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Customer acquisition, retention, and monetization strategies are one thing in the world of mobile gaming, and even e-commerce apps, but implementing these for a subscription-based service is a challenge only a handful of marketers have tackled head-on successfully.
Talk to marketing maverick Tim McCloud, Global Director, Mobile Marketing and Analytics at PlayKids, the popular mobile app designed for toddlers and their parents, and he will tell you that there are seven essential components in a ‘high-value, high-conversion’ subscription model if you hope to keep your train of subscribers on track:
1. Start with the right users
Subscription-based models require a certain type of user: one who is going to be willing to make an on-going commitment in exchange for value they see month after month, and hopefully, year after year. That’s a big difference from someone who will eagerly sign-on to try out a freemium app, or even pay a one-time fee to install an app, even though they may end up not using it.
As McCloud says, “If you’re not starting off with users who are potentially okay with a subscription model, you’re definitely going in the wrong direction.”
This requires a kick-ass user acquisition team, and in turn, McCloud says, like-minded advertising partners. These partners must have the ability to target and segment users that are relevant to PlayKids, and working with partners like Liftoff, McCloud is able to build profiles of users based on age, gender, location, past experience interacting with mobile ads, other apps installed on their phone, and do lookalike targeting across the entire mobile ecosystem.
“Targeting and building lookalikes, and then building models outside of Facebook or any other social network that already has a user base is incredibly difficult,” says McCloud, who emphasizes the importance of getting this right.
2. Use the right metrics against UA
Ensuring results is just as important for McCloud. “CPA — or cost per acquisition — is somewhat of an over-used term,” he says. “What we try to do is work with partners on a cost per action or cost per subscription basis.”
“They’re basically guaranteeing to drive users they believe will perform an action. On the subscription side, that action can be a trial. An action can also be returning to your app after that initial install. Ultimately, the action must lead to monetizing, and that’s where the cost per subscriber metric under a CPA model does the trick.”
Although there’s no silver bullet to make sure your users convert on particular actions, McCloud insists that you can get the next best thing if you can leverage behavioral analytics to your advantage.
For instance, the latest data from the 2015 Liftoff Mobile App Engagement Index, post-install actions cut sharply across gender lines. In shopping apps, women far outperformed men as the data revealed that women are 32 percent more likely to purchase, with a much higher install-to-first-purchase rate and significantly lower cost-per-purchase — $144.50 CPA for women versus $190.70 for men.
3. Test the right onboarding experience
According to Distimo App Analytics, freemium apps have higher gross earnings in both the Apple iTunes App Store and Google Play Store.
Subscription-based apps can support either premium or freemium models and McCloud believes that paying close attention to the customer onboarding process plays a bigger role in helping you choose the right subscription model for your app.
“We have consistently tested the onboarding process for PlayKids,” he says. “Typically, it could look like installing the app, using the app, and then signing up for a trial. If they like the content and see the value, then a subscription follows through.”
As a big fan of experimentation, he says it’s important to keep testing. For instance, a variation can include taking out the trial piece and just delivering a freemium app with limited access to content. If users want further access to this additional content, they can opt to upgrade to a subscription.
4. Test the impact of your subscription plans
Subscription models are a mix of art and science. McCloud contends that the testing and optimization of your subscription plans — or tiers — should be an absolute priority. Subscription plans can range from annual plans, to monthly, to every three months. And, with each comes different pricing models.
“You need to continuously test your subscription tiers with customers,” says McCloud. “If you offer various types of subscription levels like monthly or annual, you have to consistently test the prices of each of those and also the tiers — and this is likely going to differ by region.”
For instance, annual plans may show strong response rates in Canada, but that doesn’t mean the majority of users in Australia are going to share the same preferences.
However, McCloud also warns against the risks of providing a range of plans to your subscriber base.
“Offering different options can get tricky — it can confuse users and cause them not to choose any. Or it can drive them to choose an option that maybe isn’t really the most relevant for them. So when you give users options, you have to really understand your user base to prioritize one dynamite subscription offer that matches their interests and the level they’re comfortable with.”
5. Leverage dynamic user segmentation for improved modeling
According to McCloud, time is the best teacher when it comes to finding the sweet spot for your app subscription models. He says, “The longer your app or product is out in the market, the more you can develop the experience of what a significant consortium of users will want from a subscription level.”
Using an A|B testing model or a multi-variate testing model will enable you to develop a deeper understanding of what certain user segments want. These might be users who share similar behaviors, live in certain regions, or use certain platforms.
As McCloud suggests, “You can test users from the U.S. who are on iOS. By surfacing an A|B test to 30 percent of this user-base, you can build out a basic understanding of a lookalike model, and know that users sharing similar characteristics are more likely to choose a specific subscription model.”
“At the end of the day, acquiring the right set of users for your subscription-based product is what you’re aiming for,” he says.
6. Revitalize your app value proposition
As McCloud explains, monetizing and demonstrating the value proposition in gaming apps is a lot more straightforward. “When a user is in a tough spot in a game and need additional credits, the in-app purchase model makes it easier for these publishers,” he says.
With a subscription-based model, there’s a tremendous onus to anticipate and serve up content that your audience will value. You constantly have to be providing content that’s perceived as valuable enough for a subscriber to continue their commitment and keep from churning.
He emphasizes the importance of consistently refreshing content and reinforcing the value proposition. For some apps, this might be daily — think of paid newspaper subscriptions. For others, content needs to be updated every week, some once a month.
Fresh content reinforces the fact that users are not only buying information, they’re buying access. The moment users catch onto the staleness of your content and feel that you’re failing to add more value to their experience, they will not hesitate to cancel or not renew their subscriptions.
7. Pay close attention to churn
So you’ve done some kick-ass UA. You’ve got a great user base. You’re changing up content, but you’re always going have a segment of users who unsubscribe. And, they need TLC.
“You need to pay very close attention to churn and focus efforts on reengaging lapsed users,” says McCloud. “A user that is familiar with your product that has installed it and has since fallen off will be the easiest to reconvert or re-engage.”
This is the time to pull out all your re-engagement tactics — including retargeting and remarketing efforts — on those who have fallen out of the funnel. Most important in this is the timing – the amount of time that has lapsed since the user last interacted.
“On the gaming side, 30 days is basically the best timing to re-engage a lapsed user, and that’s because gaming is so competitive,” says McCloud. “But, for subscription-based apps, it’s a little bit longer, maybe 60 or 90 days.”
Overall, McCloud insists that the secret to scaling up and retaining momentum, and what has made PlayKids so successful, lies in how well you understand your audience.
“Once you have a clear sense of your core user base, you can leverage various channels and approach platform partners to help you scale up,” he says. “The real key piece for subscription-based products is to ensure really solid targeting since the potential audience user base is smaller.”
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