Articles by: "Jose Luis Kruyff, SVP Broadcast/OTT, Americas — MPP Global"

6 Pricing strategies to drive revenue growth

April 26, 2021 Jose Luis Kruyff, SVP Broadcast/OTT, Americas — MPP Global

The lifespan of a subscriber is dictated almost entirely by how they perceive value in a service. Subscribers will simply cancel and churn if their expectations are not met. Thankfully, there are many approaches to take. These include building a diverse product portfolio, informed product pricing, and promoting engagement to encourage loyalty.

Here are six approaches to consider as you work to satisfy subscribers and grow revenue:

1. Bundle / unbundle pricing

Bundling – putting all your content in an all-you-can-consume package – is a common strategy for simplifying a subscription product. To build a more diverse portfolio, however, consider unbundling. To do this, provide topic-centric packages to suit “fly-by-trial” subscribers, with low CLTV and conversion rates. This strategy is also helpful for the “neglected middle” subscribers who subscribe to full packages, but concentrate their interest in key topics.

To increase CLTV and serve both markets, consider offering tailored packages for the subset of subscribers that show less engagement. At the same time, maintain strong value in the full package for the rest of your audience. Balance is key. The full package must be a better value than a combination of tailored packages. It must have a lower barrier of entry in terms of cost, to serve both markets.

2. Stepped pricing

A traditional trial takes the form of a free period, followed by a full-paid period. Triallists cancancel before making payment. The problem here is that a free trial does not reflect the value of the content you are producing. An alternative is stepped pricing, which puts a smaller, “trial” price at the start of the subscription. The most common form of stepped pricing is a lower price trial period, for example, £1/$1/€1 for one month, before stepping up to full price.

The key advantage of this model is that it demonstrates content value right at the start of the subscription. And even low lifetime value subscribers and “fly by trial” subscribers still generate revenue.

3. Tiered pricing

Tiered pricing is like stepped pricing, only the onus of switching tier is on the subscriber. The customer can gain access to more content by opting to “upgrade” their subscriptions. Crowdfunding services such as Patreon, which allows users to configure many levels of “rewards” based on different monthly fees, is a good example.

This format uses a single product with a low monthly fee, with incentives to subscribe to more comprehensive access at higher price points. Again: Balance is key. There is research to suggest that companies operating five tiers or more realize 40-50% higher ARPU than those with fewer than five (including none). Remember, though, that too much choice can also be a turn off.

4. Role based pricing and family/business plans

Role based pricing is like differential pricing, in that it provides a price based on certain attributes. However, it is actually based on the customer’s status, rather than geographical location or a reward-based system. Common examples include student, Over 65s, family plans or business accounts. As a result, subscribers will perceive this as a better deal than a standard subscription.

Corporate accounts are popular in the publishing industry. These allow business subscriptions under many accounts, with one single paying account.

5. Super-premium pricing

Consider offering an all-encompassing “super-premium” offering. You know: a top-tier, platinum package. There are two key advantages with the super-premium tier. Engaged, loyal subscribers have an opportunity to invest fully in the service, as a “badge of honor” for being part of the community.

Secondly, adding a top-tier price sets the maximum that subscribers could pay for a service. This provides a “price anchor” in the minds of subscribers and potential subscribers. Any price below this is seen as a deal in some respect. This in turn makes standard subscriptions seem more affordable, and boost conversion rates.

6. Dynamic pricing

Dynamic pricing, or propensity pricing, is the natural evolution of intelligent pricing. It relies on rich consumer data, subscriber persona building, and the ability to deliver personalized offers at scale. It’s a tall order. But with a flexible subscriber management solution, aggregated data, and A/B testing, true next-generation customer experiences will drive up acquisition rates.

This process would track a subscriber using first party cookies and analyze their viewing habits. Then it would suggest a subscription package tailored to their buyer persona and tracked habits. This would significantly increase that user’s likelihood of signing up. From a revenue optimization perspective, that same system could track engagement rates and content types, suggesting content and subscriptions accordingly.

Ultimately, dynamic, personalized experiences driven by AI are likely to be the future of the digital subscription.

Engagement and value

CLTV is commercially important. However, it is not fit for use as an engagement measurement tool. To really understand subscriber value over time, study their engagement compared to the price they are paying. How do they perceive the value of your product? This information must be gathered from centralizing first party customer data and tracking audience habits. It is important to engage people by asking them questions through surveys or social media.

