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Perspectives | Supporter Spotlight

3 ways publishers can reduce subscriber churn

Readers and publishers both suffer from the negative effects of churn.

Obviously, publishers hate seeing readers suddenly cancel a subscription. For publishers, losing a long-term subscriber is upsetting for both the brand and bottom line.

However, readers also hate it when their subscription is suddenly terminated due to a simple mistake such as forgetting to update their subscription with a new credit card number or billing address. There they are, in the middle of reading a hard-hitting series of crime reporting, or need-to-know business information, when bam: the content is blocked. Then, they get a message like: “You’ve lost access to this content. Please contact customer service to fix the issue with your payment method”. After a few moments of uncertainty, some will make the effort required to rectify the situation. Others will seek out information elsewhere.

Having their subscription suddenly end—which is the nature of cancellations due to payment errors—disrupts the subscriber’s experience and may cause them to lose trust in the reliability of your publication. However, this disruptive experience is avoidable with the right strategy and infrastructure.

Read on to discover some tried and true strategies that help publishers (like the ones we work with) keep readers more connected to their digital subscriptions. Try these tested methods to defeat subscriber churn: 

1. Diligently remind subscribers of the amazing content they’re paying for

Getting the most value of a publishing subscription takes on different meanings for different folks. One thing is for sure: people like to stay informed of the valuable content that their subscription provides. And, significantly, low usage is the primary indicator that readers are about to cancel a subscription.

Help your readers stay engaged by keeping them updating about new content and reminding them of new features and updates that would enable them to use the subscription more often. Sending out brief reminder emails reminds your readers that their subscription has value.  

Refinery29 does a great job at reminding its readers. The weekly newsletter makes a list of seven to ten most popular articles, slaps on a catchy email subject line to entice readers to open the email, and makes every article mentioned linkable so the reader can easily go to the main website. This is a genius combination that generates high open rates and CTRs.

2. Connect digital and physical subscription experiences

Sometimes a digital subscription isn’t enough. Readers may want the option to receive hard copies or to read some articles on their tablets. Connecting the digital and physical subscription experiences is a must for publications to truly thrive in 2023.

Reader’s Digest regularly sends mailers and emails asking subscribers for their preferences, announcing new features and editions, and letting subscribers know about subscriptions outside of publishing that they’ve partnered with. For Conde Nast, readers are the first to be aware of when a print-only publication is also being offered digitally.

Beyond this, publishers are getting smarter about partnerships that connect the value of their content to physical experiences. We’re seeing a good number of publishers teaming up with different brands in different industries outside of the publishing world. These partnerships enable readers to access new deals for food delivery, takeout, personal care, cleaning supplies, and more. If you’re a publisher thinking about creating partnerships, how do you pick the right partners and optimize earnings? Audience match is key, and those insights are baked into subscription intelligence.

3. Fix the most common cause of cancellations and interruptions: failed payments

Many in media think of payment transactions as technical, backend stuff to worry about. But maintaining a seamless subscription experience means that publishers have to focus on organizing transactions in a way that will maximize the likelihood that they will not fail.

Payments that fail constitute 70% of potential revenue that could never be recovered again. In the subscription world, losing a paying reader can mean losing the present and future relationship that comes with each reader. That is why providing a good payments experience is key for retaining paying subscribers. It’s important to recover failed payments and prevent them from happening by keeping an eye on the following most common reasons for payments failure.

The most popular reasons that payments fail are: An outdated credit card number that the reader didn’t update the subscription about; errors in entering credit card information such as the wrong expiration month; insufficient funds; or change in billing address. Any of these common occurrences can happen.

Consider using software and subscription intelligence to salvage these transactions when they fail and to proactively set transactions up in a way that maximizes each transaction’s success rate. Publishers such as Wall Street Journal and The Dallas Morning News love the robustness and effectiveness of our software for recouping lost subscribers and revenue.

No churn = more return

Publishers—it’s disheartening to lose the readers whom you’ve worked so hard to acquire, nurture, and entertain. Publishing companies can do more to prevent readers from churning. By regularly reminding subscribers of the amazing content they’re paying for, expanding partnerships with brands outside of publishing, and by fixing failed payments on the backend, publishers can provide readers with more reasons to get value from their subscriptions. And more value means less reasons to cancel.

Featured Post | Perspectives | Video

Industry experts offer 3 ways streaming services can reduce churn

The Wall Street Journal recently profiled a couple that they characterized as  frustrating customers for streaming services. They subscribe to a streaming service, binge what they want to watch, then drop that service and move on to something else. Unfortunately, they are emblematic of a growing segment of streaming audiences.

When Netflix was king of the streaming services, this practice was rare. This was, in part because Netflix had a little bit of everything: hit shows like “The Office” and “Friends,” interspersed with licensed movies from blockbuster studios and must-watch original programs like “House of Cards” and “Orange is the New Black.” Didn’t have Showtime but wanted to watch “Dexter?” Netflix had it. Want to watch “Breaking Bad” without cable? Netflix had that, too.

But over the last few years—as others seek to reap the attraction of their own IP—Netflix has lost some of those key titles that once made the streaming service a must-have for households. NBC moved “The Office” to its own service, Peacock. Warner Bros. did the same thing with “Friends,” bringing it to HBO Max. “Dexter” is now exclusive to Showtime, which can be had as an add-on within Paramount Plus. “Breaking Bad” is still on Netflix, but only for the next few years, at which point it will presumably be exclusive to upstart streaming service AMC Plus.

