Louis Deering, Vice President of Digital Subscriptions of MediaNews Group (San José Mercury News, Boston Herald, The Denver Post), and Emilie Harkin, Vice President of Consumption Strategy and Growth, from The Atlantic share their experiences on Lifetime Value, retention strategy and the “pyramid model” during the Digital Media Latam conference organised by WAN-IFRA
As the media industry’s future focuses more on revenue per reader as an economic model, subscriber retention becomes critical. According to a recent Harvard Business Review study, acquiring a new customer is five to 25 times more expensive than retaining an existing one. It is key to keep customers interested and engaged, develop a more complete view of this relationship, and stop the churn before it occurs.
Louis Deering has emphasised during his speech that, although retention is extremely important, it cannot be considered as an objective in itself, because the objective “must be to develop a sustainable income model to support journalism that makes our communities are vibrant”.
Retention rates or LTV (lifetime value), Deering explains, “are not always aligned with revenue growth. And the objective really is that: that the income increases”.
For example, a strategy focused on avoiding an increase in the cancellation rate at all costs “can discourage price increases, and sometimes you have to raise prices. We have raised prices, and it has not had a negative impact. If prices are raised correctly, total income increases. It is true that it is necessary to increase moderately, but by doing so, the business is growing steadily”.
Deering also indicates that another KPI that many focus on is medium-term retention and betting on annual offers. “The retention rate is indeed higher when the offers are annual, but when we look at the accumulated income, we see that the average income per subscriber is higher if, for example, discounts of two dollars are used for six months. The total income is much higher after 18 months”.
Regarding the Lifetime Value, Deering has also insisted that, although there are media very focused on improving the average LTV, in his opinion this involves risks, “and leads to taking the wrong measures because the individual LTV is looked at more than the global LTV”.
“I’m not saying that retention is not taken into account, but rather make no mistake and lose sight of the big picture.”
In your case, there are four strategic pillars in the area of subscriptions:
Product & UX
Have a good user experience in the login area and payment wall, with the necessary FAQs.
Good ad design experience, and go for some ad-free subscriptions.
That subscribers have the facility to quickly locate the content of their choice, such as authors or topics, etc.
Billing and user life cycle.
“We spend a lot of time on billing, optimising it, for example, in terms of deadlines (monthly vs others, etc.). We also invest a lot in technology related to billing, which allows us to know when the card is going to expire, and we can even contact the subscriber in real-time when he is browsing the web and remind him that he has to renew it, “he says.
Content and engagement
In this area, “we have concentrated on simple but powerful things, such as auto opt-in in newsletters and cross-selling. Also in the personalisation of the newsletter. Readers choose what they want to receive, how often. We also work with the newsroom to see how the news is doing in terms of subscriptions, etc.”
One of the strategies in the price field has been to create a premium subscription model. “We have been using a premium model for a year, and the difference with the basic payment model is that the premium is free of advertising, with a better browsing experience. . It is a tiny price increase, and the reader improves their experience. 10% of our subscribers are already in premium, and we want to reach 20% in the coming year”.
Apart from that, MediaNews Group does a lot of experimentation on prices based on user experience, leading to a better understanding of who is willing to accept a higher price based on their engagement.
The Atlantic and the pyramid model
For her part, Emilie Harkin, who has defined herself as a lifelong lover of magazines since she had a copy of Highlihts for Children magazine in her hands, explained that the subscription model is based on pyramid.
“The industry,” explains Harkin, “has worked on several models, the funnel, the loops, the circular model, or the ladder model, but the one that catches my attention is that of a pyramid. In our case, we work to have a rock-solid foundation. We have not yet managed to build our pyramid, but we are working on it”.
How can you build a solid and stable foundation? According to Harkin, “there is a secret, which is not so secret: to have an excellent payment process and excellent engagement. These are two basic pillars. When we talk about payment processing, the payment must be as easy as possible so that the retention is good.”
For Harkin, it is also crucial to view a subscriber’s life process as a timeline. The milestones of this timeline would be
Day zero. Pre-subscription. In this phase, you have to build a reading habit in your readers, with newsletters, automated emails, experiences in social networks, apps, etc.
Day one. Purchase. Start a series of emails with the subscriber to stay in touch.
Day 31. Regular contact with automated and moment-based marketing.
Day 305: Pre-renewal. The subscriber pre-renewal process begins, with the pre-charge
Day 365. Renewal. Transparent experience, respecting cancellation requests
Day 395. Work with each subscriber. Claims, credit card retries, recoveries, etc.
In the case of The Atlantic, they only offer annual subscriptions. “From a strategic point of view, this time is important because it allows us to show the value of the subscription to The Atlantic. If it is an annual subscription, when it comes time to renew, they will not hesitate because they have already seen what it is and what is offered to them. In addition, monthly subscriptions require monthly charges, as well as other details that should be taken into account”.
According to Harkin, the length between subscription and renewal is critical to getting people engaged with the journalistic product being offered. “Discounts also play a role, but when we have an active customer, renewal is safe, and also the longer they stay, the more connection there is, and they become our evangelizers,” he says.
It is essential to take into account four points to build the pyramid of subscriptions:
Bet on the main asset, journalism
Hear what customers say and do
Invest in technology solutions, particularly in the payment process
Have a multi-faceted strategy, a multi-year approach.
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