Then, you can use this data to experiment with one or more of the models described to determine what works best for your subscribers. This will allow you to truly drive CLTV, retention, and brand loyalty. Engagement is everything. Understanding how to maximize engagement is the key to breaking through subscription revenue plateaus.

Innovation | Perspectives

Cross-industry strategies for customer acquisition in media

February 15, 2021 Jose Luis Kruyff, SVP Broadcast/OTT, Americas — MPP Global

There is a lot that the OTT and publishing industries can learn from each other in terms of acquisition strategies. With a bit of adaptation, each could improve customer signups in unexpected ways.

Ultimately, both industries focus on selling content direct to consumers. And there is significantly more crossover than there would have been 10 years ago, as video and online media have become the most common form of content consumption. OTT Market growth is expected to grow by 14% in 2021 and new digital subscription orders rose 420% in 2020 against the previous year. This provides the impetus for organizations on both sides to take advantage of this period of continued growth, and many of the strategies of one industry can be adapted and applied to the other.

Key Takeaways

Physical and digital provisions are no longer silos in themselves, and are forming parts of a more unified strategy
Payments and subscription dates can be disconnected for greater flexibility
Offering the ability to pause subscriptions rather than cancel outright can reduce churn
Bundling products together to form more focused packages can be more enticing than the all-you-can-eat approach
Streamlining registration and payment journeys is critical to maximizing conversion

Free content

A common strategy in the publishing sector is to provide a certain amount of content for free. This might be a limited number of free articles, or content types/genres that is free to unregistered customers. Meanwhile, in OTT and SVOD, the general rule is to have content locked behind a paywall or have all content available for a limited free trial period. This is a commercially restrictive “all or nothing” approach.

An alternative value exchange would be to provide a metered registration wall. In this way, you offer customers the ability to watch selected content for free in return for creating an account and sharing their personal details.

For services that do not provide a free trial, this can help entice new customers who get the opportunity to see the quality of the service. For churned customers, it is an opportunity to bring them back in. It also generates an opportunity to increases customer loyalty through other strategies.

Subscription holidays

A common scenario within the publishing sector, particularly those publishers that operate physical delivery, is where customers wish to “pause” their subscription for reasons such as going on holiday, or a financial decision. These customers do not want to churn. In this “subscription holiday” approach, access and payments are paused for a set length of time agreed by the customer and the provider.

OTT, on the other hand, is either active or inactive. Customers who need to make this decision must typically cancel their subscription and then remember to reactivate. Once churned, they may choose not to come back at all. There are some services, particularly sports services such as BT Sport and Sky Sports, which offered to pause subscriptions in part of 2020 due to a lack of sports events. In the case of BT Sports, the payments could be halted, or donated to the NHS. Other sports-based OTT services offered payment holidays to their customers during this time.

For OTT Sports, this is helpful for retaining customers who would otherwise churn in the off-season. Instead, customers can be at ease knowing their subscription and billing will only be active when they need the service.

Product bundling

Bundling is the process of combining multiple products and offering them in a single package. Using customer data insights and personalization solutions such as Zephr, businesses can get clear insights into the reading and viewing habits of their customers.

This data can be used to identify products that often perform well together. Then, those products can be offered in a package to the customer dynamically as an acquisition incentive. For publishing, this could be discounted access to certain articles based on topic, a group of magazines, or relevant discounts on third-party services. For larger OTT providers, this can be access to specific categories such as kids shows or movies.

Express registration and checkout

Netflix offers a model example of easy signup. Provide an email address and password and the customer account is ready. Amazon and Now TV both have simple sign-up pages to get customers viewing their content quickly. The key element is reducing the amount of personal data collected at the point of sign-up. The typical registration flow will offer email and password, or Social Sign On. Long signup forms are rare in the OTT space.

Publishing can stand to learn from this lesson: Customers expect as frictionless a sign-up process as possible. Where metered registration walls are used, it is a good idea to put the single sign-up process in a prominent place, using SSO and email/password only.Ensuring the registration and payment appears on a single page also reduces time and friction, which can increase acquisition rate. Publishers and OTT providers based in the European Economic Area (EEA) should also be aware of regulations around Strong Customer Authentication (SCA) and factor customer identity checks into their billing journeys.