Unfortunately, the diffusion of content to various services has created a nightmare scenario for streamers. Now, couples like the one profiled by the Journal are becoming the norm.

According to the analytics firm Antenna, around 19% of customers who subscribed to premium, cornerstone streaming services like Netflix, Amazon Prime, Disney Plus, and Hulu dropped three or more of their subscriptions between June 2020 and June 2022. That’s an increase of 6% compared to the period between June 2018 and June 2022.

Their loss has been a benefit to newer streaming services like Paramount Plus, Apple TV Plus, Discovery Plus, and others. However, the nature of how the streaming video business works means their models are not ironclad. Most services offer monthly subscriptions, and with no contract or other long-term mechanism to lock them in, customers can drop those start-up services just as easily as churn through the premium ones.

There are some obvious ways a streaming service can keep customers engaged in a way that reduces churn: Offer compelling shows and movies. Keep the price affordable. Make it easy to use. Make it available on every platform and every device. But with a dizzying landscape of streaming services that are spinning up at a breakneck pace, low prices and hit programming aren’t enough of a strategy to keep viewers locked into a service over the long term.

So, we asked some experts in the video space for other ways streaming services can grow their audience while keeping churn levels relatively low. Here is what they suggest:

1. Know your audience, and respond with that content

When the Fox Nation streaming service launched four years ago, the brand was franchised from Fox Nation section of the Fox News website, which offered a mixture of political and social commentary from thought leaders and digital correspondents. In some ways, it was a “Fox News Plus,” in that it carried several streaming political commentary shows and documentaries that were largely hosted by Fox News personalities.

That worked to a point. But as time went on, executives at Fox News Media realized the Fox Nation streaming service could serve as a platform for other types of content. It offered a home for historical documentaries, general entertainment programs, reality-based shows—content that Fox News enthusiasts had to find across a number of other services, if they were offered at all.

So Fox Nation has stepped up to fill the void. The service commissioned original shows and documentaries that it figured would appeal to the average Fox News viewer. And it has made them easy to find in a single service at a low price point.

“We definitely know what the space looks like for Fox Nation: it looks a lot like what the Fox News audience watches when they’re not watching Fox News,” Jason Klarman, president of Fox Nation, said in an interview. “Curation is at the heart of this. It’s about serving an audience that wants us to give them the content that they otherwise might go somewhere else—everything from real estate shows to cooking shows.”

The opinion programming is still there. In fact, Fox Nation viewers get next-day access to prime-time shows like “Tucker Carlson Tonight” and “The Ingraham Angle” as part of their subscription. But they also get shows like “Sharon Osbourne: To Hell and Back,” a documentary that dives into the issues of cancel culture; “The Pursuit with John Rich,” an interview show with the country music star; and “Historical Battles for America,” a docuseries hosted by Kelsey Grammer.

While the Fox News audience might be considered niche, Klarman said focusing on what those viewers would want to see from a general entertainment streaming service has done very well for Fox Nation. In fact, he went so far as to say Fox Nation has one of the lowest churn rates in the industry (second only to Netflix, he says) because the streaming service’s programming is able to make an emotional connection with the core Fox News audience.

“The opportunity is as big as we want it to be,” he said.

2. Partner with a streaming platform

While some companies like Fox, Showtime and Discovery are able to leverage their traditional cable brands to lure viewers into a streaming service, other upstarts like Acorn TV, Britbox, and Shudder have ventured into the streaming landscape with virtually no name recognition. And all still have the challenge of keeping customers once they’ve signed up.

None of this was a problem for media companies in the era before streaming: If a customer wanted premium television, they signed up for cable or satellite. When they did, they could reasonably expect to have access to the channels carrying the shows that were discussed around the water cooler at work the next day. And accessing a new show was as simple as changing the channel.

Today, things are different. Content is spread out across a few services, which makes for a confusing landscape with many gatekeepers. That is a problem that the big four streaming platforms—Roku, Amazon Fire TV, Apple TV, and Android TV (Google TV)—have sought to address with various algorithms that help viewers discover content across services.

Roku takes things a step farther with its Roku Channel, an app that comes preloaded on every Roku device sold. Through the Roku Channel, users can sign up for dozens of third-party streaming services like Showtime, Starz, Discovery Plus, Paramount Plus, Epix, Acorn TV, and others. The services are paid for using Roku Pay, and content is streamed within the Roku Channel app. The approach makes purchasing a new service and streaming shows and movies a frictionless experience for customers.

“The Roku Channel allows us to showcase content and make it easy to discover and find and potentially attract audiences that would never have discovered it,” Nicole Fencel, a Roku executive in charge of premium streaming services, said at the NAPTE Streaming Plus conference last month. “Otherwise, it’s very hard for smaller services to play in an ecosystem that’s consumed by these major services…finding ways to bring that content up and elevate it across the platform is a way that we can help.”

The Roku Channel is not alone in offering this type of feature. The Apple TV app and Amazon’s Prime Video Channels also offer a marketplace for buying third-party streaming subscriptions, with content delivered within those apps. Google is reportedly working on a similar marketplace that will be powered by its YouTube streaming service.

