Renewing & maximising lifetime value

“The retention rate for a publisher remains the absolute critical indicator of success – and with it carries the highest value to the business. If you are not able to keep the customers you have already won over then the business model will soon break,” says Jamie Wren, commercial & marketing director at InterMedia.

CURRENT THINKING

Renewal series starts on Day 1

According to Jamie Wren, “a retention strategy for any publisher should start at the point the subscriber is acquired.”

Auto-renewal is the gold standard

“Auto-renewal will always be the gold standard,” says Alan Leech, CRM Australia’s founder & chief architect; “It’s the easiest way for publishers to prolong the lifetime of their subscribers and also offers subscribers the value of convenience. Instead of single term subscription options, publishers should be focusing on making auto-renewal signups the best option for their audience. Of course, that then needs to be followed up by excellent service and even better content.”

“Monthly auto-renew is the best of all worlds – the ‘forever’ subscription,” agrees Dan Heffernan, vice president & chief product manager at AdvantageCS; “If it’s under-the-radar enough, they won’t bother to cancel, at least for a long time. But the best way to make sure they don’t cancel is to continue to make sure they’re engaged with the content. Never stop engagement.”

What is more, says Alistair Wood, ESco’s operations & development director, “there has never been a better time to encourage people to pay continuously; they can cancel anytime, but keep reminding them why they would never want to!”

The aim should be to have the highest possible proportion of your subscriber file on auto-renewal, so that means “pushing continuous payment methods on manual renewals with an attractive discount to drive longer term commitment,” says Air Business Subscriptions’ MD Stuart Lacey.

There are two other aspects to the auto-renewal strategy that merit a mention:

• the increased focus on step-up pricing mechanics to maximise lifetime value (Immediate Media’s Jess Burney)
• ensuring you are offering payment methods which suit your subscribers including, says Jaicom CEO Jorma Ainassaari, “greater use of Apple Pay and similar for upsell,” and, says Jess Burney, a “continued focus on recurring payment methods including recurring PayPal.”

Trend towards ‘enterprise’ subs in B2B

“In the high value B2B sector, publishers are trying to move customers from individual single-copy purchasers to subscribers to tiers of subscriptions culminating with an ‘all-you-can-eat’ enterprise subscription for multiple users,” says Edwin Bailey, director of marketing & product strategy at Publish Interactive.

Renewed focus on churn

“Subscriber churn is one of the largest threats to a successful subscription service,” says Ana Lobb, MPP Global’s VP, business development, EMEA; “Churn is typically divided into two common segments – voluntary and involuntary churn. Besides the obvious need to produce valuable content to keep your subscribers engaged to minimise voluntary churn, publishers are looking at ways to minimise the impact of involuntary churn, which in some extreme cases, can result in up to a 40% loss in subscriber revenues.”

The recent welcome increase in subscriptions has further brought the issue of churn to the fore: “With the additional volume of new subscribers acquired during the Covid-19 pandemic, publishers have an increased focus and desire for more intelligence around churn,” says Mark Judd, managing director at CDS Global.

“Canvass non-renewals by phone if appropriate for your market,” advises Patrick Lidstone, managing director at The Engine Shed; “Use big data techniques to analyse lapsed subscriber activity and determine the underlying causes.” And, of course, it’s not just at the end of a subscription period that people churn, says ESco’s Alistair Wood: “Are you losing subscribers halfway through their subscription? If so, make sure you’ve got a plan and campaign to win them back and ensure you make them feel special, noticed, missed… not hounded.”

Need for flexibility

The emergence of more sophisticated systems has enabled publishers to become more flexible in how they manage their subscribers. After all, Zephr CEO James Henderson points out, “a downsell is better than a churn.”

Publishers are increasingly allowing subscribers to exercise greater control over their subscription.

Kevin Hickman, head of marketing at emap: “A flexible approach is key – being willing and able to accept temporary reduction in service or even service suspension from large corporate clients down to individuals will ensure that renewal rates remain stable over time.”

