The following insights were gleaned from a presentation at INDUSTRY given by Antoine Sakho of Buusu @antoinesakho. Download Product Management TACTICS eBook for more.
Truly understanding how subscription models works can help you multiply your app revenue. While there are lots of tricks that can help you optimize, some can be counterintuitive.
In a Google survey of users who went from being free users to paying subscription users, most said they wanted access to more content. The second biggest reason for upgrading were discounts offered. These reasons suggest that many people are open to trying the free version of an app, but if it’s actually delivering value — they’re willing to pay in order to open up more access to that app. For people that are on the edge of trying those premium features, discounts can certainly help. But it’s important to incentivize longer plans, not just subscriptions in general.
It is helpful to lock down content strategically to encourage users to upgrade to a subscription. Sometimes the strategy that increases conversions fastest leads to shorter subscriptions and therefore brings less revenue. So it’s important to be thoughtful about the way we’re trying to encourage users to upgrade and not end up seeing a result counter to our goals.
Sometimes, free users are looked upon as creating all sorts of costs. But keeping users involved longer with free content could actually lead them to subscribe for longer plans, creating more revenue down the road. So rather than setting a goal to convert free users as soon as possible, think about a plan that gets users engaged with the product for longer periods of time before converting.
Signposting is another practice that cannot be ignored. Subtle hints at the premium product tend to be much less effective than a sticky banner encouraging users to upgrade. The sticky banner may seem more out of place and less visually appealing, but despite what you may expect, most users aren’t always aware of what your premium subscription product actually is.
And when the time comes to convert those free users, keep in mind that free users care more about what they can’t access than what they can see. It is important to focus on what the free users want to access rather than making what they already use prettier.
You can also never underestimate the importance of continuing to experiment and constantly price test. Busuu ran a complicated A/B/C pricing test in multiple countries, and found the market was far more elastic than was initially thought. That makes a big difference in the company’s bottom line.
But like any business, churn is always an issue. Busuu decreased churn by 30% by creating a multi-step cancellation flow. They offer help first, in case the cancellation comes from confusion. Then, the user is offered to suspend the account temporarily, since language learning (Buusu’s business) can understandably take time. Finally, they offer discounts to see if that will get customers to resubscribe. While multiple steps may arguably make for a worse customer experience, it’s true that many consumers that are unsubscribing aren’t necessarily closed to the idea of sticking around if their concerns are addressed. So before they walk out the door, see if you can help them first.
To view Antoine’s full presentation, visit https://productcollective.com/software-subscription-optimization/.