None of those tech companies require streaming services to offer subscriptions through their marketplaces in order to reach customers on their platforms: Showtime, Epix, Paramount Plus, and others are still available as individual downloads, and customers can sign up directly for those services through the websites of each company.

But Fencel said there’s a benefit to partnering with the Roku Channel: Users have an easier time watching movies and TV shows across different services when they do so through that app, and Roku has developed numerous technologies centered around learning what its users like to watch, then surfacing movies and TV shows they may want to watch next.

“Finding ways to bring that content up and elevated across the platform is a way that we can help,” Fencel said, noting that helping users discover new content can lower overall churn rates.

3. If a customer is going to leave, make sure they leave happy

But Roku’s technology, and that of its competitor platforms, can only take a streaming service so far, something that Fencel acknowledged during her interview at NAPTE last month.

“We will make sure we help prevent churn as much as possible, but if a customer is going to make the decision (to leave), they’re going to make the decision,” Fencel said. “So, our job is to try to figure out, how do we re-attract them?”

Some might assume that the answer is simple: Add more programming that people want to watch. Or lower the price of a service to attract more customers. But some streaming services don’t have the benefit of adding programming or changing prices on a whim.

Philo is one such streaming service: It offers more than six dozen live pay television networks, the same found on cable and satellite, for $25 a month. Philo is able to keep the price low by making deals with programming partners that don’t offer cable news or sports channels. And, luckily, Philo carries a handful of channels that are responsible for many cable hits, including AMC (“Breaking Bad,” “The Walking Dead”) and Paramount Network (“Yellowstone”).

However, Philo is still very much at the whim of its programming partners. It can’t control the shows and movies that the live channels choose to carry in a given season. And it knows that customers might sign up to watch a season of a show like “Yellowstone”, and then leave for a different service once that show has run its course for the year.

Thus, Philo’s executives spend a lot of time thinking about the thing they can control: The customer experience. Does the app work? Is there enough variety? Can customers tune in and relax, or do they have to spend a lot of time finding something to watch?

That strategy has worked well for Philo. The service has grown to over 850,000 paying subscribers as of last year. (The company is private and doesn’t regularly reveal how many subscribers it has). Still, like other streaming services, it allows customers to start and stop service on a whim, which it considers to be its advantage over cable and satellite. However, its a situation that keeps the door revolving.

“I think everyone kind of accepts that churn is a reality,” Andrew McCollum, Philo’s chief executive, said in an interview. “But we have a particular belief that it’s really important people have a good experience with Philo, and that even if they leave, they leave happy.”

Philo’s philosophy is that a satisfied customer who ends their subscription will likely return when their favorite show starts up again, or when they discover a new program that is on a channel carried by the service. It is the kind of brand loyalty strategy that starts and ends with the overall customer experience.

“In a world with high churn, if people have a good experience with Philo, and they leave, and they leave happy, the next time they want to watch something we carry, hopefully they’ll come back to us,” McCollum said.

Perspectives | Revenue | Supporter Spotlight

How to get back to growth in the post-pandemic subscription marketplace

The pandemic marked a period of explosive growth for subscription commerce. However–given the economic situation, easing restrictions, and a shift in lifestyle–the tides have turned.

Subscription brands—especially media organizations—are seeing new challenges arise in both retention and acquisition. Streaming giant Netflix made headlines by losing 200 million and nearly 100 million subscribers in two consecutive quarters this year. A different strategy and renewed attention are required to expertly navigate this next phase of our endemic subscription landscape and beyond.  

In this article, we delve into what’s changing in the subscription landscape and how recurring revenue businesses can adapt and flourish. 

The changing sands in subscription commerce 

The same factors that fueled the subscription explosion during the pandemic seem to now be shifting in the opposite direction. Our research has found a number of factors that are impacting consumer appetite for subscriptions and the overall subscription landscape: 

  • Shrinking expense budgets: Rising inflation and fears of an impending recession are curtailing consumers’ discretionary spending behavior. Just over 90% of subscribers say they are concerned about inflation and its impact on the cost of goods and services.
  • Reduced movement restrictions: As social distancing compulsions ease, people are once again enjoying in-person shopping experiences. This movement shifts several premium-priced subscription categories from “necessities” to convenience-based “luxuries.” The impact is clearly felt in consumers’ increased cost sensitivity towards subscriptions, which has dropped from 2% in October 2021 to 22% in March 2022. 
  • Lifestyle changes: As travel and entertainment options resume, lifestyle shifts are happening. Statistically, 46% of consumers expressed excitement about in-person dining, 45% about domestic travel, and 43% about in-person events. This shifting preference has a natural spillover to weekends dining out instead of dining in, for example. This impacts the different “stay-at-home” subscription bundles like meal kits.
  • Classic subscription fatigue: The impact of subscription fatigue is also becoming apparent. Consumers realize they are spending more on subscriptions than they need or desire. In addition, 22% suggest feeling overwhelmed with the number of subscriptions they currently own. And that clearly feeds into their decision to withdraw.

What to make of this mercurial market? It’s time for merchants to harness the above insights to intervene and adapt.

How to stabilize during this COVID aftermath

Stabilizing through the changing tides requires businesses to pivot their subscription models to increase consumer value perception as a result of their changing interests. 

