At 7:30am ET this morning, The Economist blasted a 75% off sale for Black Monday (aka Cyber Monday) to its email list of former subscribers and top prospects. The New York Times is also running a Black Monday sale on, offering 50% off Times Digital gift subscriptions. The offer, featuring a great vanity url – NYTimes.com/cybermonday – ran as a full page ad in the first section of this Sunday’s print edition.
The New York Times ran a Cyber Monday promotion using minimal copy.
In both cases, the copy was light and repeatedly focused on the deadline: Monday, November 28th only. As Insider readers know, this is definitely a best practice – if you’ve got a very short-term offer, just talk about that and try to convert the already half-converted. Don’t waste time and space listing benefits and features.
However, make sure your servers can handle the influx of traffic to your site. Unfortunately, by 9:55am ET, The Economist’s landing page was down with the error messages “Too many connections… error querying region” and “Error connecting to database,” all of which we suspect means too much demand.
Dan Burkhart of Recurly just posted a great chart showing why it’s dangerous for paywalled publishers to forecast revenues based on their first year’s retention rates especially if your content was originally free.
Your biggest fans and long-term readers of your free content are not only more likely to convert to paying than any other audience, they are also more likely to pay for a lot longer. Old-time fan paid membership accounts tend to have fabulous lifetime values.
The new customers who discovered your site more recently, only after your paywall was erected, don’t have that same sort of brand relationship. Although they were impressed enough to convert at your paywall (although not nearly at as high a conversion rate as your older fans) and they’ll keep paying for months, their overall lifetime probably will be significantly lower than that of the old fans.
It’s perfectly normal. Dan’s chart shows an example of a subscription site where the old fans had an average lifetime value of 18 months, whereas the new folks came in at 10 months average. (BTW: 10 months is roughly double the consumer paid content site average according to our research, so it’s still perfectly respectable.)
The lesson is no publisher new to paywalls should run spreadsheet forecasts for 2012 and beyond based on sales and lifetime values of old fans. It’s unrealistic to assume that initial level of success will continue — your numbers will level off after time as a higher and higher percent of your subscriber file is composed of “new” people.
According to data-crunching from Brad Alvarez of SeekingAlpha.com, 47.1% of new subscribers SiriusXM acquired through promotions last quarter, continued to pay for service after their promo term ended. That’s a moderately high stick rate for paid content subscriptions. The most surprising data in Brad’s report was that SiriusXM has a typical monthly churn rate of just 1.2-2%.
That’s insanely low churn. In fact, we’re not sure how that’s possible unless 100% of “involuntary churn” is backed out of the numbers. (Involuntary churn are credit cards and debit cards that go bad for a wide variety of reasons ranging from credit limits to fraud.) We’d caution anyone modeling these churn numbers that they are not normal….
I am a fan of TechSmith. We use their Camtasia software for many of our on-demand tutorials and I was impressed to discover their service team frequently monitors Twitter looking for customer questions and concerns to answer.
But when I got an email receipt out of the blue from them this week, when as far as I’d known I hadn’t bought anything in months, it was definitely a WTF?! moment. And it’s one that I fear many subscription-based businesses are causing in their annual customer bases – needlessly.
Charging an annually renewed customer is a tricky business at best. Too often they may have completely forgotten either about the subscription as a whole, or that now is the day it’s going to be renewed. Suddenly their budget has a bigger hole in it than expected. We detail in Insider’sRenewals Optimization Kit the practical steps you should take to ensure great retention. TechSmith broke some basic rules that now probably hurt their retention:
#1. No reference to the renewal in the email
Their generic “you have been charged” email receipt doesn’t explain why the charge has happened or that it’s a previously authorized renewal. It could as easily be for a new sale made that day. In fact, when I got it, I assumed that someone had fraudulently used my account to buy something.
#2. No marketing copy or “gift” in the email
The email baldly states the product purchased and the price — as I said it’s a stripped down receipt. But, best practices in retention are to add a bit of schmoozing into the message. Not, perhaps, an povert sales message, but at least a benefit statement. And popping in some type of gift, such as a free download in ‘thanks for your loyalty’ can go a long way to ameliorating the unexpected charge situation.
#3. Receipt sent after the charge was processed
Processing refunds costs you money — probably a flat fee plus a % of each refund. You know that a certain portion (hopefully small) of all your annual subscribers are going to bail when they get that receipt. It’s a given. So why charge everyone (which costs you money for card processing) and then pay to process those refunds afterwards? Smart recurring billing merchants send an announcement FIRST for annual renewals and then wait for the cancels to come in before they actually process any transactions. Some wait a day, others a week. You have to watch your cencel patterns to know what’s best for you.
TechSmith actually processed the charge before alerting me and now have to reverse it. Not smart.
#4. Make customer service super-easy to access
Well trained service reps can actually save (or cross-sell/upsell) a certain portion of accounts when people call in to cancel. But, perhaps more importantly, they save customer goodwill. If you offer a range of products and services to the same customers, as TechSmith does, you don’t want to leave anyone with a bad taste in their mouth because you lose that future possible sale.
Every barrier you put in front of your customer – even irate ones – and your service team hurts your bottom line. Unfortunately TechSmith requires that customers enter a username and password (which they’re unlikely to recall a year after a purchase) just to get to a form which they then have to fill out and hope that a human being will get back to them. Money falling off the table. Look at it fall….
I feel kinda mean using TechSmith as a poster child for worst practices when so many continuity merchants and subscription services make mistakes that are just as bad. But, if this example helps someone, then it’s worth it.
Whenever I’m on the phone with a subscription or membership site publisher these days, one of the questions I invariably ask them is, “What email service provider are you using?” I can instantly tell from their answer how well run their email program is — especially whether their email is actually getting delivered. (The latter is the primary, but by no means the only, reason most publishers should be using a good ESP rather than in-house systems.)
Even with Twitter, RSS Feeds, online groups, mobile, etc., broadcast email is still pretty darn central to our businesses. You are probably largely dependent on your email programs (broadcasts, autoresponders, triggered messages & autoresponders) for a fat chunk of your repeat visitor traffic. And repeats mean more conversions, not to mention longer account lifetimes.
So, you can see how I’m continually shocked at the lousy answers I get from many publishers on tjhe email vendor question. Some don’t know the name of their vendor. (Can you imagine not knowing the name of a vendor that central to your bottom line? I can’t.) Others tell me they’re using an ESP that allows new clients to upload lists and start sending with nothing more than a credit card – no re-opt-ins, no double opt-ins, just upload and send — a way to guarantee you’ll be sharing a grey-listed IP address with spammers. And some tell me they use an email program that “came with” some other software they’re using, perhaps their cart, a CMS system, a circulation management program, whatever. Again, a guaranteed way to have lame delivery because companies that don’t focus solely on email don’t tend to do a good enough job of providing the service you really need.
Rant over. (I could go on and on…)
The fact is, unless you’re working with a top-of-the-line email service provider (or you’re such a huge company that you have a fullltime technical email staff in-house), your mail is probably not getting delivered as well as you think it is. Getting past filters ain’t easy. Especially if you’re B2B and you have to get past corporate filters and then probably personal Outlook filters to boot.
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