donors who get gratification just from knowing that they're continuing to support good work.
Speaker 2 00:05:44 It's a really interesting question. And one that a lot of organizations deal with where a key reason that you get subscribers are a key reason that you get donors in the nonprofit world is because they support your mission. And so that's the starting point. And what I've noticed is that in some cases that's enough. There are certainly many, many people who will choose organizations that they believe in and the whole forever promise is I give you money. You steward it appropriately and help solve a bigger problem. Exactly. And the, and the value I get is the confidence that the money is well spent and maybe a feeling of Goodwill. When I, you know, in some cases where a pin or carry a bag with your logo on it, that I get a little bit of affiliation with your organization, but it seems like there's so much room for additional value to be created, even in the nonprofit world, which organizations are just starting to explore connection with other likeminded people, education and experiences that help them understand the problems in the world and expand their own ability to understand what's happening, products that align with the goals.
Speaker 2 00:06:59 What are you thinking about in terms of how to, you know, I always talk about how you layer in more value over time in a subscription. How do you think about,
Speaker 0 00:07:08 We're doing a few interesting things to test the value of community here and whether it's a key part of the value proposition. So in the last few months, as example, we've hosted a couple of book clubs. So our founder, Scott Harrison wrote a terrific book called thirst. We seeded a few book clubs. He made a couple of guest appearances. People were super engaged and really enjoyed talking with each other about our story, which was fascinating. We hosted some lunch and learns, um, connecting our community to our staff programs, support our experience, our creative production team, and got a lot of positive feedback from that last week, we hosted a terrific spring event for new members, new spring members, and, and Scott took them through his founding story as well as talked a lot about the work that we're focused on in the field and the priorities for the organization.
Speaker 0 00:08:03 But what was super interesting to me was seeing in the chat, we did it over zoom and, and seeing in the chat a member saying hi to each other, which was, which was super cool. And I, we have to figure out how to leverage that. So, so we're testing a bunch of stuff there. We are building a really interesting product called lifetime impact, which lets you as a spring member build or grow your own lifetime impact by referring others to the program, making donations, launching campaigns. And so that, that is another proof of concept around lifetime impact obviously. And whether you as a subscriber will be motivated to grow your impact, but it's also a proof point on community. Just are you, you know, when you, when you find a terrific moisturizer, you tell your friends about it, right. Can try this with me. I've loved this it's. So we're seeing whether the same thing plays out here. I'm a member of the spring. I get a ton of gratification from it, join me. We can grow our impact together. And eventually we see really being able to map the spring monthly giving community directly to programs that have been wholly funded by the spring community, which is pretty powerful.
Speaker 2 00:09:15 Yeah, it's really interesting. And I just want to call attention to a couple of interesting points that you, that you made. One of them is almost an MLM, a multilevel marketing kind of an approach where you bring people in and then they get a chance to kind of build their own communities, which I think is really interesting and novel. And I really liked that. The other thing that I want to touch on you, you brought the point that, you know, Scott is a very charismatic leader and you know, he's written a book, he created his own content, which has been tremendously powerful at growing the charity water brand. You've also worked with Ralph Lauren, Gwyneth Paltrow. These are some very charismatic celebrities in their own, right. And yet you're building a brand that hopefully transcends their own celebrity. How do you do that? What advice do you have for people who are kind of torn between building a loyal, engaged membership around their own personality versus trying to build something that will be a legacy and outlast them?
Speaker 0 00:10:18 I will say, I think goop has done a really wonderful job there. Um, particularly within group health and, and obviously the, the conferences and goop health is really spearheaded by, you know, Gwyneth's network and the things she's curious about and interested in. So it is very much her point of view, but you have access when you attend that event to the wider group team, the wider group community. And she's done a really nice job in that regard. I think kind of scaling beyond herself. We are trying to figure that out at charity water, Scott has been a fantastic and very productive driver of growth for the whole organization, but certainly for the spring until this year, we effectively had one paid performance asset out there, which is a 20 minute long video of Scott's story that I think at minute 18 makes an ask for the spring and it's incredibly performance and conversion driving
Speaker 2 00:11:21 By the way, that is amazing. This is a 20 minute ad that people love and that actually converts them to become members of the spring. Right.
Speaker 0 00:11:30 And we get a ton of feedback. I was, I was crying when I saw the ad, how could I not do this? I'm just yesterday, there was a guy who posted an Instagram story after watching the video and he's starting a thing called hashtag the spring challenge, trying to compel his community to give it a a hundred dollars a month. Um, just because he watched, he watched the very powerful spring film going back to, to why took the job like you, you know, as a product person, I think you look for a product market fit in any opportunity you're evaluating. And, um, you know, when I first started talking to the organization, they had grown a community of 40,000 members on the back of one 20 minute long pre-roll asset. Right. And really hadn't organized the organization around a North star metric, or really done anything much with the product to drive growth. So looking at that, I thought, well, how can there not be a ton of upside if they've already done this? And they haven't put much more of an investment in it. Right. So the, the Springfield is, uh, it's a very compelling story.