Here are some actionable ways merchants can adapt to changing consumer preferences:

  • Help people save money: As consumers become more cost-conscious, offering subscriptions that promote saving can be powerful. As found in a Recurly study, only 20% of U.S. subscribers intend to sign up for more subscription services, while 49% plan to keep their subscriptions the same due to the rising prices. Introducing “Subscribe and save options” or providing handsome bargains for “lock-in” subscriptions–for example, securing an annual subscription at a lower monthly rate–can be helpful to reverse price-conscious unsubscribes. 
  • Introduce greater price flexibility: For non-essential subscriptions (the “nice-to-haves”), offering tiered packages can help mitigate churn risks. Allowing users to pay less for reduced features can fuel retention. Netflix has leveraged this by offering lower subscription fees for consumers consenting to watch ads. 
  • Put customers in the driver’s seat: Customers now want greater freedom, personalization, and choices as their lifestyles change and consumption patterns shift. For example, 82% of subscribers state that being able to pay with their preferred payment methods is one of the features they want most from merchants–and that’s up from 69% in October 2021. That said, offering too many options can cause analysis paralysis, so experiment with pricing and packaging to find the right balance for your subscribers. 
  • Help people save their time: Studies suggest 81% of shoppers wouldn’t mind continuing subscriptions if they could save time and enjoy greater convenience, despite surging inflation. Merchants offering pricier subscription bundles that help people save the value of their time can continue to triumph if they can effectively convey that value.
  • Ensure excellent customer experiences: Customer experience remains paramount to successful subscriptions and even more so in the current volatile and maturing market. Allowing customers to pay easily with their preferred payment methods, access flexible renewal and cancellation opportunities, and enjoy prompt support as needed will fuel lasting retention outcomes.
  • Increase win-back chances with pause options: Despite efforts toward retention, some customer segments may still be unwilling or unable to continue.. Offering them a softer alternative of pause can help to retain them in the fold and increase their likelihood to re-subscribe in the future. We’ve seen merchants that use our pause feature experience a 46% reactivation rate, demonstrating the power of this magical button.

While the pandemic accelerated the demand for subscriptions, the current correction demands a pivot to thrive in this evolving market and inflationary climate. 

Subscribers continue to seek value–whether for their money, time, or both. Hitting the sweet spot requires making necessary changes to existing models or subscription bundles to adhere to the reimagined consumers’ preferences. 

About the author

Theresa McEndree is the Chief Marketing Officer at Recurly, a subscription management and billing platform that maximizes subscriber lifetime value with expertise, technology, and insights for global brands.

Industry-Research

Track reader regularity rates to optimize subscription success

Reader-revenue strategies offer publishers a recurring revenue stream and positive audience relationships. A strong subscription business requires measuring and monitoring the core metrics of consumer engagement. More than likes and clicks, though, true subscriber engagement is characterized by regular usage. The Medill index developed by the Medill Spiegel Research Center provides insights to identify this important metric of at-risk subscribers for local news outlets.

The research includes data from close to 50 news outlets. On average, across all publications, 95% of subscribers pay for their subscriptions each month. However, they do not visit the sites that they subscribe to daily. And that could spell trouble.

Know your readers

The Medill’s subscriber index segments readers into three tiers based on outlet size to identify at-risk subscribers.

  • Tier 1, large newsrooms, shows a monthly retention rate of 95.4% and visit an average of 5.7 days per month.
  • Tier 2, mid-sized newsrooms, shows monthly retention at 95.7% and visit an average of 9.2 days per month.
  • Tier 3, small newsrooms, shows monthly retention at 96.2% and visit an average of 10.5 days per month.

Subscribers in smaller communities tend to look at their local news organizations for multiple purposes. These include local news events and sports sports, as well as national and international news. In contrast, many readers of medium and large newsrooms turn to secondary sources for national and international news.

Deep dive into audience analyses 

The Medill index tracks both subscribers and registered non-subscribers to assesses whether they are “at-risk” or “established” based on their regularity. “At-risk” is defined as two or fewer visits per month, while “established” means more than two visits. The research concludes that regular visits to a website is more important for retention than the number of stories subscribers read. Building toward habits of daily usage is a necessary retention metric.

Engaging with at-risk subscribers is vital to keeping retention high. Tim Franklin, Senior Associate Dean and John M. Mutz Chair in Local News at Northwestern’s Medill School of Journalism, suggests getting subscribers engaged through regular communications. This connection point can be a newsletter, a news alert, an email from the editor or the publisher, or even emails about events. Reader retention needs to be a central focus and play a prominent role in a publisher’s strategy.

Experiment to engage

In addition, experimentation is essential to evaluate the effect of different pricing offers on churn. Lenfest’s Herts, a former Finance VP of the Dow Jones Consumer Media Group, recounts an experiment at a major metro news outlet. They offered an introductory price of $1 for six-month access. A higher number of sign-ups for the long-term introductory offer resulted in more total subscribers after one year than previous short-term offers.

Understanding cross-platform consumption is also crucial in understanding the total engagement picture. How often a reader engages in the site, app, newsletter, comments, etc., all represent an integration into the reader’s lifestyle experience. The publisher’s goal is to make its product a constant touchpoint and — as such — valuable to the subscriber.

