💎 Growth Gems #114 - Retention and Monetization
Fellow growth practitioners!
I’ve dug up more gems 💎 during my last shift in the growth mine. This week, I’m bringing you back insights on:
Mined from the depths, I hope these hard-dug insights from Ekaterina Gamsriegler and Paul Ganev bring you value.
🥇 TOP GEM OF THE WEEK
📢 PUBLIC SERVICE ANNOUNCEMENT
Miners start families, too.
I’m no exception, and yesterday was the day…👶😍
If you’re not familiar with how hard and time-consuming mining gems is, I can tell you this: you can’t bring a newborn to the mine, at least in the first weeks.
More than ever, Growth Gems is here to stay.
However, I don’t anticipate being able to share new editions before June, so I will just send a few bonus gems from the Vault in the meantime.
(you should also expect little to no LinkedIn activity)
Retention: analytics, external triggers
Gems from Ekaterina Gamsriegler (Head of Marketing, Product Growth at Mimo) in How to master retention triggers on the Mobile User Acquisition Show
Each time Ekaterina has made an appearance, I’ve found something valuable.
You can tell she has a great understanding of the entire user journey and growth levers.
It helps that she’s in the education vertical with a subscription app, but many of the tips below can be applied beyond this.
If you like what she’s sharing here, hurry up and sign up for her Maven course (deadline is tonight ⌛).
💎 Look at your product usage and metrics to understand the typical usage patterns and average usage frequency. Understand usage dips and spikes to know when to double down on external triggers (e.g., email, push notifications, retargeting ads, etc.).
Example: at Mimo, there are spikes during the weekdays and a slight drop over the weekend vs. a closet organizer app where product usage increases on the weekend.
(03:00)
Be careful of averages, however. There are some dimensions where you need to understand how things like usage are different.
Related: understand your tourists vs. locals👇
💎 Sometimes, if you have the resources and curiosity, it makes sense to iterate on a losing variant rather than abandoning it altogether. It allows you to uncover unexpected variables that may have caused the failure and get a deeper understanding.
(04:48)
Ekaterina mentioned a test on personalizing notifications: the test group notifications had elements like username, current streak, etc. After retesting, they realized it had initially lost because of the increased length, not because of personalization, and they could turn personalization into a win.
💎 Ideally, allow users to choose their preferred notification reminder time. If user customization is not feasible, send reminders 24 hours after the user's last engagement. Personalize and keep messages short, with a clear call to action for optimal effectiveness.
(10:08)
The most effective notifications are when you align communications with users’ motivations. She mentioned the ideal use case of a trading app, where users receive notifications when stocks increase or decrease.
💎 Create different retargeting campaigns for different segments (no trial started, no trial to paid conversion, etc.) with separate sets of creatives and discounts (tailored to the user journey stage). To avoid cannibalization, find the natural drop-off “times” in conversion events so you can first try engaging each segment via CRM and only launch retargeting campaigns after that period (retargeting this way can only work for ATT opt-ins).
(13:12)
💎 Different traffic sources result in varying retention rates. Since exact numbers are impossible to get, rely on trends and changes over time: what happens to retention when you scale up/down some channels, get a featuring, etc.
Look at D1/3/7 retention and the percentage of activated users with this lens to gather channel-specific insights.
(16:08)
Some differences Ekaterina spotted while doing this: best retention rates for ASA and Google organic search, good retention rates for influencer partnerships, and even TikTok. She’s also noticed that traffic from referral programs seems to have a significantly 30-40% lower retention rate than organic.
Monetization: TAM/SAM/SOM, freemium model, hybrid monetization
Gems from Paul Ganev (VP of Strategy, Analytics, and Marketing at Surfline) in How to Succeed with Freemium and Hybrid Monetization on the Sub Club podcast
Subscription apps AND surf.
How could I not love this episode ?!
Surfline started with a hotline 20 years ago and targets a niche (of passionates), so, as usual, not everything will apply. But there were some very interesting insights on freemium models.
💎 It’s an often-made mistake to focus on the Total Addressable Market (TAM) instead of the Serviceable Addressable Market (SAM). You need to target your product and commercial strategy to the specific segment you can reach and cater to effectively AND that can commit.
(08:27)
They discussed that it’s all about timing!
Your SAM should evolve to take more of your TAM because:
Segments of your market can become more open to using your product
Your product can evolve as you go after adjacent users or other geos
💎 You can start with the simplest market models and get reasonable answers. Don’t just revisit the same model; try to start the first principles again and rebuild your model.
(17:14)
As Jacob mentioned: “If your model is so complex that you can’t rebuild it in a setting, then your model might be too complex”
And, of course, there are always users that will never pay no matter what.
💎 When contemplating a freemium vs. premium model, think about:
Users’ commitment level
How strong your value proposition is currently for users, and how much stronger it will get over time
The existing (free) alternatives
A freemium model allows you to convert people you have kept on your platform.
(21:10)
Implementing a freemium model aims to reduce the Customer Acquisition Cost (CAC) over time.
For Surfline, it wasn’t the original plan: they were free to begin with and then added a paid offering. However, the free aspect turned out to be very important because new surfers need to understand the importance of surf forecasts, and starting as free helps Surfline educate users about the product.
This doesn’t necessarily mean you should start with a freemium model: the path that Opal chose is also very interesting (start premium, open to freemium later)👇
💎 The magic rule of freemium models is to balance increasing conversion with increasing free user retention. If the size of your free audience declines over time, the pool of users you can convert to your paid product decreases.
Finding the line between what is free vs. paid to achieve this requires a lot of iteration.
(27:40)
Paul mentioned that if you have the capital, it’s better to emphasize free user retention rather than conversion because it gives you time to improve your product.
The hope is that your baseline conversion gets better over time without the size of your free user retention going down.
💎 Two freemium models you can consider and test:
Give unlimited access to a limited amount of features forever (e.g., LingoKids)
Give time-limited access to all features (e.g., The NY Times)
Not limiting engagement (model #1) increases your opportunities to interact with free users and eventually convert them.
(35:07)
💎 Partner with brands to find offerings that make sense for free users but also for subscribers.
Example: Surfline subscriber-only discount for a new surf park opening in their area.
(39:46)
Along with higher subscription tiers, this is a great idea to break the ceiling the subscription model naturally brings.
Surfline has been pushing this much more lately. As a subscriber myself, I actually check out the perks for good deals and feel rewarded for my loyalty. They even added urgency as the latest perks are available only until a specific deadline.
Before I leave, here is a quote from App Growth Summit, preaching the (over)use of emails in marketing:
“Overuse it [ emails], it’s not gonna cause anything bad” - Thomas Hopkins (Fractional Head of Growth)
See you next time.
Stay curious!
⛏️ Sylvain
🔗 Sources:
Congrats for your baby 🎉