The search hots up for cross-sell opportunities

Maximising LTV is not only about increasing the ultimate length of the subscription, but also about selling each subscriber more things during their time with you.

One way of doing this, says Air Business Subscriptions’ Stuart Lacey, is to “engage with the subscribers through daily / weekly bulletins and offering discounted access to other services and offerings; trying to get the customer buying into the brand and therefore becoming more invested in the product.”

MPP Global’s Ana Lobb suggests, “extending digital products and services to create supplementary revenue from existing subscribers, for instance NYT’s cooking and crossword apps, Aftenposten Junior and Miami Herald’s sports-only subscriptions.”

Loyalty should be rewarded

One way to do this, says The Engine Shed’s Patrick Lidstone, is to “offer ‘club membership’ providing tangible benefits (discounts to events, on products, on one-off publications etc).”

A membership scheme can be enhanced, says Mike Halstead, managing director at HH&S, “through rewards, offering customers exclusive deals and offers. Newspapers seem to have had more success with this than magazines with schemes like My Mail and Times Plus. Even if a subscriber never claims a reward, they like to feel they are getting value for money as well as a good discount.”

An important part of rewarding loyalty is ensuring fairness in pricing. “Over the lifetime of a subscription,” says Stuart Lacey, “a subscriber will go through multiple price increases but should still retain an attractive saving on the shop price or BAR.”

And, try to avoid showering your newbies with all the goodies. Alistair Wood says: “Don’t devalue your existing subscribers – they deserve the special offers as much as the new… in fact more so, they are loyal!”

Unrelenting focus on product improvement

Ben Wood, managing director of Risk.net at Infopro Digital, says that his company is increasingly adopting the mind-set of a SaaS business. He says: “The first thing we do is to think about additional features from a technology point of view – for example, being able to follow topics that are relevant to you, to personalise user experience, improvements to the newsletters or apps for example. These improvements can be developed once and released across all of our brands and we think about them as the ‘enablers’ for the annual price increase. We can clearly demonstrate that x, y and z has improved since you bought your subscription. If you can prove you’re investing in improving the experience, then that goes a long way with clients.”

“The second – and the route to significant price increases - is to think clearly about product development. And, by this, I specifically mean content. All of our content improvements fall neatly into three buckets:

• Improving the Premium package: In the main, we try to work almost exclusively in improving our premium offering in order to upgrade more customers at renewal. An example of this was digitalising our Risk Books content and making it available to all Risk Premium subscribers.
• Content that attract new segments: In September 2019, we introduced a new ‘Investing’ section onto Risk.net to improve our offering for asset managers. It has significantly helped our ability to sell enterprise to this audience group.
• Content that introduces a new pricing tier: This is the Holy Grail! We are launching a new Benchmarking Service into our Central Banking product this month. Research suggests it’s valuable enough to introduce a whole new pricing structure off of the back of it.

What we’ve found is that there is a clear correlation between our brands that have been able to consistently achieve the second route, and consistent year-on-year subscriptions growth.”

WHAT OPTIMAL PERFORMANCE LOOKS LIKE

According to Stuart Lacey, “a healthy continuous payment subscriber base, with the rest consistently renewing with little need to be prompted past the first renewal reminder,” is a good definition of optimal. “The quality of content,” he continues, “is the strongest asset publishers possess and they must ensure quality remains high. Providing a product that engaged subscribers want will generate ongoing renewals.”

High retention rate at low cost per renewal

For emap’s Kevin Hickman, the ideal is “a high proportion of subscribers paying via continuous funding to minimise erosion by inertia of the base.”

Minimal intervention is obviously the secret to achieving the lowest possible CPR, so, for Publish Interactive’s Edwin Bailey, the aim is a “subscriber renewing two months ahead of lapse with minimal interaction from the sales team.”

To put some figures on retention rates in the B2C market, “a great renewal rate is around 80%. These are publishers with highly engaged subscribers who are loyal to both the brand and the content. An example of underperformance would be a renewal rate of 30% or below. Currently, the average rate is around 65%, which is still good,” says CRM Australia’s Alan Leech.

Whilst we all strive for the highest possible renewal rate, as InterMedia’s Jamie Wren points out: “Customers will at some point choose not to renew – this is just life – understanding why can shape a retention strategy and help to reduce similar potential losses, however there is always a requirement to accept the fact that regardless of what you do, optimum performance will never be 100% retention…”

Low churn

“An effective filter to proactively manage cancellations,” is essential says Kevin Hickman; “this will include a stop save desk, telesales efforts combined with a strong focus on win-back to bring lapsed / cancelled subs back on board.”

“When it comes to involuntary churn,” says Ana Lobb, “a well-managed churn prevention process should ensure churn rates are maintained at less than 1%.”

Engaged subscriber base

Content consumptions metrics will be one indication of this, as will “subscribers accessing / using multiple services that the publisher offers rather than just the product or brand that initiated their engagement,” writes Stuart Lacey.

Seeing your subscribers “evangelising about you on social media” is another positive sign, says Angus Chenevix Trench, dsb.net’s managing director.

The total value of your subs base is increasing

One way of achieving that, says CDS Global’s Mark Judd, is “extending the “offer” to subscribers … by adding additional content, products or services to create a bundle or package.”

Zephr’s James Henderson advises publishers to be looking for “incremental increases in subscription value – ensuring you are expanding product sets for customers, driving extra value. This will lead to diversified revenue streams and net increases in customer lifetime value.”

All subscriber communications are personalised

For AdvantageCS’s Dan Heffernan, optimal performance is predicated on “personalised engagement based on analytics”.

Alistair Wood encourages publishers to “personalise your messaging and make sure it remains up to date. If your brand is affected by the seasons, make sure this is reflected in the messaging.”

“Testing different renewal strategies and mechanics is important and don’t assume the same strategy will work for all customers,” says HH&S’s Mike Halstead; “Segmenting customers depending on how they were recruited can be a good way of testing different renewal approaches.”

LTV informs all decision making

“The value attached to the full lifespan of a customer is the single most important metric for retention marketing; any decisions should be based on maximising this value,” says Jamie Wren.

For Jess Burney, managing director, direct marketing and business development at Immediate Media, “using LTV as a routine part of the mix to inform all pricing and marketing investment decisions,” is key to achieving optimal performance.

The value of each subscriber is known

“Ask yourself,” says Lineup Systems CEO Michael Mendoza, “do you know what each reader is worth to your business? Because I talk with a lot of publishers and most can’t answer that question. But when we talk about lifetime value, we have to start by understanding what information we have on each reader, and then zoom out to understand the audience as a whole. So, look at what advertising revenue is tied to each reader, know what content they engage with and where – that's the audience data that powers revenue across subscriptions and advertising, together. Without it, you can’t understand lifetime value, let alone maximise it.”

Your product has never been better

The moment you can’t say that is the moment your subscriber numbers will start to fall.

COMMON REASONS FOR UNDERPERFORMANCE

“Performance can be poor based on any number of the moving parts within the process failing which is why there is such an importance on accurate reporting to identify issues quickly and resolve them effectively,” says Jamie Wren.

Over focus on acquisitions

“Many publishers focus far too much on acquisition and not enough on retention,” says Mike Halstead.

Jess Burney concedes that, for many publishers, there is indeed “too much focus on acquisitions.”

Publishers need to find the right balance. Infopro’s Ben Wood: “It’s so easy to be drawn into focusing too much on new business. Clearly, it’s critical to success, but without maximising usage and demonstrating value to existing subscribers, you will not be able to deliver a sustainable path to long-term growth.”

Adopting a one-size-fits all approach

“Treating everyone within one demographic the same way,” is an approach guaranteed to deliver underperformance, says Dan Heffernan.

Not investing in the product

“We see too many publishers who think that they’re failing to renew subscriptions because the marketing offer isn’t good enough. They counter by increasing discounts, offering free gifts or trying out other gimmicks. We believe that if the content is good and the price is fair, subscribers are more than happy to pay what it’s worth,” says Alan Leech.

According to Stuart Lacey, a “lack of vision around long-term engagement and investment is key to losing trust and, ultimately, subs volume in the matured subs tier.”

Poor offer management

“I think offering a small incentive is fine and we've seen a lot of our clients have success with various renewal or signup bonuses, but don't go over the top. Subscribers are smart, and they recognise their ability to get a better deal by holding out and waiting,” says Alan Leech.

He continues: “It’s a big mistake to be improving your offer the longer they wait because they’ll understand the pattern and you begin training them not to renew. Instead, give your audience your best offer in the first renewal correspondence and then make the offer less attractive the longer it takes them to renew.”

And, take care not to be too generous. After all, asks Alistair Wood, “if your promotion is going to cost you more than it makes you, what are you getting for that investment? Is it worth doing it?”

And it’s not just poor offer management within a renewal series. Attractive, and widely publicised, offers to new subscribers are another cause of churn, as existing subscribers spot and decide to “take up new, better price acquisition offers” instead, warns Stuart Lacey.

Failure to learn lessons and not measuring the right things

“If not enough time is spent in understanding the behaviour of the subscribers, their acquisition source, channel and journey, it will be the most significant reason for underperformance in this area,” says Mark Judd.

Obviously, it’s also important to make sure you’re measuring the right things and not all publishers are.

“With few notable exceptions,” says dsb.net’s Angus Chenevix Trench, “few publishers use CSAT scoring to monitor and improve customer satisfaction.”

Leaving it late

According to Mike Halstead, “trying to retain a customer should start from the moment they subscribe not just as they approach the end of their subscription.”

For high value enterprise subs, “leaving renewal discussions to the last minute can appear like the publisher is only interested in the renewal sale thereby irking customers who are wavering to re-subscribe,” says Edwin Bailey: “Building an ongoing, personal, relationship between account management and customer should result in a smooth renewal.”

Ben Wood: “It’s important to think about renewals throughout the cycle – you should never be caught out by usage on a contract renewal. We constantly monitor contract usage, but in particular, we circulate usage stats internally for all contracts over a certain value, and we give the team until the following report to address any that show the wrong trends.”

Poor systems & data collection

For Ana Lobb, “the lack of tools that have been specifically designed to help reduce involuntary churn within the media sector is the primary reason for underperformance in churn prevention metrics.”

Lineup Systems’ Michael Mendoza points to data silos as a primary problem: “Data silos are killing revenue growth. Too many media companies have completely separated their advertising and subscription teams and technology, even though their overall revenue depends on those two business models working together.”

But it’s not just the tech infrastructure, it’s publishers’ approach to it: “A failure to collect, understand, interpret and leverage data appropriately in content-rich environments would represent a missed opportunity,” says James Henderson.

And whilst publishers have increasingly sophisticated marketing tools at their disposal, a failure to get the fulfilment basics right can prove very costly. One example, says Patrick Lidstone, is a “failure to chain renewals correctly, which results in multiple records for the same individual, leading to duplicated communications.” It happens more often than we’d all like to think.

Ignoring LTV

“Not using LTV routinely,” is one of the primary causes of publisher under-performance, says Jess Burney.

WHAT PUBLISHERS CAN DO TO IMPROVE PERFORMANCE

“At the heart of customer value is customer satisfaction and optimising this is the key to long-term relationships and improving lifetime value. Optimum performance involves re-evaluating the notion of loyalty.

Subscribers should be seen as value-creating partners, rather than value-extraction targets. Subscribers add value because they give us good ideas; they evangelise for us on social media; they reduce our costs; they collaborate; they share their data and introduce us to their friends,” says Angus Chenevix Trench.