Speaker 2 00:12:32 What kinds of metrics did you bring to kind of put more discipline around your process of growing this
Speaker 0 00:12:39 Subscription? I mean, we were, you know, we, we have a really strong BizOps team and we were of course tracking, um, you know, MRR and ARR and member, just our general active, um, member count.
Speaker 2 00:12:54 We, we didn't have
Speaker 0 00:12:56 As much visibility when I joined into churn, as we do now, we're doing a lot of work to more clearly understand LTV, lifetime customer value. Yeah. We, um, we really, we didn't really have much of what I would call a business intelligence practice and we have spent much of this year. I mean, certainly the last nine months, very focused on understanding the performance metrics of the business. How many people are we acquiring every month? What channels are they coming from? Um, how many people are we losing every month is, you know, what is turned by channel look like? What is our LTV? So we've gotten a lot smarter, thankfully.
Speaker 2 00:13:41 Yeah. It's, it's great. I mean, those are, those are the metrics, you know, monthly recurring revenue, annual recurring revenue, lifetime value of customer acquisition rates, engagement, churn. Those are, those are the metrics of if any subscription business. And it's interesting to hear them in play at a nonprofit. I'm curious, what are some of the reasons for churn and what are some of the remedies that you're finding that work at deepening engagement or extending the relationship? We see
Speaker 0 00:14:06 A few interesting things. There is definitely a subset of members who support us for a year. And then at the end of the year, say, I've done my turn. I'm going to go support something else, which is interesting psychology. And we're trying to figure out, you know, I think lifetime impact and the product we're building, um, is meant to address that community. And, you know, the more we can connect our members with the impact in the field. I think the more we'll offset churn for that reason, just when you see how much work there is yet to do out there. I mean, we've made tremendous progress as an organization in the course of our lifetime, but there are hundreds of millions of people who still lack access to clean water. And as you begin to see the impact of the spring community on solving problems and bringing clean water to millions and millions, more people, my hope is that that will be compelling enough to, to keep people in the program.
Speaker 0 00:15:00 We did see very high, which is not surprising, very high churn rates in March and April of this year when COVID hit largely based on the qualitative data that we received, you know, based on economic hardship, people fearful of losing their jobs, just everything that was going on, kind of in the macro economy. We, in response to that, we made a couple of changes in the product to enable people to pause their subscriptions and pause still counts as churn, but we're hoping, and we don't yet have the data, but we're hoping that, um, if we can continue to send people their monthly good news statement of impact that after some period of months, when they're feeling a little bit more back on their feet, they will remember us and join us once again. Um, and then we just made a couple of very kind of what I would call like product one Oh one changes to the cancellation flow that drastically improved our churn rate and reduced it. So we've been hovering at about a 2% turn rate for the last few months, which I'm very proud of
Speaker 2 00:16:01 What I really like about what you said is the pause button and making it possible for people. Like I always say, make it easy for them to leave, make it easy for them to come back and understand if you understand the reason that they're leaving. In many cases, that's acceptable. If somebody says, look, I lost my job. And I'm concerned about where the world is going. As many of us are, uh, that's a very reasonable case for pulling back on charitable donations, for example. And yet you, as you said, you want to keep them in the family, keep them in the fold, continue sharing that, that story, which you know, is so compelling. So I think that's, that's really interesting. And I think like something that I've seen is that many businesses are introducing the concept of pausing as, as almost a, a standard now that I think consumers are coming to
Speaker 0 00:16:48 Respect. There's an interesting, you know, there's an interesting question in there also like, you know, once a spring member, always a spring member, like you'll, you may not be a, you know, a monthly active user, so to speak, but you are part of our community and what do we do about that in the longterm? And we're trying to figure that out. Yeah.
Speaker 2 00:17:03 It's really important that freemium model, right? Uh, can you be a member forever for free and get real value out of your membership? Is there a sense of being part of this community, perhaps because you participate in written campaigns, uh, you write letters, you, you do things, maybe you don't give your money. Um, so you're not inside that paywall, but there are, I would imagine many ways that you can contribute to the cause without opening your checkbook. Right.
Speaker 0 00:17:34 So, I mean, and then that is very core to the lifetime impact product, right? How do you, you know, even if you can't make a significant monthly donation, there are other ways that you can leverage your influencer, your, um, your community to, to help fix the world. Yeah. I love that.
