The subscription model is not new, but it has taken on a new significance. Over the past seven years, revenue for all subscription companies – from software to healthcare – grew by 321% on average. In the case of apps, this positive trend was bolstered by a 32% year-over-year increase in the number of users who sign up for a subscription after installing an app.
Fast forward, and publishers report a massive bump in subscriptions and a surge in audience interest since the coronavirus outbreak. In just one week, subscription technology platform Piano observed that subscriptions across the European newspapers in its network increased by 267%. From Condé Nast and The New York Times to Disney and Viacom, subscriptions are big business for the media.
However, these record increases may be short-lived. Already aggregate data from subscription technology platforms shows monthly subscription rates for digital news has declined from 3x the average (over the previous 12 months) in March to 2.4x in April. Growth rates, despite signs of slowing, still outpace pre-pandemic rates by a healthy margin. But there are other developments publishers need to watch.
“News fatigue is [also] setting in, and the short-term and long-term economic impact of the crisis is likely to be profound,” warns the Reuters Digital News Report 2020. It combines insights about digital news consumption and the survey results of 80,000 online news consumers in 40 markets to highlight the factors “likely to accelerate long-term structural changes towards a more digital, more mobile, and more platform-dominated media environment.”
Move to a retention-first model
As advertising budgets are slashed and a recession looms, content companies have two choices. They can persuade more people to pay directly or they can find ways to keep their existing subscribers.
It’s not a toss-up. Seminal research reminds us that it can cost five to 25 times more to attract a new customer than retain an existing one. The Financial Times sums it up in cost savings. Drawing from internal research, the FT concludes that “it is four to five times cheaper to retain an existing user than to acquire a new one.”
The task of keeping customers active and interested turns up the pressure on media companies to adopt a retention-first mindset. That starts with understanding who your customers are and then investigating the “why” of what motivates your audiences to interact with your content and keep coming back. That is where marketers need a retention framework that will allow them to develop a more nuanced view of customer engagement and stop churn before it starts. (I’ve written here on DCN about a new Engagement Pyramid model, also known as AIC. But you should choose the model that is right for your company and your audience.)
To help companies as they architect strategies to cash in on the “corona bump” and maintain robust subscriber numbers, I draw from two standout interviews with retention marketers and app publishers featured on Retention Masterclass, the video podcast series I co-host with fellow Forbes Senior Writer John Koetsier.
Build a “radically superior” product
Marketers who want consumers to commit to a recurring cost need to offer a product worth paying for in the first place. But they should also be prepared to “burn some boats” to get there. This was the advice offered by Nick Hobbs, an ex-Google manager who is driving a phase change in thinking around how to design and grow a subscription news product. Today he is the founder and CEO of Brief, a news app aimed at GenZ and Millennials and doubling its subscriber base every month. He told Retention Masterclass this growth is fueled by his determination to build a “radically superior” product.
“It can’t be the same product with a new coat of paint,” Hobbs says. It also can’t be a product that is a little bit better than the rest. “It has to be fundamentally a completely different experience that’s vastly superior to what came before it.”
One terrific example of a company taking this approach is Spotify, which does more than distribute music tracks. They offer an emotional soundtrack that delivers what audiences want and need. More importantly, Spotify has built a business model on access, not ownership. “Gen Z doesn’t want to buy things anymore,” Hobbs explains. “They want access and they want services.”
Accordingly, Brief is a customized news service produced by human journalists and algorithms. Rather than offering audiences endless news to scroll, or a lot of options to personalize their feed, Brief focuses on curation. “Instead of trying to feed you more content, we’re trying to give you less.” The takeaway: When “product is the new marketing,” enabling a better experience is essential to achieve high subscriber numbers and strong retention rates.
Keep it fresh with “situational” communications
Push notifications are growing up. And content companies are getting smarter about ways to deliver them. I’ve written that organizations, including ABC News, get high marks for strategies that use push and other communications channels to power personalized news experiences.
However, while push notifications can be incredibly useful, they can also be noisy. Christian Eckhardt, CEO and co-founder of full-stack mobile marketing and tech consultancy Customlytics, called out companies for using push to alert users of every mundane activity. It’s a practice sure to backfire, Eckhardt told Retention Masterclass.
Push is part of product
Companies have to shift from attempting personalized push (which no company has mastered) to delivering more “situational” communications, Eckhardt says. This approach to communications is shaped by real-time analytics to “continuously improve the messaging, determine what is working and do more of it.”
So: Is push related to mobile CRM or marketing? “If done right,” Eckhardt explains, “it’s probably more part of product than it is of marketing.” Ultimately, push is a great asset for driving retention and engagement. Harness analytics to customize messaging to the situation in which users find themselves in your product.
What my conversations with Hobbs and Eckhardt demonstrate is that whether you are looking to add subscribers or retain them, the power of the product can not be underestimated. And, as we see that retention needs to be top of mind in any subscription model. And, again, product takes the front seat.
The explosive growth of subscriptions for content online and in-app is a clear confirmation that users are willing to pay a monthly fee provided the value exchange is on the money. These days, a me-too product may help you attract new subscribers. But it’s the ability to offer a consistently excellent experience – informed by analytics and customized to audience activity – that builds relationships to last.