Allocate more time to ‘renewals’

The consensus is that most publishers spend less time than they should on renewals vis-à-vis acquisitions.

“Make sure you spend enough time on retention,” urges Jess Burney. But, what is enough? In a recent InPublishing podcast, Jo Adams, marketing director at New Scientist, said that they split their time 50:50 between acquisitions and renewals.

Adopt a culture of continual improvement, based on testing

This is probably the single most important thing you can do to achieve long term subs success, but also one of the hardest to achieve.

A key component of this culture, says Michael Mendoza, is “understanding first party data and how to make it actionable”.

When it comes to testing, adds Dan Heffernan, “live by data. Make decision based on data. Test price elasticity – don’t guess!”

Kevin Hickman’s approach at emap is to “test modifications, ideally at scale due to the long lead time of results tracking. Test 3-4 variables using different control groups to enable rapid rollout of winning tests and the faster evolution of strategy.”

Don’t leave anyone behind

The US army, apparently, has an ethos of never leaving a soldier on the field of battle. Publishers need to adopt a similar approach to people who drop off their subs file.

“Implement cancel-save strategies with incentives for agents / teams who manage to attain excellence in this area,” advises Stuart Lacey: “This will both aid retention and also provide insight into the wider reasons for cancellations (price, supply, content etc) that may be used to improve retention on a wider basis.”

“With imagination and proper analysis there are a range of interventions available,” Stuart continues: “Consider acquisition parity offers for renewing subscribers unhappy with their renewal rate. Sky have implemented this, and it has improved both their retention rates and also, critically, their customer satisfaction levels.”

And, another recurring theme, don’t even think of trying to adopt a one-size-fits-all saves strategy: “With more subscribers paying by Direct Debit, ensure you have a multi-channel cancellation programme in place. It’s important to differentiate and have adapted journeys for those who have organically lapsed, refunds, bounced payments, and hard cancellations,” says Seema Kumari, digital marketing & CRM director at Hearst UK.

On the understanding that prevention is often cheaper than cure, advises Mike Halstead, “look at common reasons for cancellations and figure out what you can do to overcome them.”

Michael Mendoza agrees: “Proactively help ‘at-risk' subscribers – for instance, people who have subscribed but hardly used the site. Use nurture messaging to re-engage them with relevant and timely content.”

Segment your renewals

Mark Judd advises: “Implement a contact and retention strategy for newly acquired subscribers which reflects how, why and where they joined and is not just your standard or existing strategy.”

Segmenting, at the very least by source, the amount they paid and how long they have been a subscriber, “ensures you speak to your most loyal customers with a different message to those that have reached the end of their first contract. The message, price and reasons to renew may well differ and thus should be conveyed accordingly,” says Jamie Wren.

There are numerous ways to slice and dice your renewals series to deliver more personalised messaging and, ultimately, higher renewal rates.

Stand by your KPIs

A key plank in successful retention marketing is setting goals, identifying KPIs that will allow you to track progress against those goals, and then sharing that information.

There is no substitute for transparency.

Jess Burney advises publishers to “make retention KPIs part of the reporting suite for senior management.”

If the KPIs are comprehensive, this will mean that all variables are under almost constant review, which is a good thing says Jamie Wren: Never stay still because “treading water is a fool’s game”.

“Don’t rest on your laurels,” agrees Hearst’s Seema Kumari; “if your retention rate is stable – it could change overnight.”

Invest in the right tech / tools

“Establish a single customer view,” urges Patrick Lidstone; “Your events, awards, white paper downloads, subscriber and even advertiser contacts overlap. Understanding how they overlap can identify new marketing opportunities and focus future business development efforts on the most profitable sectors.”

Jaicom’s Jorma Ainassaari encourages publishers to invest in “best of breed solutions from the best providers, integrated together, and to closely co-operate with solution providers to ensure agile development of the applications needed to respond to changing market requirements.”

There’s no point saying otherwise. Without the right tools, however talented and enthusiastic your team might be, it’s always going to be a struggle.

