💎 Growth Gems #121 - Retention and Monetization
Hi, fellow growth practitioner!
I’ve dug up more gems 💎 during my last shift in the growth mine. This week, I’m bringing you back insights on subscriber retention.
Mined from the depths, I hope these hard-dug insights from Thomas Hopkins will be valuable.
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Subscriber retention: engagement (but not only)
Gems from Thomas Hopkins (Fractional CMO, previously at Masterclass) in Retaining Subscribers to Maximize Customer LTV at App Growth Summit LA
I have a major soft spot for EdTech, so seeing a talk from someone who was at Masterclass always catches my attention.
I liked Thomas’ takes on performance marketing and growth before (from his MAU talks - I might share these one day!), so I was curious to learn more about his experience with subscriber retention.
It did not disappoint!
Decreasing subscriber churn is not always about engagement
💎 To improve subscriber retention you must understand your unsubscribe segments:
Involuntary unsubscribes
Voluntary unsubscribes
(06:10)
Patrick Campbell (CSO at Paddle, previously CEO at ProfitWell) believes too many people focus only on the value provided to customers and leave money on the table by forgetting everything else. You can read some precious gems from him in Growth Gems #71.
💎 When looking at involuntary unsubscribes, set up additional payment processing systems in case a card gets declined with a specific system (e.g., Stripe) but could be approved with another one (e.g., PaymentCloud).
(06:10)
💎 For voluntary unsubscribes, you must first understand what is correlated to unsubscribing.
Engagement
Content
# of Devices used
Payment system they paid with
Perception of your product
(06:53)
💎 Do not focus on increasing app engagement for your subscribers until you confirm that higher engagement rates are correlated with higher retention rates. For example, at Masterclass, that wasn’t the case.
(07:50)
💎 The type of content consumption might not be correlated with retention rates. Example: Masterclass subscribers retain at roughly similar rates whether they consume content from a category or another.
(08:16)
It’s a stretch to consider 40% is similar to 50%, but they do seem to have less variance for that dimension than others mentioned later (keep reading).
💎 Voluntary unsubscribes can be correlated with how many different types of devices are used. If that’s the case, make creatives and content that display well on different devices. Be careful, though: it can be correlation and not causation.
(08:43)
The typical trap of interpreting causation…Here, it’s possible that subscribers using multiple devices are the ones that are more engaged to begin with. While it will help to make this multi-device experience even better (or improve the experience on a specific device), it might not be a big growth lever if doing so does not help the retention of other users.
💎 Subscription retention rate can be correlated with payment method (e.g., American Express vs. PayPal vs. Visa). Understanding this data can help you find more people with those payment methods.
(09:10)
A word of caution here as well: while having a “default” payment method can influence the choice “your way”, it’s possible that you’re seeing a better/worse retention rate because of underlying user attributes (age, motivation, etc.), in which case this might not be the best thing to focus on…
If you do focus on this, first check which payment method seems to lead to higher subscriber retention for YOU.
Last week I shared a page of the FunnelFox report on this topic, where they mention Apple Pay is the best. So, I guess the answer is “it depends”.
💎 Brand perception can be strongly related to subscriber retention rates. Here are a few things you can do to understand and increase that:
Run surveys to understand how much content retained subscribers think you have (e.g., some think there is more content than there is, and retain hire)
Let users know that more content is coming (e.g., Netflix’s “Coming soon”)
Give the perception that the app is making the world a better place
Give the perception that the app is having a positive impact on users’ life
(10:45)
Here is an example of survey results…This is kinda fascinating!
How do you increase brand perception besides ramping up your offline marketing budgets? Thomas suggests promoting community, “coming soon” content, and “user success stories.”
💎 Allow your subscribers to gift your product to somebody else. This can help with the retention of the subscriber gifting!
(15:12)
I never thought of gifting this way, but it could make sense. Again, is this correlation or causation? Regardless, I need to check some data 👀.
On the renewal email topic, here is a different but interesting approach from headspace I shared in Growth Gems #94.
Increasing engagement
The second gem I shared mentions the possibility that “subscriber retention” != “engagement”. If you’ve proven you’re not in that case:
💎 Some tactics if your Retention is based on Engagement:
MEME - More Email, More engagement. If you’re sending one email a week, send ten. People don’t unsubscribe, so overuse it.
PEPE - Personalized experience, Perception Elevated. Send personalized emails based on the app usage.
Use in-app messages, push, and email and leverage rich media.
Have a weekly newsletter if you have the resources and content.
(13:30)
If your app is less content-based, one approach that can work for newsletter is to feature customers and “success stories”. Nude’s newsletter is (was?) a good example of this: they don’t talk about their product as much as they feature their customers and their stories.
💎 You have to know your unsubscribe curve so you know when to engage users to keep them around. Focus your feature promotion and lifecycle during those times. Example at Masterclass: email at day 335 to let them know the subscription will renew
(14:10)
This looks quite different from the data David Barnard shared with me for Growth Gems #98.
I also mined some good gems on subscriber retention and engagement from Vahe Baghdasaryan from Taking Preventative Measures for Subscriber Churn, and they’re in the Vault, but I don’t know if I’ll get to share them in a future newsletter edition. If you’re a paid subscriber, reply, and I’ll share the gems with you.
Before I leave, here is a strong quote on product-market fit at App Growth Annual:
“If you’re trying to justify that your product is working, it’s not.” - Nikita Bier (Founder of Gas)
See you next time.
Stay curious!
⛏️ Sylvain
🔗 Source: