LOW PROPENSITY PROMO OFFER CASE STUDY
Every publisher faces a common challenge: how to convert audiences with low propensity to subscribe.
Our research shows that two thirds of conversions come from the most engaged two percent of audience (see Fanatics in the chart below). Through our work implementing intelligent paywalls, we have also found that first-time users are often misclassified (many are in fact repeat users but tracking tools are limited by cookie technology). True first-time users bounce after one page view and are very difficult to convert outright. Thus, a restrictive paywall works well for these first-time users since it maximizes conversion volume with limited page view risk.
An elusive group is the low/moderate repeat users (see Stable Users in the chart below). This group typically accounts for 11% of a publisher’s audience but accounts for the lowest percentage of conversions (only 7%).
Recent research from the Mather-led GNI Subscriptions Lab also found propensity to subscribe diminishes after users hit the paywall too many times.
To improve conversion volumes, Mather supported a test using the Listener™ Data Platform to find if price incentives would improve performance from these difficult-to-convert audiences. The
Mather team isolated two distinct groups within the Listener™ data platform (including known and anonymous users) measured as having a low propensity to subscribe.
- Stable Users
- Users who encountered the paywall 7 times or more but have not subscribed.
A 50/50 A/B split was applied to each group with the control group receiving the business-as-usual offer and the test group receiving a promo offer 99 cents for the first six months. Not surprisingly, the test group with the steep discount showed a 0.38 percentage point lift in the conversion rate (.52% versus .14%). This bump in conversion rate was found to be even higher than a typical conversion rate for Fanatics of .36%!
The success was not only volume, but also in revenue. Over a 24-month period the aggregate cumulative revenue impact was found to be over 2X their originally forecasted revenue from these audience segments.
RESULTS FROM THE STUDY
The key here is to use segmentation to target price discounts to audiences where the total revenue impact is greatest and poses the least risk (or worse, cannibalization). For example, for the Fanatics segment, heavy discounts are not needed since these users are much more likely to subscribe. In conclusion, save your best deals for those less likely to subscribe and focus on higher ARPU for those more likely to subscribe.
Many publishers are offering extended promo periods to boost subscription start volumes (the 99 cents offer for 3-6 months is ever more popular). As always, Mather suggests using customer segmentation and applying a data-driven approach to managing a sustainable subscription business. With lifetime value as the north star, volume and rate can be optimized over time to reach sustainability.
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