Identifying and engaging with at-risk subscribers is necessary for reader retention. The Medill Index demonstrates the importance of publisher attention to reader regularity to build a long-term relationship with a core cohort of paying subscribers

Perspectives | Revenue

How pricing flexibility and personalized offers will win the subscription wars

The subscription economy is firing on all cylinders and across all verticals. However, an avalanche of subscription offers turns up the competition for audience attention. Content companies must find innovative ways to drive customer connection and conversion to rise above the noise. 

The stakes are high and so are the profits. The 2021 Subscription Economy Index published by subscription technology platform Zuora, reveals an impressive 21% uptick in subscription revenue growth in Q4 2020 alone compared to the previous quarter. That’s yet another data point in a growth trajectory that has seen subscription revenues increase 6x over the last nine years. 

But cashing in on the boom requires publishers to embrace flexibility and customer convenience, even for cancellations. It’s not enough to build the capabilities to sell as a one-time transaction to readers. Publishers must reach potential subscribers in the right context, and at the right stage of the customer journey, to reinforce the decision to commit to recurring costs. 

Personalize pricing and paywalls 

Each customer is an individual, not a generalized demographic. Their willingness to subscribe also differs widely. Most efforts focus on moving consumers from free trials to the full-meal deal. However, an increasing number of content companies are experimenting with flexible pricing and new subscription billing models.

Some publishers offer readers the option to commit to smaller, more frequent payments instead of annual subscriptions. Others remove friction by providing options that allow consumers to manage or upgrade their accounts quickly and easily. While these efforts to convert consumers deeper in the funnel can yield impressive results, they bypass the business benefits publishers can gain from customizing pricing earlier in the consumer journey. 

Publishers are “leaving money on the table by not changing subscription offers and upsells based on acquisition source,” according to Andy Carvell, CEO and partner at Phiture, a mobile growth consultancy that specializes in app engagement and retention. 

Keynoting at CleverTap Quarterly, Carvell advised publishers to use data to optimize pricing and advertising based on acquisition source. At a basic level, this means showing consumers a different offer or pricing depending on whether they come into the app via paid advertising versus if they discover your app organically.

Customize for customer wins 

Different platforms attract different audience segments. But publishers should resist giving away discounts based on generalizations. “The theme here is: Go in high and then drop prices after they [consumers] have resisted a few of your paywalls,” Carvell says. However, rather than assume a GenZer exposed to your content via a TikTok ad can’t afford a subscription, check the data. Metrics such as low time-to-install or time-to-conversion suggest high intent and signal a strong willingness to pay. 

Consistency across the funnel is critical. Align the pricing on the paywall with the ad campaigns and copy currently running on your acquisition channels and ad networks. That way, Carvell says, “the user feels like the subscription is right for them because you’re speaking the same language as you did in the app.” 

Cancellations and connections

Customizing top-of-the-funnel communications can attract and convert subscribers. But what do you do when your audience makes the conscious decision to cancel?

This is the cue for most publishers to show apologetic pop-ups or send emotional emails asking for a second chance. Granted, a sincere message to remind consumers their subscription matters or helps support quality journalism can be convincing. But if publishers are delivering this nudge after consumers click the button and prepare to make their exit, it may be a moment too late. 

A better approach is to preempt the decision altogether by playing to FOMO fears and showing consumers upcoming content they don’t want to miss. It’s the strategy Sasha Kurdiuk, head of customer experience at Shahid MBC, has followed. Shahid is the leading Arabic language video-on-demand service globally known for the largest library of Arabic movies, shows and dramas – including two Emmy–nominated series.

In a podcast interview, Kurdiuk told me how he uses personalized perks and content shorts to stop churn before it starts. “Rather than pop-up and ask you not to go, which is a message that could enrage you if you are determined to cancel, we asked ourselves what might happen if we showed you a bit of the top content you haven’t watched.” 

Drawing from behavioral and analytics around what subscribers view and enjoy, Kurdiuk’s team personalizes messaging to influence them at this critical moment. “Contextually relevant communications convince many subscribers to think twice and then press resubscribe,” Kurdiuk says. It’s also the well-timed and highly customized nudge that has allowed Shahid to “reduce voluntary cancellations by more than 20%.” 

Given the pressure on content companies to compete for advertising, it is only good news that the subscription economy is booming. However, as an increasing number of products, entertainment, and information services compete for subscription revenue, companies must work hard to stay competitive. They will need to stretch their models and personalize offers and experiences to drive connection and conversion across the subscriber lifecycle. 

Industry-Research

Courting media consumers with a customized approach

The pandemic triggered further consumer reliance on media for entertainment, information, and social connections. As consumers reenter life outside the home, publishers are assessing how they will maintain strong post-Covid consumer relationships. Deloitte’s new report, Digital Media Trends, 15th Edition delves into this issue. The analysis identifies consumer attitudes and behaviors and how to best serve their needs to form a strong relationship. The research is based on the survey results of 2,009 US consumers in February 2021.

Driving subscriptions

Consumers have multiple free and paid entertainment choices competing for their attention. Content and cost are key factors driving paid video subscriptions. Content, no cost, and ease of access are drivers for ad-supported video services. Consumers often assess subscription costs based upon their willingness to offset price by viewing advertising.