For Jess Burney, the solution is straightforward: “Invest in LTV models and forecasting tools and upskill users to make this a routine part of the business.”

Continually encourage usage

The single biggest determinant as to whether a subscriber will renew is the extent to which they have engaged with your brand.

This is partly about “keeping the lines of communication with subscribers coming up to renewal open – highlight the additional content they may be able to access, stress the discount they are enjoying, inform them of their exclusive access etc… in a nutshell, demonstrate the value of being a subscriber over a casual purchaser at every step of the acquisition, engagement and retention stages – communication radio silence will lead to a disenfranchised and disinterested subscriber base,” says Stuart Lacey.

If your brand is a monthly print magazine, then usage is harder to gauge. In this case, says Jamie Wren, “customer surveys are a simple way to learn more about the consumers who are buying our products. Reaching out to the customer base and asking them to tell us what they think of the product can very quickly enhance the engagement level. Making the customer feel like they are at the centre of the product is key and will deliver far more insight than any marketing team can gather, and straight from the horse’s mouth.”

“Actively listen / collect feedback from your customers”, advises Michael Mendoza, who also says: “Continue to nurture and engage the customer throughout the lifetime of their subscription.”

According to Edwin Bailey, “analytics on subscriber usage should help annual renewals. Understanding when and how the subscriber accessed content should indicate the usefulness of your product. Renewal discussions can be tailored around usage. In simple terms, low usage should alert the publisher to a potential lapse.”

And, if your customer usage KPIs are stuck in the doldrums, then talk to your current users, advises Ben Wood: “Existing customers are always happy to talk about their experiences, offer ways to improve, and test new ideas.”

For those subscribers who do use your brand extensively and renew regularly, Angus Chenevix Trench would like “to see publishers rewarding subscriber loyalty. Today’s loyalty strategy needs to re-imagine the future of customer loyalty – building dynamic, digital first customer relationships.”

Improve your product

Mark Judd: “to improve LTV, publishers are starting to broaden their offering and this should be accelerated. Creating a membership by adding products, services and content to a print subscription will increase revenue and improve loyalty.”

For Michael Mendoza, publishers need to be thinking in terms of “delivering continued and increasing value”.

Sometimes, says James Henderson, it can be about “recognising the value of bundling and unbundling products. Think iTunes enabling single songs to be bought from albums, but then the way Spotify were able to bundle this back together. On top of this, recognise the value of personalisation and putting the two together. There are “only two ways to make money in business: one is to bundle; the other is unbundle…” It’s a line that VC and internet giant Marc Andreessen has dropped a few times and attributing it to his former colleague Jim Barksdale, founder of Netscape – and those two know a thing or two about making money from digital content…”

For those publishers keen to improve their product but struggling to find a creative spark, help is at hand. Ben Wood says: “It is so easy to conduct research into new ideas – it doesn’t need to be a 500 person survey or 50 in-depth interviews, by learning to ask the right questions, act nimbly and constantly evolve, you can get to client solutions and product answers very quickly.”

Ben continues: “The other area where we’ve had a lot of success is by devising what we call ‘editorial heat-maps’. These detail the top performing stories broken down by subscriber cohort and the team discuss and review them in weekly editorial meetings. This has two effects – it means our editorial team aren’t just judging article success on clicks, but they are also confirming if the customer segment that are reading the article are actually the segment the editorial team wrote the piece for. Further still, they use it to spot potential trends particularly when an article gets traction with an audience group that wasn’t expected – why is that, what does it mean, should we do a follow-up with a different angle? All things which lead to a better product for subscribers.”

Make everything easier

“When somebody is invited to renew their subscription, it should be quick and easy, a click of a button. Subscribers should never be asked to enter all their details again if renewing. Ensure that your pricing structures are clear and straightforward and that your lovely renewing subscribers are offered the same seasonal offers or free gifts as new subscribers,” says Alistair Wood.