Hopefully you noticed the fact that I failed, for only the second time in a year, to publish the newsletter last week - I was under two critical deadlines and didn’t want to produce a half-hearted newsletter. Last week I would have covered the Netflix financial results - this seems like old news now and there is a lot of great coverage out there. With no irony, the best coverage I came across was from The Economist, which if you have a subscription you can read here.
First impressions matter
If effective onboarding of customers is critical to customer retention, why does it so often seem an afterthought in subscription services. As a user I know that I my expectations from any digital experience (and most subscriptions start there) is informed by all the other digital services I engage with. This article identifies the key elements in onboarding users.
Teach users - your product / service and its features might seem obvious to you - but don’t take the risk of frustrating users. Explain how they can interact with the product. Always give them the opportunity to skip this as well
Keep it simple - be clear, use simple language, remove any confusion or doubts
Be creative - keeping things simple doesn't mean you can’t be creative. Effective use of images / visual cues can increase engagement
The article is written very much from a design perspective - what could be added is pay attention to what customers are doing through the onboarding process and their engagement with your product directly after this - this provides instant feedback on how well you’re onboarding.
How to succeed with subscriptions
Lidjia Polutnik, Professor of Economics at Babson, intrigued by the rapid growth in businesses adopting a subscription model teamed up with Shikha Jain, a partner at consulting firm Simon Kucher & partners to research best practices of best in class subscription companies. Key points that emerged:
Subscriptions is much more than a payment model, depending on the nature of your product it will involve significant operational changes and investment
Continuing to deliver value is key to retaining customers. Companies need to be responsive to customer needs
Ongoing innovation is required to continue to deliver value and engage customers
Customer engagement has to be enabled across many channels
Understand the customer and potential customers - this comes from looking at every interaction the customer has with your product
You can find the paper here.
Price to reflect behaviour
In past newsletters I’ve recommended articles that have included elements of behavioural economics. This piece distils behavioural economics in pricing to 4 key principles - which are a great reminder:
Design for the perception of value - with most products there is no true value, it’s value or otherwise is down to customer perception. Start with the question: “How can I best convey the product’s value?”.
Know what is relative - it is vital to understand the existing “anchors” in your market - what are the alternatives and how are they priced? For me the anchor price in streaming has become Netflix - all other offers are compared to this.
Make sure your pricing feels fair - this seems like a strange concept but the negative impact of people thinking your pricing is unfair can be catastrophic. This can often make regional pricing or special discounts for customer groups difficult.
Start high - it is easy to get caught in the trap of initially pricing your product cheaply to gain traction, this short term tactic can damage your prospects of increasing the price, however good engagement, in the future.
The article is a quick read and they provide examples from research / business to back up each of the principles.
The Guardian published it’s full year results (to the end of March 2021) recently. The mix of approaches to getting readers to pay (support) for news is working. You would think that it would be impossible to have a digital subscription, a recurring contribution and one-off contributions and advertising alongside each other. But The Guardian seems to be able to reach different types of user with each way of paying. Some highlights:
Digital subscriptions reached 401,000 an increase of 46% on the previous year - some of this can be attributed to the pandemic and the news cycle
560,000 people made recurring contributions up 24% year on year
In the financial year 585,000 single contributions were made globally - an 83% increase on the previous year
50% of digital revenues are from outside the UK
Is The Guardian the exception that proves the paywall rule? Or has it found another way to generate revenue from its digital audience?
Leveraging word of mouth
At a different scale to The Guardian, Tortoise the slow news site continues to grow subscriptions. According to this piece from Journalism.co.uk 50% of subscribers are generated by referrals. I’m not sure how active Tortoise is in encouraging subscribers to make referrals, but it’s clearly working. Referrals are powerful - it’s strange that they’re often neglected by established companies. A creative referral programme was at the centre of the newsletter Morning Brew’s success - 30% of their total subscribers were gained through referrals.