Having worked for many years at various publishing houses, Markus Schöberl launched pv digest 12 years ago. Through this media, Markus publishes a monthly commented overview and analysis on sustainability for digital and print media professionals, supporting their work in building lasting revenue models.
After having compiled so many case studies and spent so much time analysing industry strategies, we spoke to Markus on how he believes publishers can successfully balance acquisition and retention to maximise the ARPU of each reader.
Q: Let’s dive in at the deep end: what are your top recommendations for publishers offering digital subscriptions?
The standard answer to this question would probably be something like, “there is no silver bullet,” or “you have to look at each case individually.” And that’s fundamentally true. But it’s also a bit boring for an interview. May I go out on a limb instead?
Q: Go ahead…
Then let me start with a little provocation: Ever since I started dealing with subscriptions — 25 years now, because before I became a reporter and analyst, I was a manager at major publishing houses — I’ve noticed that people too readily interpret relationships as one-way causalities, when they’re more like chicken-and-egg situations. The most important example is “annual subscriptions.” Many believe that annual subscriptions increase subscriber retention. But I don’t know of any proof of a causal relationship.
It’s true that annual subscriptions don’t get canceled in the first year — but that’s contractually enforced and usually bought at the cost of a high discount. As for whether annual subs are more durable than comparably aged monthly subscriptions after that first year — I’ve seen mixed data. Overall, I get the impression that they aren’t significantly more durable.
More importantly, any durability advantage comes mainly from self-selection: only users who are determined not to cancel sign up for annual subs. But these same people wouldn’t have canceled a monthly sub either. So if you offer these already-loyal subscribers a discounted annual sub, you don’t gain any additional subscription months — you just lose revenue and ARPU.
(By the way, Le Monde already came to the same conclusion in an earlier piece here on The Audiencers.)
Q: How would you recommend publishers make use of this information for their acquisition strategies?
From the start, it’s been industry standard to recruit new subscribers with a month trial. It could be free or cost €0.99 or €1/£1/$1, but it’s almost always a 30-day trial, followed by a switch to the regular price — or sometimes a special first-year rate that increases later.
But I’ve long been fascinated by another offer — I believe invented by the Boston Globe. Namely: take a very expensive subscription — let’s say €30–40 per month — and offer it to new readers for a very long time (say, 6 or even 12 months) for just €1/£1/$1.
This type of offer is often accused of just inflating subscriber numbers with low-value subs. But that’s not the real idea.
The idea is to lure people in at a minimal cost and then have plenty of time to draw them into the product — time for them to develop usage habits — so that by the time the price jumps (from almost nothing to something quite high), they’re already hooked and stay on.
I’ve heard “that’ll never work” many times — but always from publishers who never tried it. On the flip side, I don’t know a single publisher who actually tried it and didn’t find it worked. Right now, that’s the closest thing I’ve seen to a “silver bullet.” A very low-priced, very long trial — and then trust that a surprisingly high share (50%+) will convert to the full price.
Q: What would you recommend to publishers looking to maximise subscriber acquisition and retention simultaneously?
As a passionate chess player, it occurs to me that this question might tempt one to start looking for tactics before having found a good strategy.
Maximizing acquisition is actually not very difficult. All you need is a highly clickable topic, distribute it widely through suitable marketing mechanisms, and place a paywall with a very low-threshold offer in front of the article. That way you maximize the number of orders. But many of these orders will come from people who are not really part of the medium’s core target group and who have no long-term perspective. We do not want to maximize the number of orders per se, but the number of orders from people who belong to our target audience.
And that brings me to the subject of retention. Retention is not a game of tricks. You don’t optimize the durability of your subscriptions through a collection of techniques and tools. Rather, well-bound subscriptions are built on three factors.
First, a reliably good product—good and useful in the sense of the target audience. That means good and useful for some people, but more or less irrelevant for most others.
