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.
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.
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.
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.
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
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.
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
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.
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.
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.
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.