Speaker 2 00:17:50 And I think that's a really important point for people to consider, especially those people who are listening, who have nonprofits and are thinking about how to structure, um, structure their community, to have a place for the people who aren't actively donating, as well as what I love about what you're doing to make it easy for people to donate on a rate on a regular cadence and feel some sense of membership, belonging participation. We did also here
Speaker 0 00:18:16 Quite, um, from quite a few members who asked for more flexibility around payment amounts and timing of the recurring payments. So we're, we're working on some product upgrades there as well. We lowered the monthly minimum, um, because of our, our a hundred percent model, we cover all transaction processing fees. So there is in fact kind of a minimum below which we can't go without losing money, um, on the transaction. So we lowered our, our monthly minimum is as low as we could to, to create the sort of entry level membership. So we're doing a number of, of things to, to play around with making it appealing to you, regardless of, of how much you can donate in the longterm.
Speaker 2 00:18:58 Yeah. Different tiers, different tiers is, is critical as well. So I'm wondering what advice would you give to, to somebody as a product leader, working in subscriptions and as a product leader who might want to move into the nonprofit world,
Speaker 0 00:19:15 Please come and join us. If you want to move into the nonprofit world, it's hard to compete with some of the startups and the upside and the equity. And we are always looking for mission driven talent. So DME, one day we'll all be in a position to hire people again. And it would be great to know you when that day happens. But I would say the same thing, do a product person, you know, in a, in a nonprofit, as I would to a product person into DTC business, which is you have to, you have to experiment as much as you can. We, you know, long before I arrived at charity water, they had a check box for a monthly giving program. And they, they took steps toward trying to prioritize that in the user experience. And look, they were able to grow a pretty nice size community without really doing much as an organization, um, to invest in that direction. So, and that, you know, as I said before, really speaks to the product market fit of the, of the offering
Speaker 2 00:20:13 Advice. Would you give to somebody trying to build community in a subscription business? So they already have subscription revenue. How do you layer in community into that
Speaker 0 00:20:23 Offering? That one is much harder. You know, at the times when I was there, we spent a lot of time trying to figure out how to create more community and whether that was through events or whether that was through some sort of gamification in the product said, or, um, community moderators working alongside our journalists. And we saw over and over again, that readers were interested in forming a community with our reporters and editors, but not so much with each other. Right. And so they like the steps they've taken as an organization, which makes sense. You want to hear from the reporters and the editors you don't really want to hear from me as a fellow reader. You know, I would say at glossy, it was, it was a very different case in that you really, if you look at the, the, into the gloss Facebook group, you see a ton of conversation around skincare and makeup and recommendations, and it's way beyond Glossier specific products.
Speaker 0 00:21:21 But obviously that community is looking to each other for tips and tricks and product referrals. And, you know, so that, that seems like almost obvious, but it's, it's really interesting and compelling. And I think the, you know, the companies trying to figure out how to leverage that in a bigger way, it's a little bit less clear to me here. I've only been a charity water for about nine months. We're trying to figure it out. As I said, we we've seen a lot of engagement on the part of our community with Scott. We have seen a lot of interest from our, our chorus bring members in meeting and engaging with each other. We are about to test whether individuals will leverage their communities toward hitting a fundraising goal with our September campaign that we'll launch in September. And, and I, I, you know, we're going to continue to test, hopefully we'll go back to in person events at some point soon and be able to, to test IRL activation, um, building pods in different cities. We have all sorts of things on the roadmap. We'd love to try. I'm not yet sure what we'll take and what won't, maybe, maybe I'll come back in a year and we can talk about,
Speaker 2 00:22:29 I love it. I love it. Okay. And then the last advice question I had for you is around content marketing. What do you see organizations doing wrong that you'd like to advise them to fix, to make their content marketing
Speaker 0 00:22:42 Powerful? I mean, I, it's so hard for me to answer that because I've, I've always been lucky to work with organizations potentially with the exception of Ralph Lauren that really had content, good quality content available to market. Right? So obviously the times we had a report, Glossier had an, an editorial operation, um, and produce content regularly. Same with goop here. We do a tremendous amount of storytelling, accessing partner stories from the field taking photos. I mean, this year we haven't been able to travel, but in the past, our creative team has traveled a couple of times a year to the places where we're working and gathered footage. We have, um, a terrific mini series called the journey, um, which if anyone's listening and they have kids a great way to expose your kids to what's happening in some of these developing countries around water. So we're, we're, we're really supremely lucky. And it's, it's very hard for me to imagine working in a business that was to do effective content marketing without the sort of rich, deep access to content. I've just not had that experience. Um, I would say the one time I did that was a Ralph Lauren and it, it was hard for me because the, or the company saw itself very much as a, a narrative driven company, but we didn't have much beyond the print ads. And I never felt that the story hung together.