Second, the emotional bond with the product or the brand. Well-bound subscribers are not only tied by rational purpose but also emotionally attached. This emotional bond can stem from different sources. It may be the community that forms around a special-interest brand. It may be the conviction that by supporting a medium one is contributing something positive to society (a key motive for subscribers to The Guardian, taz, or De Correspondent etc). It may be linked to the “coolness” of a brand, or to the social distinction that comes with being a subscriber to The New York Times, The New Yorker, The Atlantic, or The New Statesman.
It should be noted: so far, nothing I have said about acquisition and customer retention is in fact new. The same was true already in the world of print subscriptions.
From the world of print subscriptions we also know the importance of habituation. Customer retention also arises out of habit—probably even primarily out of habit. The regular delivery of a product in reliable quality, the habit of using this product as a paying subscriber, and the positive feeling of having used it are essential binding factors. This too we know from the world of print.
Only here I come, for the first time, to a purely digital topic. For many media companies, it makes sense to also have an on-demand online offering ready. By this I mean offerings that fit those many small and short moments when people, standing in a supermarket queue, waiting at the bus stop, or sitting in a doctor’s waiting room, pull out their phone for just a moment and without any specific intention.
For these moments, news media should provide a news ticker, or perhaps a set of casual games. Other media might present a kitchen hack, a short Instagram-style video, or some other form of suitable snackable content. These may well be pieces of content that have little to do with the brand’s core promise. Instead, brand attachment here arises from the fact that the entertainment or the little time-filler for that short waiting period comes from my preferred subscription medium. Whenever possible, this should also appear under the medium’s logo, so that my attachment to it is reinforced.
Q: Do you see any concrete measures that could improve retention?
Oh yes, I do see them. I only want to make clear that the strategic goals mentioned above are more important for any subscription offering than specific individual measures.
Concrete measures that can increase customer retention include multi-user access, so that a cancellation affects several people and not just the payer. Personalization mechanisms that ideally improve more and more with continued use—like the famous Spotify algorithm—are a very effective way of discouraging cancellation. Favorites lists, recipe collections, high scores in the puzzle section—all those things that one might like to access again in the future, and which are lost if the subscription is cancelled—constitute an effective anti-churn mechanism.
Q: How do you recommend tackling the price increase moment to reduce churn? are there any strategies you’ve seen to work particularly well?
Of course, the point at which a price jumps from the heavily discounted trial rate to the regular rate is a critical moment, and naturally you will lose a certain number of subscribers at this stage. But in fact, most of the case reports I know on this subject make the point that fewer subscribers drop off at this stage than expected.
And even that number can be improved by clearly communicating from the very beginning that the low price is offered only for a limited trial phase, and by making this trial phase long—very long—so that users have ample opportunity to develop usage habits and a bond with the product.
Last but not least: this price step should be taken boldly. So, no fear of making significant price increases.
Q: We couldn’t talk about retention without mentioning cancellation – a step in the user journey that’s being increasingly regulated. What do you recommend to publishers to balance making cancellation possible and encouraging subscribers to stay?
I think we have pretty much the same view here. Under no circumstances should one try to tie subscribers down through overly complex or opaque cancellation processes. But it is also not desirable to offer cancellation with the absolutely minimal possible effort. A little friction makes sense—whether to ensure that not every spontaneous negative impulse leads to a cancellation, or to make the subscriber clearly aware once again that cancelling is a significant decision.
So, as far as consumer law allows, one should feel free to include two or three steps in which the subscriber intending to cancel is reminded of everything they will lose if they give up their subscription. Beyond that, however, the process should not be made more complicated.
I am by no means of the opinion that press media should build an on-off relationship with their subscribers, as video streamers tend to do. I do believe that press media should aspire to accompany their subscribers for a lifetime—or at least throughout a longer-lasting phase of life. But of course, there can be many reasons to cancel a subscription while keeping open the perspective of resubscribing later on. For that reason, it is important not to destroy the relationship during the cancellation process by making it unnecessarily complicated. An easy cancellation process certainly increases the willingness to subscribe again at a later point.
Q: One more “silver bullet”?
Courage. The courage to even offer paid content and subscriptions. The courage to charge appropriate prices. And the courage to raise those prices regularly. All areas where publishers often act too timidly — but where I’ve almost always heard positive results from those who dared.
