π Growth Gems #30 - Gems from "How to Win with Subscriptions on Mobile"
Hi there,
Today's gems areΒ mined from a discussion between Eric Seufert (Analyst and Strategy Consultant at Heracles) and Thomas PetitΒ (Growth Consultant) in the MobileDevMemo podcast where they talk about all things mobile subscriptions: product strategy, how to price test and the future of the subscription model.
π #1
Even with mobile web clicks not necessarily cheaper and more drop-offs on the web funnel, ads leading to a web onboarding flow can still be worth it: it can allow you to broaden the audience beyond the reach of app install campaigns (some networks don't target LAT people, some people don't click on app install ads and end up seeing less of them).
08:40
π #2
Once people download an app you can get a great completion rate even with a longer in-app onboarding, but this might be more challenging to do on the web.
09:09
π #3
With a web onboarding you only pay 3% to Stripe instead of 30% to the app store but the added friction might bring your conversion rate down 27%, making things even.
09:34
π #4
The real benefit of a web onboarding flow is that people become your direct customers. It is a massive benefit to have that direct relationship, as it brings flexibility when it comes to cancellations, refunds, renewals, etc.
10:09
π #5
Having a direct relationship with the customer allows you to do things like partial refunds: instead of cancelling a yearly subscription directly for the customer, you can offer them to refund half of the subscription while keeping their access on. It's a win-win.
10:52
π #6
With the IDFA deprecation coming up, a lot of people are trying to move to web. But it's a different mindset and very few people have the skills to understand the app store ecosystem AND the web ecosystem at the same time.
17:05
π #7
You are losing a lot of users at that App Store page step. You can't control it, and you think you could do better with landing pages. But still the bounce rate can be higher on the web!
18:08
π #8
A lot of people try to increase just one metric and think it could trickle down all the way. But early drop-offs (like on the App Store page) can filter out low-intent people that would never convert anyway.
19:16 by Thomas
π #9
The growth hacking mindset when it comes to funnels is not the right one. You can endlessly A/B test an onboarding flow yet still have your conversion rate go down, or fail to increase revenue.
20:22 by Eric
π #10
You can not just focus on A/B testing specific parts of the funnel because these local optimizations often disregard the impact on down-funnel metrics. Another critical aspect is the traffic composition.
21:10 by Eric
π #11
Even if you consider both deeper-funnel events and traffic composition, be careful about over optimizing for revenue. Short term gains can end up being long term losses and prevent you from really scaling. Example: great payback period but high churn.
27:12 by Thomas
π #12
Put secondary metrics ("tradeoff metrics") to every test you're doing. It's more complex but leads you to think bigger picture. Example: retention when optimizing for revenue, email sales when adding SSO, etc.
28:12 by Thomas
π #13
Eric has seen some games where subscription players (often high LTV ones) end up up paying more on in-app purchases after subscribing. Players get a subscription to be more competitive, but as more players subscribe as well they still need to buy IAPs.
29:30
π #14
A lot of games are not doing subscriptions because they have already found a way to get their players to spend as much as possible.
30:47
π #15
The beauty of the subscription model is the predictability/security but a major flaw is that you have a high floor and a low ceiling.
High floor: high barrier to entry because some people would pay for a daily/weekly pass but not a subscription so you're leaving money on the table.
Low ceiling: nothing more to "extract" from a user that has already paid.
31:27
π #16
You can even sell non digital goods to your subscribed users. This is what the Sweat app is doing with a shop. The community wants branded goods. Another example with 8fit: super expensive subscription where they could deliver fruits & vegetables through Instacart.
33:33
π #17
Think about how you can fight against the "low-ceiling" of your subscriptions. What can you upsell (another product, another subscription, a bundle with another app through a partnership, etc.)? Subscriptions don't have to be a binary thing.
35:34
π #18
What's the probability that the price you set for your subscription is the max they're willing to spend? If you're already willing to buy the subscription, you'd probably be willing to pay more.
37:00
π #19
If you're an app like Calm or Tinder, a +2% gain is huge and small price optimizations end up being worth doing (especially because you have the data to do it).
38:09
π #20
The problem is that people over experiment but don't test radical enough things. The less data you have and the more you haven't been down the road of experimentation, the more radical you should be.
39:23
π #21
If you find 5-10% increments in monetization, it might make a huge difference in the volume you can unlock through UA (passing a bid threshold can unlock acquisition volume). Example: an app that had already iterated on its paywall finds +15-17% increase in revenue that unlocked massive volume.
40:52
π #22
Think about the state of mind in which the user is when he reaches the paywall. Don't think about cosmetic changes (bullet points, buttons, etc.). Example: show 30% discount if they skip the paywall, then if they skip again then email with 50% discount, etc. But you can go even further: daily pass when they hit the paywall the second time, free month if they invite somebody when they hit the paywall for the third time, etc.
41:55
π #23
The best experiments are the ones that work on the onboarding screens before the paywall. Anecdote: an app Thomas works with had tested having a longer loading screen ("preparing your plan"), which increased intent because it hinted at personalization (even though there was none).
42:57
π #24
If you make the skip button more obvious on your paywall (instead of making it discreet) you churn people less, you get less dissatisfied people and you get an opportunity to monetize them another way.
44:50
π #25
Instead of trying to optimize the subscription bundle at the highest price possible right out of the gate:
Prove out that initial payers are ready to pay for a subscription
Collect more data
Upsell other things they could find value in and purchase (digital goods, different kinds of content, etc.)
47:35
π #26
Always raise your price: the highest price always wins. Only a small percentage of people are willing to pay for in-app subscription, and those people are not really price sensitive. Example: speechify at $150, tests Thomas did with first $50 vs. $100, etc.
52:06
π #27
Price elasticity is typically very low, but don't push the fact that conversion doesn't change that much when you increase prices. It might be best to leave some money on the table (more users who pay less) if it means that you get more data, your community grows, etc.
54:02
π #28
There are beneficial effects of having a bigger userbase: word of mouth, viral effect, etc. but customer churn also becomes less meaningful.
54:40
π #29
In crowded spaces, people are not going to compare the apps' content that much (short term). But the power of brand is what comes in when you reach a degree of maturity, with often 1 or 2 players. Example: Peloton, Headspace, Calm. True in language learning too.
01:01:50
Stay savvy!
βοΈ Sylvain