Nearly the same number of consumers prefer to pay for content as those that prefer ad-supported services. Interestingly, 40% of respondents prefer to pay $12 a month for a service with no ads versus 39% preferring a free service with 12 minutes of ads per hour. Understanding how ad-related preferences and expectations around personalization and privacy impact consumer choice is crucial to driving subscriptions, paid or not.  

Consumer frustration and churn

The flip side of acquiring subscribers is retaining them. Listening to consumer frustrations is an important action step for all businesses.

Deloitte’s identifies audience dissatisfaction when:

  • Content they want to view is no longer available on the service: 66%.
  • They must subscribe to multiple services to access the content they want: 53%.
  • They find it difficult to access content across so many services: 52%.
  • A service fails to provide them with good recommendations: 49%.

Anchoring consumers in a customized user experiences with an ease of navigation builds audience engagement and prevents churn. The report states the churn rate for streaming video services remained constant at approximately 37% measuring from October 2020 to February 2021.

Impact of data economy

Consumers are wary of data collection. They want more oversight in the data economy and question the value they get from its collection. In fact, eight in 10 respondents (82%) believe they should be able to view and delete the data that companies collect about them. Further, 78% said providers are responsible for protecting consumers’ personal data. Looking to put controls in place, 77% say the government must do more to regulate data collection and its usage. Importantly, publishers should assess ad-related preferences and consumer expectations around personalization and privacy to inform their internal policies.

As media companies navigate their subscription practices, they must continue to keep consumer preferences in focus. An emphasis on data and analytics is key to create a personalized entertainment service for consumers. Further, a customized user experiences makes it easier for subscribers to find content they want to view. Improving the interface with personalization and ease of use strengthens the audience connection. As the competition for audience grows tighter, it’s necessary to take actions that support developing and maintain a strong relationship with the audience. 

Industry-Research

Identifying optimal subscription management practices

In the wake of the pandemic-era rise in subscriptions, news publishers are intently focused on retaining subscribers. Reducing churn and increasing retention are fundamental business practices of any subscription business. However, with a vast variety of tactics to engage users, figuring out which ones serve your business best is the million dollar question. The American Press Institute (API) addresses this question in their survey of 526 news publishers to find out what practices are used to maintain customer loyalty. Important to note, the term “subscribers” here encompasses subscribers, members, and donors.  

Jeff Sonderman and Gwen Vargo’s analysis of the survey data offers insight into the strategies utilized. The authors identify the top 10 retention tactics and note 12 of the least employed strategies practiced.

Most utilized retention strategies

Four of the top 10 most retention practices use email and social platforms to introduce content and offer reminders of subscription benefits.

  • Encourage new subscribers to sign up for their email newsletters (90%).
  • Send welcome emails that highlight features of their subscription(s) including apps, e-editions, rewards programs, etc. and respond to individual concerns and complaints on social media platforms such as Facebook, Twitter, etc. (78%, each).
  • Email subscribers to remind them about the overall benefits of their subscription (69%).

Analytics also play an important role in subscriber retention. Four core practices analyze subscriber usage on a macro and a micro level.

  • Use analytics to track what subscribers are reading (89%).
  • Track data about which digital content online users engage with (86%).
  • Identify reasons for a cancellation or lapse (74%).
  • Send surveys via email (68%).

Further, studying subscriber interests and behaviors is important to increase user intelligence. However, most publishers rate their proficiency in doing so as moderate.

The last two of the top strategies use special offerings (72%) and campaigns (69%) to attract and retain customers. Additional backend analysis by demographics, psychographics and content usage also helps optimize pricing by target group.

Least utilized retention tactics

Sonderman and Vargo identify 12 retention practices used by one-third or less of publishers. Importantly, the authors suggest that publishers should review their current practices to see if there are new tactics they can deploy in order to retain subscribers.

Maintaining updated credit card information to eliminate potential friction is important. Approximately 33% of publishers communicate one-to-one on site with subscribers to update credit card information. Many publishers use a third-party resource to automate this process, eliminating the need for personal outreach.

Further, the ability for publishers to identify subscribers at risk of cancellation allows publishers to get ahead of potential churn. Thirty-one percent of news publishers report that they target subscribers with low engagement before their renewal date. They try to re-engage these subscribers with content of interest. Similar, 28% of news publishers report that they segment their subscribers based on a risk of cancellation. Profiling subscribers at risk in advance, can provide the time to re-engage them and reduce churn.

Additional issues and opportunities

Additional retention practices, used by quarter or less of publishers, include targeted content and more personalized approaches to keep subscribers engaged.

  • Ask visitors to answer a survey while they are on website or app (25%).
  • Send individual subscribers personalized messages about the content and services they have used (23%).
  • Personalize content for subscribers to see on website or app based on what they previously consumed (20%).

The authors note that one of the biggest technological needs for publishers is to integrate CRM software that links all subscribers’ identities to their digital engagement. Unfortunately, many news publishers, especially smaller ones, do not have the software, employee bandwidth or budget to execute these analyzes.

Some publishers try to create face-to-face (and virtual) connections to subscribers. Close to one-third of news publishers (31%) offer meetups for subscribers and reporters. While meetups help establish a community connection between reports and readers, they are not easy to executive.

In addition, there are a few practices that are usually managed outside of the publisher. Again, bandwidth and budget are often reasons for publishers to underutilize.

