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Aug 14, 2008

Special Report: Group Subscriptions to Online Content: New Data and Tips on Top Strategies

SUMMARY: Group subscriptions or site licenses can help publishers reach customers who may not subscribe as individuals and retain them as readers. But how much longer does a group subscription last and how are companies accommodating them?

This special report looks at some of the key issues in group subscription marketing. It includes three new data charts on retention, discounting strategies and sales tactics. It offers tips on choosing the right approach for your own efforts.
The most tantalizing targets for online subscription marketers are those who want to buy a group sub or site license for people within their organization. Landing numerous paying customers with a single account provides an instant boost to the total subscriber base, offers prime targets for cross-selling and upselling and creates a relationship that’s likely to last longer than one with an individual subscriber.

“An effective model for a subscription business is to grow though an enterprise like kudzu,” says Russ Somers, Senior Manager, Product Marketing, Hoover’s. “When you become deeply implanted in the way everyone does business, renewal becomes a foregone conclusion.”

Selling group subscriptions, however, requires a special approach to acquisition marketing, a group-pricing strategy, and tactics that can include a dedicated sales force. We surveyed and interviewed hundreds of marketers earlier this year about their group subscription practices.

Here is data on the benefits of group subscription sales and common tactics used by marketers to chase these accounts. We’ve also assembled advice on choosing the right strategy and making the most of your efforts.

Chart: Length of Group Subscriptions vs. Individual Subscriptions

MarketingSherpa Charts

Many marketers cite increased lifetime value as a major reason to offer group subscriptions. As Somers from Hoover’s says, having more individuals within an organization relying on your content or services makes cancelling that subscription more difficult.

Our survey of online subscription marketers conducted this spring reveals just how much longer marketers tend to retain their group subscribers:
o Average individual subscription lasts 34.8 months
o Average group subscription lasts 45.3 months

What’s more, 33% of marketers said their average group subscription lasts more than five years. By contrast, only 14% of markers said they retain their average subscriber for five years.

Increased customer retention isn’t the only reason marketers choose to offer a group membership level.

Two other important benefits to a group-subscription offering:

Benefit #1. Group memberships provide entry points for upselling and cross-selling.

When you sell a multi-user subscription, you create a potential group of evangelists who can help market your products and services to their co-workers.

Marketers say they often begin a relationship with one division inside an organization, such as the sales department, finance or HR, which, in turn, leads to other divisions or business units joining the subscription package once they’ve seen how it benefits their colleagues.

Establishing your company as a trusted vendor also allows you to market additional content or services, such as:
o Training programs
o Books or reports
o Conferences

Benefit #2. Widespread coverage within organizations attracts advertisers.

Group subscriptions also provide a strong value proposition to potential advertisers for marketers pursuing a hybrid subscription and ad business model. A publication that offers only individual subscriptions might help an advertiser reach one or two prospects within a target company. By contrast, a group membership or site license model allows those ads to reach scores of people within target companies.

“You get multiple decision makers on the license model,” says Ed O’Farrell, Publisher, Family Wealth Report. “If the company has a license, you’re probably going to have all the key decision makers reading the publication.”

Chart: Maximum Discount and Average Discount Offered on Group Subscriptions

MarketingSherpa Charts

Source: MarketingSherpa Subscription Content Survey, April 2008
Methodology: Fielded 4/3/08 - 4/22/08, N=312

In most cases, group subscriptions sell on a volume discount. Publishers agree to increase the discount from the individual-subscription price as the number of participants in the group increases. Discounts help to:
o Attract larger organizations within your target industry
o Increase the total number of subscribers available for upselling/cross-selling
o Add incremental revenue without significant increases in cost for content creation and distribution

The size of the discount as well as the transition points between discount levels vary widely among publishers. But our survey found that B-to-B content marketers on average provide:
- Maximum discount of 41.8% off an individual subscription
- Average discount 26.5% off an individual subscription

Whatever level you settle on, it’s important to make the volume discounts meaningful enough to encourage prospects to boost the number of employees covered by a group subscription. Not all publishers adhere to the group-discount pricing strategy. In some cases, subscription prices increase depending on the size of the organization.

For example, Family Wealth Report – a subscription-based news source for the wealth-management industry – sells its subscriptions on a sliding scale. The price is based on the amount of assets under management by a financial services company. Under that system, a firm with $1 billion under management would pay less for its subscription than a firm with more than $3 billion under management.

“You look for some type of reference point that your customer is going to understand and is used to buying from,” says O’Farrell.

Other benchmarks that could form the basis of a pricing strategy include:
o Company revenues
o Number of employees or target professionals (accountants, sales people, attorneys, etc.)

Chart: How Group Subscriptions are Sold

MarketingSherpa Charts

Source: MarketingSherpa Subscription Content Survey, April 2008
Methodology: Fielded 4/3/08 - 4/22/08, N=312

Processing subscriptions for individuals is as simple as providing an online registration form and collecting credit card information. Selling group subscriptions often requires a sales rep to negotiate contracts and alternative payment methods.

Not surprisingly, our survey reveals that the majority of marketers selling group subscriptions do so through a direct sales force. About half of marketers also said they offer online transactions to process some group subscription sales.

A typical approach to combining Web sales with a direct sales force involves:
o Creating a tier of subscription levels (e.g., 1-25 users, 25-50 users, 50-100 users.)
o Setting standard pricing for those levels – with a sliding discount
o Processing subscription orders for the standard tiers online
o Proving contact information for sales representatives if a prospect wants a larger account or needs some customization.

Here’s a closer look at the two primary sales tactics for group subscriptions:

Tactic #1. Web sales and sales team support.

Marketers who use this strategy say accepting Web orders offers several benefits:

- Established prices and online ordering for smaller groups frees the sales team to focus on enterprise prospects and higher-value accounts.

“It takes about the same amount of time to close 5,000-user deal as a 20-user deal, but one of those sales pays for the sales person’s time and one of them doesn’t,” says Joel Bush, Sales Director, Near-Time, an enterprise collaboration platform. “So we try to focus our sales team’s time on the higher-end plans.”

- Lower-cost plans for smaller users allow prospects to test a subscription with a smaller group of employees.

After a prospect uses your content or service with a small group of subscribers, the additional tiers or a custom sales option provides a path for upselling.

- Special low-end plans allow marketers to attract smaller companies or associations and ad-hoc, project-based groups.

For example, the subscription-based green design site, BuildingGreen, created low-end membership packs for 2-20 individuals. These packs allow the subscriber to split its membership among individuals who may not be working for the same company.

Membership packs appeal to industry organizations, such as local green-building chapters, or collaborators from multiple companies in a green-building project, such as the project owner, architect, engineer, and construction firm.

“It’s been a good thing because members don’t have to be in the same office,” says Susan Way, Marketing Director,

If you choose to offer online sales for group subscriptions, here are some tips on marketing your range of pricing and user levels:

Tip #1. Provide a visual aid

To help prospects find the right subscription level, create a page with a clear visual representation of your packages. A chart, table or matrix can organize the complex array of features and benefits available at each subscriber level. Checkmarks or other icons will clearly indicate what’s included with a package.

The table or matrix should include for each level:
o Maximum number of users
o Price
o Depth of content or online services (e.g., access to certain articles or databases, file storage capabilities)
o Features included with subscription
o Customer support or training options
o Available add-on services

Tip #2. Clearly indicate discount level for larger subscriptions.

If you offer significant discounts for larger groups, don’t require your prospects to do the math themselves. Besides listing the monthly and annual pricing for each package, include a line that spells out exactly how much lower that price is on a per-user basis.

You can display discounts as:
o The percentage savings off an individual subscription price
o The cost per user for larger groups, compared to an individual subscription.

Tip #3. Create special landing pages to target enterprise-wide customers.

Consider directing these prospects to landing pages that outline the benefits of enterprise-wide subscription packages even if you rely on a sales team to negotiate custom packages beyond your set subscription tiers.

