Want Passive Revenue? Give Your Product Away.

Passive revenue. Subscription models. Automatic renewal. All words that fill entrepreneurs and VCs with happiness. If you can pull it off, you'll be kicking back on a beach in Fiji while your bank account increases by the minute. Your customer base will expand, your revenues will skyrocket, and your expenses will stay pretty much the same. God bless scalability.

So how can you use email marketing to reach subscription Shangri-La?

Before you begin to market, you have to look at the model itself. There's a trick to subscription revenue models, and it's the same sort of non-trick as using diet and exercise to lose weight. Here it is:

A successful online subscription model consists of giving your customers information that they value as much as or more than you charge for it.

Your customers don't care that it doesn't cost you a single extra penny to add their name to your distribution list, or that it gets done automatically with no human intervention, or that you didn't even notice when they signed up. What they care about it what they get: newsletters, webinars, white papers, coupons -- whatever it is you're selling that they're paying for.



Once you've got your information-of-value sorted out, you're ready for Step 2:

Focus your email campaigns on what your customers get, not on what you want.

I belong to a subscription program for marketing professionals, from which I receive weekly newsletters and have access to weekly webinars. This company sent me their newsletters for well over a year before I shelled out the $199 to sign up. From a customer perspective, here's why I was willing to hand over the cash:

  1. They gave me tons of value before I ever gave them a dime. All of the free stuff was relevant and well-written, so I already had a handle on the quality of the material. Psychologically, I felt that the price didn't really matter because I'd already received so much from them.
  2. They showed me teasers of everything I could expect as a premium member. Every email newsletter had the same format for the available articles: headline, snippet, 'more...' button. The only difference is that some of the articles had, 'You must be a premium member to view this content' in small print. So I could readily see the balance between how much of what I wanted to click through to was free, and how much was premium.
  3. They gave me tons of opportunities to convert. Every time I'd click through to a premium article, they'd say, "This article is available to premium members -- SIGN UP TODAY." They sent separate emails with special sales promotions. Most of the promotions were framed as giveaways of something of value, available free to premium members. I like to call them "grass-is-greener" giveaways: as a non-premium member, I received frequent reminders of how good life was on the other side.
  4. The pricing model made it easy to go for the full year rather than individual seminars ($99 for 1 seminar, $199 for a year of weekly seminars). The company's transparent pricing strategy made it easy to see they're looking for customers to stick around. Having received their newsletters for so long already, I was pretty confident I'd get my $199 worth over the coming year.
Whenever you send an email to a customer, you're hoping for something. You're hoping they'll read it, of course, and you're hoping they'll respond in a particular way, which you're usually explicit about in your "call to action." Making your message more about the customer than about you will increase the chances that your call to action will be answered.
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