  • Offer a reward program and discounts on local products and services (27%, each).
  • Send them free gifts (25%).
  • Bundle other news and entertainment services for free or discounted prices through partnerships (17%).

With subscription revenues now core to news publishers’ business models, retaining subscribers is crucial to their financial success. Identifying retention practices and investing in business analytics is an important to reduce churn and increase retention. Finding the most effective way to introduce users to the benefits and value of their subscription as well as content of interest pays off.  

Perspectives

Tear down the funnel and build a pyramid: The shift from purchase funnels to mobile customer journeys

In a market where the cost to acquire an app user is rising through the roof, and the increase in app abandonment (the number of users who quit an app after one use) is alarming, it’s clear that the traditional focus on top-funnel metrics is fatally flawed. Our focus on a linear journey is completely out of line with user lifecycles. Mobile had forever altered the consumer path to purchase and funnel models no longer fit.

Architecting campaigns and strategies that prize acquisition over retention doesn’t just force marketers to burn considerable cash. It blinds them to the key engagement activities and metrics that are the sure-fire indicators of highly valuable and deeply loyal consumers who are primed to engage with content—and more.

It doesn’t matter whether the goal is to drive registrations, encourage consumers to volunteer information such as personal preferences that will allow you to deepen the customer relationship, or sell subscriptions: Ensuring a predictable and sustainable cash flow quality trumps quantity every time. In the App Economy, success isn’t a numbers game. It requires strategies that get the right users into your app—and keep them coming back.

A strategy that harnesses AI and machine learning to connect with customers in a relevant way based on an analysis of the millions of data points and signals that communicate their context via mobile and in-app can be a bonus. But even the best mix of analytics and analysis will miss the mark if marketers segment their audience by static demographics, not dynamic actions.

Embracing the engagement pyramid

First and foremost, marketers need a firm grasp of the hard data around the “who” of their customer base. However, they must also command the soft skills around the “why.” They need to understand what motivates their audience to take action in the first place. Effective app marketing engages with users throughout the lifecycle based on these two inputs.

But an ongoing data investigation by Phiture, a leading mobile growth consultancy based in Berlin, and CleverTap, a full-stack customer retention platform, ads a third dimension. They’ve built a framework to measure and analyze the user engagement we observe.

Published for the first time last month, Phiture’s framework offers marketers a more nuanced view of user engagement and a roadmap to increase retention. The authors of this must-read resource (Andy Carvell, Kevin Bravo ,and Tessa Miskell) present the Engagement Pyramid, a model that breaks engagement down into three layers:

  • Acknowledgment, where users show an appreciation for the app, but not high intent. (For example, opening the app or reading a push notification.)
  • Interest, where users deliberately interact with the app and demonstrate a willingness to do more. (For example, tapping on items in a feed, consuming content and initiating search queries.)
  • Conversion, where users follow through and complete a core action that is aligned with the purpose and value proposition offered by the app. (For example, booking a trip with a travel app or managing money with a finance app.)

Maslow and measurement

The framework gets high marks on several counts. It bravely questions the practice of monitoring DAU (Daily Active Users) or MAU (Monthly Active Users), or employing performance metrics that simplify engagement into binary terms (counting users as engaged or not). It also gives the concept of a purchase funnel a rehaul, literally turning it on its head in a hat tip to Maslow’s hierarchy of needs.

Maslow’s theory in psychology divides our human needs into five levels, placing the most basic needs at the bottom of the pyramid and elevating our most complex needs to the top of the pyramid, the Engagement Pyramid inspires marketers to aim high—and be highly focused on outcomes.

Above all, the authors open our eyes to the model and the mindset marketers must embrace to increase meaningful engagement and stop churn before it starts. “It’s important to understand that engagement is a continuum, ranging from low-value to high-value actions,” they write on their latest blog. “A user may traverse this spectrum rapidly within the space of a few sessions, or remain stubbornly stuck in a low-engaged state for days, months, or years, without necessarily abandoning the app.”

Tracking events and asking questions

Applying the framework doesn’t just equip marketers to analyze key user actions and assign them to the proper layer in the Engagement Pyramid. It enables marketers to assess the value of user engagement and the potential impact on the business. “Observing how layers grow or shrink over time gives an indication of how well the app is performing,” the authors write.

Are more users performing actions that demonstrate Acknowledgement at the bottom of the pyramid than are striving to complete events associated with Conversion at the top? Review your app onboarding strategy and double-check that your user acquisition campaigns are designed to attract the right users from the get-go.

Is there a high correlation between the number of users who belong to the Acknowledgement layer and the number of users who progress to Conversion? Read that as a signal that you can scale campaigns, increase spend and aim high—because you can.

Courtesy of Phiture

Piecing together the retention puzzle

While the authors don’t specifically address it in their framework, insights into how users engage and how much it’s worth also empower marketers to enhance the user experience and—ultimately—increase customer lifetime value.

This was the focus during Cutting-Edge Retention Strategies, a recent webinar and fireside chat where I was a guest along with Jessica Osorio, Lead, Mobile Growth at Mozilla. While she doesn’t formally apply the AIC framework (our discussion preceded its release by roughly two months), her analysis of engagement metrics and their impact is just as rigorous.

