Subscription-Product Fit, Part 1: The Myth of Magical Monetization

“If you build it, they will capitalize you through at least your Series B“ — Kevin Costner, “Field of Deals”
A simpler, subscriptionless time on the Apple App Store
  • Monetization is often viewed as a necessary evil. Build an app and launch it on the App Store and one of your biggest sources of complaints is likely to be, “It costs money”. In a zero marginal cost market, Internet users are used to getting things for free. The subscription model thereby causes considerable grumbling and indignation.
  • It’s often built in subsequently. As mentioned earlier, the subscription is often added on (or focused on) subsequently for a product initially focused on user growth. The subscription thereby risks becoming an appendage cut off and grafted back on instead of an organic extension of the whole.
  • It’s a hazy priority. Subscriptions are part of the product, but who thinks of it? And who owns it? Product? Growth? Marketing? Is there a separate focus on it at all, or does it just get treated as ‘something that will benefit as the product improves’?
  • It’s not the exciting workstream. Subscription wins are often the result of many small optimization experiments, and result in changes invisible to the end user, expressed in wonky acronyms like ARPU and LTV. Such optimizations are not the exciting thing for product or engineering teams to work on unless contextualized and fit into a more holistic workstream.
  • Siloing: The severing of the subscription from the product can lead to siloed product teams, where the subscription team has insufficient integration into core product to make the subscription a natural organic outgrowth of the product.
  • Defaulting: The subscription model a company launched with often ends up being the model they stick with indefinitely thereafter. Optimizations take place within limited bounds but don’t fundamentally shake up the preexisting paradigm.
  • Lack of resources: The subscription experience simply gets no attention, or ends up being tackled in a scattershot way by core product teams without the expertise to truly consider the way forward.
  • Unenthusiasm: This is an insidious danger present even in mature product growth orgs. Framing the subscription as a negative makes it the ugly thing to work on. Sure, enough all-hands meetings stressing the importance of monetization on the business will help. But work on subscriptions can be tedious enough as it is — a continuous stream of button copy tests is no engineer’s idea of the startup dream. Why make it harder on them by treating the subscription as an embarrassing necessity instead of as the engine of company growth?
  • Reject the embarrassment and embrace the subscription: Make it clear to the company that the subscription is not something that is optional or something to feel squeamish about. This is especially important when your team is exposed to user reviews that complain about the subscription cost.
  • Seeing the subscription as the product: Fundamentally, we need to make sure we see the subscription as growing from out of the product, not as something grafted on after the fact. This results in more interesting initiatives for the subscription that mirror complex base product initiatives.
  • Making the subscription the best you have to offer: We need to see the subscription as the best the product has to offer, and give it full, holistic attention instead of just treating it as a set of optimization experiments without more robust thought given to the user experience.
  • Celebrating business wins and user growth: Above all, the subscription has to be recognized as the core of your business, without which you don’t have revenue, you don’t have growth — and you don’t have millions of users using the amazing product you built.

Product, growth, data, archery

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Jesse Germinario

Jesse Germinario

Product, growth, data, archery

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