For example, BuildingGreen created special landing pages for firm-wide or campus-wide memberships. These pages comprise:
o Content and features included in an enterprise-wide subscription
o Sample articles and other content
o Pricing
o Customer testimonials
o ROI data on the value of an enterprise subscription

“Those pages tell a little more about those offers that we have, and they’re the pages we refer people to when they begin asking questions about a larger membership,” says Way.

Tactic #2. Processing subscription orders through a sales team

Many marketers handle group subscription sales through a team rather than an online, self-service purchasing option. Here are the major reasons why:

- Higher price points might scare off potential customers.

Many B-to-B content and service companies, particularly for enterprise clients, can cost up to thousands of dollars a month. Posting prices and subscription tiers may give site visitors sticker shock – before they learn about the value they receive for that subscription fee.

In these cases, marketers say they prefer to provide detailed information on the quality and benefits of their product or service. But they encourage prospects to chat with a sales rep to discuss subscription options. That way, prospects who engage with the sales team are more ready to share information about their needs.

- Product and subscription packages are so customizable that a standard pricing option is impractical.

A site that offers one product or one service can easily tier levels and a pricing scale. But when marketers have a wide range of products and services that customers can assemble into a custom subscription package, it becomes a complex sale that requires the assistance of a sales team.

For example, Hoover’s provides a range of products and services with subscription pricing to accommodate individual users, small businesses and enterprise clients. Because of that complexity, the company directs prospects to call an 800 number or chat online with a sales rep.

“We have a number of tools and subscription levels designed to fit different budgets,” says Somers. “I worry that if I throw out too many price points it becomes very misleading.”

If you handle all your group subscription inquiries through a sales force, here are some tips on marketing to those prospects and collecting qualifying information:

Tip #1. Provide educational content to generate leads, collect information.

As with any complex, business-to-business sale, you may be dealing with prospects that aren’t ready to pick up the phone and talk to a sales person. Educational marketing content can move those prospects closer to a buying decision by demonstrating how a subscription will benefit their business or solve a challenge.

Marketing collateral can include:

- White papers highlighting industry issues, and how your product or service addresses those issues.

- Webinars that feature customer success stories, or tutorials on using a subscription to address a need.

- Email newsletters highlighting tips and tricks for using the content or services.

Use registration pages to collect qualifying information from prospects, such as name, company, email address, phone number, organization size, etc. This data will help your sales team prepare for a telephone consultation that offers a custom-tailored subscription.

Tip #2. Create targeted content for different audiences

Tailor content to your prospects if you offer specific products or services that appeal to different industries or divisions within an organization. You can create content for:
o Industry verticals
o Business responsibilities or job description
o Customer buying cycles, such as content describing the ROI of a subscription delivered around prospects’ annual budgeting process.

Tip #3. Use free trials for lead generation.

As with individual subscriptions, free trials are a vital marketing tactic for group sales. Trials let prospects experience your content and services. They provide an opportunity for you to gather more qualifying information.

- Establish an easy-to-implement trial process – one that limits a membership to a small test group within the organization. When the trial period is over, your sales team can discuss ways to expand the offering to a larger group within an organization – or identify additional features and services the prospect needs.

- Use free-trial communications, such as welcome emails, to seek additional contacts within an organization. O’Farrell of Family Wealth Report asks every prospect who begins a free trial if they can recommend other decision makers in their organization who might be interested in the publication.

“We get referrals on a user basis,” says O’Farrell. “If someone uses the product and likes it, they’re going to be happy to give us the names of other people that it will be of value to.”

- Be flexible with your trial end dates.

Don’t cut off a prospect’s access to your site immediately upon reaching a free trial deadline. Use email and phone follow-up to contact each trial member. Determine if they are ready to convert to a paying customer, or need more time, access to more features, or accounts for additional team members before making a decision.

“I’d gladly give a month or six weeks of free service to land a client who is going to renew for four straight years,” says O’Farrell.

Useful links related to this article

Relevant Sherpa articles:

Group Subscription Marketing Tactics

6 Subscription Strategies to Increase Renewal Rates

How Hoover's Keeps Leads Hot: 5-1 ROI Test Results

12 Lessons from on Selling Subscriptions, Site Licenses, & Print-to-Online


Family Wealth Report



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