6 Develop Your First Experiments – The Forever Transaction: How to Build a Subscription Model So Compelling, Your Customers Will Never Want to Leave

6 Develop Your First Experiments

In 2014, Electronic Arts (EA) was among the first movers in gaming to bring a subscription service to life with EA Access, a subscription offering available via Microsoft’s Xbox One console. While subscription business models seemed attractive to the company, the path to this future was unclear, given EA’s historical strength with individual games. Electronic Arts was one of the world’s blockbuster developers of video games. Players bought a game or two annually at about $60 each, usually the latest release of their favorite franchises. EA games ran the gamut from sports to shooters to strategy games, from FIFA to The Sims. These blockbuster successes were part of the problem though. Players waited for the new releases. Business was transactional, seasonal, and heavily dependent on promotions. CEO Andrew Wilson wanted to focus on how to more effectively help players find and play new games in the most player-friendly, ongoing manner.

Migrating to subscriptions required instilling a “player-first” mindset to benefit both players and the business. If EA continues to create great entertainment, subscribers will stay and play. When players stay, EA gains greater insight into how they play, nurturing delivery of better games. The players find new games to explore as they await updates to their favorites. As a thriving business, EA had a lot at stake in changing business models. The company needed to be careful and invest in thoughtful testing and learning.

Michael Blank, an experienced EA executive, was tapped to lead the subscription project, but with the mandate to proceed cautiously. Blank’s team needed answers to pressing questions: Could EA offer subscriptions without cannibalizing existing revenues? How would EA avoid alienating valuable, powerful partners: retailers like Target and GameStop, and console manufacturers like Sony and Microsoft?1

At the same time, the team couldn’t suddenly change the way the company designed games, with major releases every year or two. Before this strategy would be revisited, Blank’s team had to demonstrate to the leadership team, through step-by-step testing, that the company could successfully leap to a subscription pricing model with a member-oriented approach.

Initially, the initiative was “off to the side” away from EA’s core business. The first subscription was for an Xbox One subscription to a catalog of older (about six months post-launch) games. This was followed by numerous experiments and research. Eventually the team tested an offering including new releases and availability for PC games. EA’s use of subscription to achieve its forever promise of being fully player-first is not yet completely realized, but it’s well on its way. Says Blank, “Five years after our first subscription launched in 2014, we continue to learn as we go. What we know today is that players play more and stay engaged when we give them frictionless access to great content in one place. We know we are on the right path and are focused on keeping players as our first priority as we build for the future.” EA is now the leader with subscription services on more platforms than any other gaming company (three platforms: PlayStation, Xbox One, and PC). But the journey began with a small test.

Start Small and Learn

It took Netflix years to expand nationwide in the United States, have original programming, or become available via digital streaming. LinkedIn was once just a place to easily post your résumé. Most companies, even those with the biggest promise of a forever transaction, start small. They have to.

A modest launch may be due to limited resources—not enough staff, money, or time. Sometimes entrepreneurs are stymied by ambiguity or lack of clear direction. The organization may resist disrupting a specific target audience before they’re confident. There’s always fear around cannibalization—that current “best customers” will transition to a less expensive subscription and lighter customers won’t upgrade to subscription.

Resistance from partners, investors, and peers can also pose significant challenges. If you’re moving from hardware sales to selling services—particularly subscription services—you must balance the product team’s needs with the investment requirements of the streaming business. If you’re bypassing retailers and wholesalers to go direct to customers, you may get too much pushback to move forward successfully. Overcoming these challenges requires mapping out a step-by-step path for your own business launch or transformation.

Break down your longer-term vision for membership into small parts so you can begin making progress. Specify the steps that will get you there and whether they require research or an actual in-market product test. Each step must naturally transition into the next. It’s easier to adjust your strategy than to move forward with no strategy at all. Get entrepreneurial: begin testing ideas with prospective customers, through both market research and actual testing of product prototypes. One useful model for product testing is the well-developed and documented concept of minimum viable product (MVP). Dan Olsen, the author of The Lean Product Playbook, describes the MVP as “The smallest set of functionality that delivers your product’s value proposition that has been validated with customers.” He cautions teams to “avoid taking on too much scope too early with your product” but also “not to use this as an excuse to rationalize a shoddy user experience or a buggy product.”2

The “Getting Started with Forever” Brainstorm

You’re more likely to suffer from too many ideas, not too few. There are so many subscription and membership options available. Many organizations will want to include a laundry list of features that they’ve seen in other people’s offerings—such as discounts, content access, exclusive experiences, concierge-like services, “surprise and delight” features, and even a cool membership card. They want immediately to offer multiple tiers and maybe even some kind of points-based currency.

But while all of these features might work, it’s important not to let the tail wag the dog. Features serve different purposes for the customer and might lead to a different outcome for your organization. Someday, you may be able to invest in providing all of them. For now, that’s too ambitious—it would take too long and cost too much. Start by working toward a modest test, while keeping in mind a long-term vision of what you’d do if you had unlimited time, power, and resources. Make sure your test is clearly linked to the long-term vision.