Speaker 2 00:24:06 Yeah, really interesting. And what I'm taking away from that is the importance of having a strong editorial team to actually have storytellers whose job is to be storytellers to make that content as compelling and high quality as possible. Last thing I want to do with you, and we're just about at the end of our time is a quick speed round, just for fun. So what's your favorite subscription now? I,
Speaker 0 00:24:28 I'm a huge, I'm loving my seed subscription. It's a probiotic. Um, it comes every month and it has, it's really has transformed my life. Um, you know, in this very stressful period, I, I give some attribution to, to see, to kind of keeping me level. So I'd highly recommend it.
Speaker 2 00:24:47 Uh, what are your employees love about working with you and not love about working with you?
Speaker 0 00:24:52 You'd have to ask them. I would think, I mean, we, you know, I think we're all very lucky on my team to have the agency and autonomy that we have to form our own strategies and try things. Um, and I would hope that the members of my team feel they are able to pursue their own strategies and their own roadmaps without with me questioning them potentially, but without me really getting in the way. And what do you think is hard about working for you? You know, I think it's hard with my, my team is still pretty small. We are roughly 80 people in the organization and my team numbers about 10 we're pretty lean. Um, so I am definitely still, and, you know, hopefully this will change as we grow, but I'm still very much straddling the day to day tactical stuff, as well as the overarching strategy for the business in the longer term. Um, so I do occasionally swoop in with very tactical questions that I'm sure that I remember very clearly being incredibly annoyed by when my bosses did that. Um, and I, I, you know, every week write down do not do this and I still do it. So I'm sure that's incredibly annoying.
Speaker 2 00:26:02 And then finally, what's your super power,
Speaker 0 00:26:04 Two things that I, that I like to think that I am good at one is I'm very proud of the mentoring relationships I have with people who have worked for me in the past and where those people have gone in their careers. And, you know, the, the fact that people who have worked with me in the past still look to me for advice on where they should go and what they should do, and that I'm able to, to support them and mentor them in that way beyond a time when they work for me is really meaningful to me. And I think, you know, at the end of everything, when I look back, that will be something that I value tremendously and that's my own community that I've built. Right. So I take great pride in, in sort of my
Speaker 2 00:26:44 Personal community, my personal network. And then second, I, you know, whenever you take those personality tests, you like get the same result. And I'm always told that I am a synthesizer by nature. I'm good at taking inputs from across a variety of domains and places and, and folding them together into a strategy, which I don't know that I would necessarily have been able to articulate that on my own, but once it was pointed out to me, I did realize that, yes, I do do that. And I enjoy doing that. And I think that makes you, uh, you know, I think leaders who can do that are stronger leaders. Yeah, I do too. So a holistic synthesizing approach and the ability to, to cultivate a community and a longterm relationship with the people that you care about, those are such super powers of a subscription leader.
Speaker 2 00:27:39 I love that to all your guests. No, I mean, those are the traits. I mean, joking aside, my work is all about the forever transaction building longterm relationships. And that's what you were talking about is your superpower. And then when you talk about synthesis, one of the biggest challenges that I see in a lot of organizations that are trying to move to subscription is that the organization thinks in silos, right? There's this line of business and this line of business and this line of business and this functional area and that functional area. And if you can't synthesize, if you can't kind of look at the whole thing through the lens of the customer experience and the journey, the subscription is never going to hold. So I actually think that that's, those are both really very subscription oriented strengths, um, which I find really interesting. Well, thank you. I give huge credit to our, to Scott and to Lauren, our CEO and our COO for kind of having that vision. Um, I just fit into it and I feel very lucky every day. That's awesome. Well, thank you very much, MZ for being a guest on subscription stories and look forward to having you back next year. Excellent. Good luck with the podcast and congratulations again.
Speaker 2 00:28:52 Thanks for listening everyone. I'm Robbie Kellman Baxter, and this has been subscription stories today. I was talking with MZ Goodman, SVP of subscriptions for charity water. You'll find more about MZ and charity water as well as a transcript of our conversation at Robbie Kellman, baxter.com/podcast, to hear other success stories of entrepreneurs and executives creating their forever transaction in this new and exciting membership economy. Subscribe to my podcast wherever you listen. Most
Speaker 1 00:29:24 <inaudible>
Speaker 2 00:29:26 Also, if you like what you heard, please take a moment and give me a star rating and write a review reviews matter so much in helping others find us. Thanks for listening and thanks for your support.
Speaker 1 00:29:38 <inaudible>.
