Research / Insights on current and emerging industry topics
Lessons learned from the pandemic-era subscription boomMay 24, 2021 | By Patrick Appel, Director of Research – Piano @PatrickLAppel
The Covid-19 pandemic served as a catalyst for massive subscription growth, in part because consumers sought quality journalism to get accurate information about the virus. It also accelerated content consumption trends that were already happening. Let’s explore the main highlights across digital engagement, retention and conversion during a year of increased appetite for news content. We’ll also unpack how publishers can use this data to prepare for future shifts in consumer demand.
Paid trials convert to full price more often than free trials
According to our Subscription Performance Benchmark Report, approximately 17% of new monthly subscribers in January 2020 signed up using a free trial as the pandemic spread around the world. By December 2020, only 5% of new subscribers signed up on a free trial. This indicates that publishers became more confident with their pricing and smarter about promotional strategies as the pandemic raged on.
Free trials can attract a lot of new users upfront. However, they make less financial sense when there’s high demand for content. At the same time, there’s much lower lifetime value gained from users who subscribe on a free trial offer. On average, you’ll lose over a third of free trial subscribers to churn before those users are required to make their first payment. It generally makes more fiscal sense to use paid trials in acquisition campaigns since you earn a little money upfront and retain a higher volume of users over the long term compared to free trials.
Onboarding post-pandemic subscribers is crucial for retention
As many new users subscribed to online publications for the latest news about the pandemic, the strategic focus for media publishers had to shift from acquisition to customer engagement and retention. Convincing people to subscribe is only half the battle; encouraging them to continue subscribing is the other half.
If new subscribers don’t engage with your website early and often, they’re far more likely to cancel the subscription at the first given opportunity. There’s also the risk that they could become “sleepers,” which are subscribers who haven’t visited your site in the past 30 days. According to our benchmark research, an average of 40% of subscribers on media sites are sleepers.
To minimize the number of sleeping subscribers on your site, you need to act fast. Over half of your annual subscribers and nearly two-thirds of monthly subscribers will cancel in the first year if they become inactive. Your mission as a publisher is to incentivize those subscribers so they remain engaged. That’s why onboarding programs are so helpful to minimize churn and boost customer lifetime value. Use programs like guided tutorials and onsite benefits promotion to showcase all of the capabilities a new subscriber can access using their account. These programs not only drive user engagement, but they’ll also create habitual patterns that keep subscribers engaged on your site.
The Covid-19 retention bump endured thanks to annual subscriptions
Given the volume of new subscriptions early in the pandemic, many publishers expected lower retention rates and higher churn as the year went on. However, those fears never materialized. We found that users who became subscribers between March and July of 2020 retained at much higher rates than those who became subscribers prior to the declaration of the pandemic.
In an effort to maintain higher retention rates during the second wave of the pandemic, many media publishers made a concerted effort to increase annual subscription rates across their websites. Annual subscriptions retain much better than their monthly counterparts, and they subsequently carry much higher lifetime value for brands and publishers.
Throughout Q4 2020, many publishers used special promotions and smart pricing strategies to increase demand for annual subscriptions. Publishers used special events like Black Friday and Cyber Monday to create short-term offers for annual subscriptions that, in many cases, more than tripled conversion volume.
The Covid-19 pandemic continues to be a prominent and dynamic world event. Publishers should use this time to assess how user behavior impacted their subscription models in 2020 to make more strategic business decisions for 2021 and 2022. It is critical to:
- Determine when and how people were most likely to subscribe
- Analyze conversion rates, churn rates, special offers and trials to understand more about audience behaviors
- Optimize websites with targeted messaging and personalized content that incentivizes greater onsite engagement
- Maximize revenue opportunities with paid templates designed to boost conversions
By understanding these patterns, your business can make strategic decisions that will boost retention rates and, by extension, lifetime value. This will help you improve growth and develop a sustainable subscription business beyond this last year of high consumer demand.