“All apps face a really steep drop in retention on Day 1, just 24 hours after the app install,” she told me. To plug this “leaky bucket” and deepen user engagement with the app, Mozilla has improved the onboarding experience, adding what it calls the “welcome journey.” It’s during this stage that Mozilla delivers a series of automated push notifications and in-app messages to “walk users through all the things to do with the app that we know will drive the most value for them.”

Osorio is also realistic about the “natural usage frequency” and the importance of setting reachable targets for how (and how far) her company can drive app engagement. “We want users to come back and enjoy the app, but it’s not a target we miss if the users don’t come back on a daily basis,” she said. “For us, it’s not DAU or WAU. It’s about building products that meet users’ needs and journeys that surface that value from the start.”

Audiences evolve, and marketers must keep the pace with app messaging, ad creative and the value proposition tailored to match with the needs of users as they move through the app journey. Whether companies embrace new frameworks to assess engagement or architect customer journeys to boost loyalty, the increased interest in retention marketing has profound implications. It also demands marketers master the capabilities to reach and segment users based on what users do (and don’t do) in-app with messaging that motivates them throughout the customer lifecycle and the life span of the app.

Perspectives

2019 will be the year of app retention. Here’s how machine learning can help make marketing human again.

Ten years into the iPhone and global App Economy and all the rules have changed. For nearly a decade, app makers focused on app downloads and installs, the lower-funnel activity that powered staggering growth in the early days of the app store. Now, this focus has shifted due to a dawning realization that sustainable success is the result of a strategy that drives engagement and activity deeper in the funnel. The focus has rightly shifted to app retention.

A defining moment was the observation by mobile measurement company Adjust, which found that on average users delete apps 5.8 days after they used them last.  Significantly, Entertainment apps have the shortest lifespan, with users deleting this app category less than one day following their last session.

Graphic based upon an Adjust analysis of 8 billion app installs from January through July 2018.

What’s worse, the average app loses its entire user base within a few months. Media apps may offer fresh content to nurture engagement, but even that appeal can grow stale. A recent report that provides an overview of Media and Entertainment engagement and retention metrics reveals 43% abandon the app a week after they install it and 67% of users churn within two weeks.

Indeed, 2018 will go on record as the year our fascination with the hockey-stick growth of the global App Economy as measured in app downloads (pegged to grow globally from 205 billion in 2018 to 258 billion in 2022) was replaced by the sober realization that the average retention rate for mobile apps plummets after just the first three days.

It follows that 2019 will be the year we see an avalanche of interest and activity aimed at finding new and better ways to encourage app engagement, app retention, and drive lasting loyalty.

Aligning marketing with app activity

In the online marketplace, a single-digit increase in retention can mean a double- or even triple-digit increase in profits. When it comes to marketing and monetizing apps, the advantages of offering the appropriate campaign at the appropriate moment can equally significant.

It’s a given that effective marketing is personal and relevant, aligned with who your consumer is and understanding of their individual needs. However, apps introduce a new dynamic: activity. To deliver marketing and messaging users will accept and appreciate, marketers must also segment audiences according to what they have or haven’t done in-app.

If you want users to keep coming back to your app, you need to understand user profiles (age, gender, geography). But you also need to grasp user behaviors and the patterns that point to churn. (Have they launched the app in the last 3-5 days? Where did they drop out before committing to a subscription? What did they choose as news preferences and how often would they prefer updates?)

Unfortunately, the work required to segment audiences and – more importantly – market to each user segment differently has moved beyond human capacity. It requires marketers to sift through billions of data points (trillions if you count the input from the smartphone sensors).

In a recent interview Anand Jain, Co-Founder at CleverTap, a mobile marketing platform company sharply focused on the science of app engagement, told me marketers typically tend to use “less than 5% of the data available to them to make decisions.” However, it’s not just because marketers are overwhelmed by the sheer volume of data. Marketers, he said, also increasingly struggle with bias. “Preconceived notions about what the data is ‘telling’ them about how users should – and must  – act in their app or react to marketing messaging is blinding marketers to the smart ways they could be prioritizing and personalizing campaigns to match every user’s unique engagement preferences.”

Removing bias to deepen engagement

That’s where machine learning can play a major role. It has the capacity to weed out human bias and help marketers open the aperture of how they view and engage their audiences.

Right now, marketers tend to operate according to rules. If users haven’t done x in the app for a certain period of time, reach out with y message via the channel that makes the most sense (push, in-app messaging, text, email, social). But without a deep understanding of who the audience is and what will bring them back (insights that emerge when marketers wield all the data, not just 5% of it), the outcome—even if it is personalized to address the user by first name—has many similarities to one-size-fits-all marketing.

Good marketers are clearly customer focused and likely have a strong intuitive sense of their customers’ behaviors. However, they will undoubtedly achieve greater success by understanding the vast amount of customer information that digital makes possible. This is the first step to architect strategies that will allow them to achieve customer intimacy at scale.

Engagement is emerging as “the” performance metric that matters across the every stage of the marketing funnel and every step of the user journey. But keeping users active and interested remains the biggest puzzle marketers have yet to crack. That’s where machine learning shines. It gives marketers a much greater ability to tailor engagement approaches to specific audiences, even specific customers, based on the probability that they are very likely, likely and even less likely to churn. The opportunity and ever-present challenge of mobile is its intimacy. To retain customers, every offer, incentive, “nudge” in the desired direction must strike a personal note.

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