Contributed by Gold Resource Partner, Pasha Law PC
SUBTA hit New Orleans with a bang at its SubSummit Conference and a record number of attendees. Subscription-based businesses from around the world, along with vendors and sponsors, created quite a buzz that could be felt at the entrance of the hotel. Our law firm’s crew arrived early the night before and it was clear to us that this conference is on the cusp of exploding with big things to come in Dallas, the location announced for SubSummit 2020.
Though we are very familiar with the subscription model through both our clients and our firm’s own subscription-based legal services, we did learn a few things about the industry and what your business should know from a spectator looking in.
Here are our top 5:
1. Passion, culture, and integrity are industry priorities.
Credit to SUBTA and credit to its attendees for having a session and keynote for practically every timeslot that was dedicated to being a better business beyond the bottom line. Whether it was Bulu Box’s “fire the assholes” policy, HumanKind Box’s service to young women facing a cancer diagnosis, or Rich Sheridan’s babies in the office, the industry is clearly an incubator focusing on positive company culture and making a difference with their businesses.
There will always be exceptions, but market front-runners and SUBTA board members, along with the up-and-comers, are leading this effort to push standards of subscription-based businesses.
2. Many of you are still figuring it all out, and that’s okay.
A little unexpected was the sheer volume of companies in either a pre-startup or start-up phase. They, of course, asked great questions to many experienced speakers, but equally unexpected was the frequency of even veteran and extremely successful subscription-based business that transparently discussed the challenges they are still trying to solve.
Sessions like “How hard should it be to cancel?” and other panel discussions exposed fitting levels of vulnerability that led to opportunities of growth for the panelists and the audience alike. It is proof for those starting out and those who want to reach that next level that they have to embrace that agile philosophy—be willing to assess and make those changes constantly.
3. You are solving old problems with new solutions.
The subscription model is not new. Utility companies and newspapers are the true OGs, but since then companies like Book-of-the-Month Club (1926), Columbia House (1955), and Netflix (1997) have reinvented the model over and over.
Being successful in retention rates, price points, unit pricing, cost of customer acquisition, and cancellation processes have always been a key to success in the subscription model, but the internet-based approach has given your business a new way to track, modify, and address these basic metrics. A/B testing is now available at a few keystrokes. Globalization has decreased costs dramatically, and technology has allowed easy entry and sophisticated tracking of the same. Old problems, new solutions.
4. Data-driven decisions bring success.
As an attorney, I have a biased disposition for objective-driven decision making, but market leaders seem to have the same leanings. Customer-based valuation using methodologies similar to those developed by Daniel McCarthy should be a perpetual metric of financial health and achievement. Attendees that knew their numbers, i.e. knew how much it cost to acquire a new customer and knew the life value of that customer, are here to stay and thrive. Making decisions like reducing or increasing your subscription options or setting your price points without tracking data is flying blind.
5. Legal compliance is a late-stage concern, and that’s probably not okay.
Starting a business is hard. There are a million things to do and only enough time and money to do a few well. It is understandable why legal sometimes gets put on the back burner, but after our firm’s team met hundreds of entrepreneur attendees at SubSummit they did informal audits of your company’s websites. They came back with terms and conditions, privacy policies, and checkout disclosures and processes that were rife with errors and vulnerabilities. Based on similar patterns we have observed in the past, these businesses are likely also to be legally vulnerable in their operating or partnership agreements, employment compliance, and their agreements with fulfillment, shipping, and product sourcing vendors.
Putting aside the proactive protections like trademarking that can perhaps justifiably be deprioritized over other legal issues, unfortunately, some of these basic protections are being sacrificed by early-stage (and in some cases, late-stage) businesses leading to substantial exposure. Encouragingly, SUBTA is filling its leadership role by exposing its members to legal-based sessions, news updates, and a compliance committee focused on protecting its members.
There is a bright future for your business. The dozens of volunteers, speakers, and leadership of SUBTA should be very proud and excited for what is to come.
Written by Nasir N Pasha