Andy Baker has over twenty years’ experience of building digital media businesses, including start-ups, turnarounds, and the buying and integration of acquisitions. He runs The Lawyer, part of Centaur plc and is a member of Centaur’s 5-strong Executive Committee. Andy joined as Managing Director of The Lawyer in 2017. He has led the development of a market-leading subscription and information business, based on double-digit increases in subscriber usage, strong retention rates and yield increases, market penetration gains and new data-led product development. Previously, Andy spent 6 years as Managing Director of HSJ, the Health Service Journal.
Piers Bearne: Andy, welcome to the Collingwood team. There is unprecedented interest in launching and optimising subscriptions products this year – but what makes a good subscription business?
Andy Baker: I can’t think of an example, certainly not in B2B publishing, where the essence of the subscription business isn’t great content. The content can be text, data, video, podcast, events or community-led, but fundamentally it has to be content that a subscriber believes is quality, that gives them or their team competitive advantage, and is from a brand they trust.
All that has to add up to something a subscriber is prepared to pay for because there are so many sources of free content. Without great content, you don’t end up with renewals, and without strong renewals you won’t have a sustainable subscription business.
Piers: Which is why subscription businesses are typically valued more highly than advertising-led businesses.
Andy: Yes, in B2B, advertising businesses can be high margin but they have to work harder and harder to distinguish their proposition against the global targeting abilities of the big platform plays, and are more volatile with the economic cycle. If you get subscriptions right, with a solid bedrock of renewals, the resulting customer track record and forward visibility of revenue will create value, the confidence to invest and develop your business and, of course, for investors to pay more if you’re considering an exit.
Piers: And event businesses have tended to sit in-between subscriptions and advertising in terms of valuation multiples, although COVID is clearly bringing that into question. Let’s go back to the ‘competitive advantage for you or your team’ you mentioned; what are the best examples you’ve seen of that ?
Andy: I think that’s very situational. When we were thinking about HSJ Intelligence it started around the opportunity cost of tendering – we hadn’t understood enough about the pain in time and money that vendors and professional advisors go through to tender for NHS contracts, even competing internally for resource in some cases.
What we learnt was that anything we could do to narrow down the odds was valuable: in simplistic terms, we helped customers to make sure they tendered for ‘6 good ones in a year rather than 12 variable ones’.
Using editorial insight and constantly updated, reliable data, we helped HSJi subscribers to narrow down the 300+ NHS organisations so that they could get a shortlist for their business development teams to target. That gave them a competitive advantage.
Piers: How about the product itself?
Andy: Beyond great content, it requires operational excellence in all its guises – brilliant, easy-to-use digital product, well thought through go-to-market plans and pricing, the crafting of the marketing proposition, the drilling of sales, the right engagement metrics.
On digital product, it is essential to collaborate with clients, bringing them into the thinking as early as possible. And it’s critical that the research or product lead starts with open, qualitative discussions with customers about what problems they have or what insight they would like, not just testing out pre-formed ideas or features. At the same time, when you get to specing and building I always think less is more. We have a tendency to overcomplicate, over-spec, and overestimate just how much time our product is going to get in the totality of a time-sparse B2B customer’s day. That is why getting great digital product people isn’t easy, and they have different skillsets to brilliant editorial skills.
Piers: What are the biggest mistakes you’ve seen in trying to build subscription businesses?
Andy: I’ve seen decent ideas fail because teams didn’t work closely enough with their customers or in their markets. That led to the fundamental content and product promise just not being tight enough or grounded enough – attempts to map all buyers or all relationships come to mind in industries where the data wasn’t available enough or just changed too frequently. Customers feel mis-sold and lose confidence in the product.
I also think Business As Usual (BAU) is underrated. Of course, launching well is key but I’ve seen examples where teams are dazzled or worn out by the launch. They think BAU will somehow just take care of itself. But subscription businesses are like gardens – they need nurturing, feeding, pruning – they need disciplined operational rigour and ongoing attention to what is working and what can be improved. Unfortunately, subscription businesses with good content and product can still falter for any number of operational reasons – poor onboarding, poor customer insights about how the content is used, poor metrics, mis-selling, too much attention to new biz and not enough focus on renewals.
Piers: You mention engagement. What are the best metrics to use?
Andy: Again, I think that can be very situational. But in The Lawyer we’ve built a relatively straightforward set of usage KPIs. We primarily have an enterprise-wide subscription business so we are looking at an organisational level, and by seniority of job title, across three measures of engagement – how many subscribers visit in a month, how many visits they make i.e. frequency, and how many pages they consume. It’s not perfect, and others will argue for alternatives, but it’s pretty straightforward and reliable – my team can understand it, clients can understand it. And one of the outcomes – the number of lawyers we are getting onto a daily or weekly digital habit with us – is a key source of our competitive advantage. That digital habit from subscribers drives our renewals, makes us harder to compete with, and provides us with the platform to layer in new products and services.
Piers: All this sounds good but expensive. Smaller publishers (and event organisers) won’t have the resources to do this from day one. So if you’re developing a subscription business from scratch and either funding it from cashflow or convincing others to invest or lend, where do you start ?
Andy: Yes, not easy and I can recall the equivalent of hand-to-hand combat in the trenches to secure investment. You must have the compelling customer insight, a believable way in which you can deliver the content proposition, and an attractive ‘size of prize’. That might mean ten plus really in-depth customer interviews, with quotes from senior players, players that will directly buy or influence the purchasing decision. Those quotes have to articulate the current pain, friction, dissatisfaction and go some way to articulating the value to their organisation if that friction is removed.
From that, you have the basis of that fundamental piece, the content proposition that you’ve got to believe you can deliver. And you combine that with a detailed map of the market, benchmarks and evidence for likely pricing and penetration over time to get to the size of business you can envisage. Whether you’re validating your decision to launch, or looking for investment, you have to be to paint the picture convincingly across at least those three – the customer pain, the content proposition and the size of the prize.
Piers: Are you seeing anything new in engagement during COVID?
Andy: Like many other publishers our usage is soaring. People in our industry want to know who is doing what to survive and prosper in this crisis. I think that was to be expected but we’ve been pleasantly surprised with video engagement and virtual events. COVID has taught us all that you don’t have to be perfect ‘on Zoom’, in fact, I think seeing people working from their own homes, dressed informally, can make the conversations more candid and insightful. Our Editor and Deputy are now doing weekly 30 minute chats with senior private practice and in-house lawyers as a key new source of subscriber engagement.
This article first appeared on the Collingwood Advisory website, and is re-published with kind permission
About: Since 2006, Collingwood Advisory has been working with media, events, information and membership entrepreneurs on strategy, scaleup, value creation, exit planning and M&A. We translate best practice from corporates into tools that work for independent owners, and we have specialist expertise in leadership, product development, marketing, sales and finance. Collingwood Advisory works exclusively for entrepreneurs.