Commentary

Engaged Readers Drive Outsized Response To Subscription Offers

Improving the efficiency of subscription offers has become more important for news publishers as they seek to diversity their digital revenue.

They can improve those efforts by offering the best deals to groups of “stable users” who show the lowest likelihood of subscribing, according to Mather Economics.

The consulting firm conducted a study to determine the best ways to convert these readers who make up 11% of a publisher’s audience, but only 7% of total conversions. The study focused on moderate users and those who had hit a paywall seven or more times but had yet to subscribe.
The test groups that received a promotional offer of 99 cents for the first six months showed 0.38-percentage-point gain in the conversion rate to 0.52% from 0.14%. The higher conversion rate also translated into revenue that exceeded expectations in the following two-year period.
“The key here is to use segmentation to target price discounts to audiences where the total revenue impact is greatest and poses the least risk,” according to Mather.
The stable users are among four groups of readers identified by the firm that show varying degrees of total audience and conversions. While stable users are most resistant to subscribing, the other three groups -- fanatics, enthusiasts and transient -- have higher conversion rates.
The so-called “fanatics” make up 2.8% of the audience, but drive 65% of conversions -- making it unnecessary to offer them steep discounts to improve average revenue per user. Enthusiasts are 6% of the audience, and comprise 8% of conversions, while transient readers make up 81% of the audience and 21% of conversions.
Mather recommends “using customer segmentation and applying a data-driven approach to managing a sustainable subscription business. With lifetime value as the north star, volume and rate can be optimized over time to reach sustainability.”

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