Best of both

Acknowledging that content does not have to be an all or nothing approach. Using data to personalize offerings and create bundled content tailored content is a great way to win signups from customers.

Physical and digital are no longer separate silos but are both key parts of the acquisition strategy. The popularity of video only continues to increase and is now the expected content format of any brand. The lines between OTT and publishing are continuing to blur. So, organizations that learn from this shift in expectation early stand to see major gains in customer acquisition.

Perspectives

OTT subscriber acquisition strategies for a new reality

November 5, 2020 Jose Luis Kruyff, SVP Broadcast/OTT, Americas — MPP Global

Amidst the gloom of a global pandemic, the rapid growth of OTT subscriptions has sounded a rare positive note: it is estimated that global revenues for the sector will grow by an unprecedented 55% in 2020, according to Videomind.

Traditional pay-TV and broadcast subscriptions are falling away, particularly in the U.S. Therefore, it would be easy to reach the conclusion that Covid-19 stay-at-home orders have accelerated our arrival at the tipping point where on demand and OTT become the dominant models for video entertainment consumption.

The truth, however, is that the road ahead for OTT brands in an increasingly crowded and competitive market remains uncertain and fraught with challenges. Some of which come in the form of:

Unknown post-lockdown churn with continual changing global circumstances
Potential slowing of subscriber growth as the world returns to a sense of normal
Raised expectations in line with what customers have grown accustomed
Change as the only constant, with the ability to adapt quickly to meet continuously shifting needs

Opportunity from uncertainty

The net result is that subscriber acquisition is likely to be more important than ever in 2021. And the fact is that subscribers themselves will represent a more demanding, constantly moving target.

Our recent OTT playbook explores the opportunities for OTT brands to experiment and innovate at every stage of the subscriber acquisition journey. To succeed, brands need the ability to innovate, experiment and adapt quickly. This capacity has long been held back by everything from a lack of customer insight and inflexible business models to monolithic technology platforms that set limits on the pace of innovation.

However, that is starting to change.

Broad customer insight

No-one yet knows whether the pandemic-era spike in new subscribers will be temporary or convert into long term loyal customers. Subscriber growth– be it short or long term – offers clear financial benefits. However, it also offers something potentially more valuable and enduring: insight.

It seems that recent subscribers were drawn from every section of society, not just the traditional heartland of the 18-35s. In fact, some of the most significant growth was among older age groups, with around a third (32%) of 55-64-year olds and 15% of over-65s using subscription streaming services, according to Ofcom.

What’s more, it would be a mistake to assume those demographic changes are entirely transient. Resear c h from EY found that 19% of households agreeing that the pandemic has irrevocably changed their viewing habits.

As a result, OTT brands could attract and engage a much broader cross section of society, accompanied by diverse needs and behaviors. So, success will depend on understanding and adapting to a broader set of demands.

The good news, for those brands able to convert data into action, is that subscriber growth during 2020 has provided the basis for hugely valuable customer data. Interrogating that data, to understand customer needs and behaviors can be the basis for multi-faceted, adaptable and, above all, effective subscriber acquisition strategies.

Agile, flexible subscriber management

The brands best poised to act on that insight, and the ability to keep pace with a constantly moving subscriber sweet spot, will have a significant advantage. The scale of that advantage will depend how far along the digital transformation journey they have traveled.

Those still wrestling with monolithic legacy systems will struggle to keep pace with change. Siloed data will hamper customer insight. And complex systems requiring technical resource will limit the ability to innovate, adapt and experiment in response to change.

On the other hand, a new breed of fully integrated cloud subscriber management platforms will provide forward thinking brands with all the flexibility and agility they need – and at lower cost. These will allow OTT brands to innovate and experiment in every aspect of the subscriber acquisition journey. This will take hours rather than months, without the need for technical skills. These factors offer a critical competitive advantage in the months and years to come, as we all adapt to a new reality.

Experiment and innovate

In the post-pandemic world, there can be no standing still. OTT brands will need to constantly experiment and innovate in every element of the subscriber acquisition journey in response to diverse customer needs and rapidly changing behaviors, coupled with a demand for greater flexibility and choice.