Get clear on what phase you’re in—are you brainstorming for the first time the full range of possible features and benefits, or prioritizing? Or are you executing on decisions that have already been made, to determine the most cost-effective and powerful way to test your hypotheses?

Many of my clients get stuck between brainstorming and prioritizing. Yet they want to jump ahead to testing and validating without first exploring the possibilities. Brainstorming is an important part of the process. Team members should take into account organizational considerations, customer considerations, and alignment with the forever promise as they evaluate the potential hypotheses to test.

You can do a first pass on all of these questions in one day with a small team. Make sure the brainstorming questions include not only the ideas in the room, but also ideas that other stakeholders and influencers have contributed. If the CEO always talks about how the company needs stickier relationships with customers, or to attract a more youthful audience, incorporate those objectives into the brainstorm. You don’t have to chase down the CEO’s pet hypotheses, but you do need to consider them. You need a good answer for why you prioritized as you did.3

Acknowledge all the unspoken risks and fears explicitly, so your colleagues and investors know you’re aware of them and taking them into consideration as you move like crazy down your narrow early path. The summarized brainstorm, coupled with winnowed-down recommendations, can translate into a huge leap forward in your process.

Making Sure Your Test Delivers

Next, a team member should synthesize all of the data in a test, including a few options along with their specific risks and mitigations. Based on your brainstorm, you can start putting together your test. Dan Olsen has mapped out a range of options in the two-by-two matrix he uses for MVP evaluations (Figure 6.1).

Figure 6.1 Tests Categorized by Type4

Many experts limit tests to the types in the lower left corner—Qualitative/Product tests—but I agree with Olsen’s assessment that other types of activities can be equally valuable early stage experiments. The important objective in this phase is to make sure that the experiment you design answers the right questions and points the direction moving forward. Most organizations neglect this step.

For example, if your goal is deeper engagement among existing customers, don’t waste time on features designed to attract new customers. If the target members are moms with school-aged kids, you won’t need discounts at late-night clubs. And if you’re selling wearable devices, like Apple, and you’re targeting an audience that’s 50 percent women and seeking health tracking, it might make sense to track menstrual cycles—something Apple’s research teams notably forgot.

Identify the Risks and Roadblocks for Learning and Leverage

There are many compelling reasons why companies don’t go all-in from the outset and why early testing is so important. I divide these roadblocks and risks into two categories: learning and leverage. Learning objectives bolster internal confidence. Knowledge breeds confidence; without it, organizations won’t invest heavily in a new initiative. The team leader might say, “Even if money were no object, I’d want to do a smaller test or roll out the vision piece by piece. I have a lot to learn before I invest.”

Learning objectives can answer these questions:

    Are my best subscribers who I think they are?

    Is my platform scalable?

    How do people engage in our community?

    How long do people stay subscribed? What drives churn?

    What does it cost to service subscribers?

    What is the most important benefit that will trigger sign-ups?

Learning objectives come from within the team.

In contrast, leverage objectives are achievements or milestones necessary for the team to get the green light. They mitigate the risk of deeper investments. Achieving these goals gives your team the proof points, beachheads, or authority to move forward in ways that other stakeholders might attempt to obstruct. Leverage objectives originate outside the team. Table 6.1 lists possible leverage objectives sorted by the stakeholders that might impose or require them.

TABLE 6.1 Possible Leverage Objectives

Determine which objectives you must achieve to prevent pushback from other stakeholders. Your team must address them to build a trial for long-term success. Identify these critical objectives so you can resolve them.

Prioritize Learning and Leverage Goals, and Achieve Them in the Right Order

You’ll notice that some of your listed objectives need to be met before you can advance at all. To move the needle on engagement, you need to demonstrate that people will consume more of your products and services with the new model. Perhaps the first step is proving that people would find your offer compelling. Your priorities will depend on whether you need to justify the bigger investment, or whether you plan to work stealthily to build consensus before launching in a public way.

Whatever your priorities, remember that you don’t need to build your offer out fully in order to learn. Sometimes you just need research and not a full-blown test. For example, to prove the perceived value of the offer, you don’t have to build all the features—you only need to design the marketing offer. One of my clients who was exploring a subscription music offer created an email campaign for existing (transactional) customers with the subscription features and pricing. Anyone who clicked all the way through in the first few hours of the test learned that the product wasn’t real yet and received a $10 gift card, as well as thanks for their response.

Another client wanted to test a concierge feature, a call center of experts to provide advice and connections. Given the small test volume, the task force took those calls directly so they wouldn’t need to hire concierges before understanding expected call volume and the nature of the requests.

With your forever vision, a proposed starting point, and a clear set of objectives, you’re ready to deploy and learn from your first steps toward forever.

What to Do Next

    Gather your most creative, strategic, visionary, and passionate team members for a “getting started with forever” brainstorm.

    Make a list of all of the possible features you could offer your best customer(s).

    Determine what would be free, and what would be paid.

    Determine what research you can do immediately.

    Begin scoping the first, small