This Monday morning at 8:30 A.M., executives from 100 Web sites selling subscriptions, from Ancestry.com to Ziff Davis, gathered in a conference room in New York to swap data and tips at ContentBiz's 3rd Annual Summit.
"In the past subscription growth was relatively easy," noted ContentBiz Publisher Anne Holland.
"Everyone picked the low-hanging fruit. Consumers who loved you so much they'd subscribe in a heartbeat. Plus, subscriptions grew because the marketplace overall was getting more and more used to the idea of buying content online. So everyone was happy at our past Summits, oh great we're selling subscriptions!"
"However, I'm here today to warn you," she continued. "You've plucked most of that fruit already. Selling subscriptions is going to get harder and many of your subscription marketing efforts are fairly weak. I surf hundreds of subscription sites, they need a lot of work to do better at conversions."
On that hard-headed note the Summit began. Here is a quick overview of tips and trends across the board:
1. Direct response and Web tech = unhappy bedmates 2. Credit card processing headaches 3. Outbound marketing tactics to get a steady new sub flow 4. How to improve visitor-to-sub conversions 5. Three solutions to raise renewal rates
-> 1. Direct response and Web tech = unhappy bedmates
Selling subscriptions to Web sites and email newsletters requires classic direct response marketing tactics and skills.
As one speaker admitted, "Teaching my marketers Internet stuff is easy at this point. We've got that down. It's the direct response stuff that's killing us. That's really hard."
Lesson one: Hire marketers from DR backgrounds. In fact steal circulation managers from offline publications if you can. They should be the kind of people who love spreadsheeting and analyzing numbers.
However, your biggest marketing challenge is probably your tech department. "Tech hell!" exclaimed AmericanGreetings.com's Josef Mandelbaum. "Whenever you want to test something, your tech people won't like it."
Of course the foundation of successful direct response marketing is the ability to launch and measure an unending series of tests.
Terra Lycos' Paul Pellman said he has devised a series of workarounds such as using banner ad-serving tech to put up tests on the fly instead of hard-coding marketing onto site pages.
He explains, "I'm a big fan of bubblegum, rubber bands, bits of string. IT wants to engineer a gold-plated version, but if you do that you're not ever going to test a lot. You have to be able to throw stuff against the wall a lot to learn answers."
The most popular tests many sites are trying:
o Pricing
Almost everyone reported that price sensitivity is not as bad as they thought. In other words, if you have not tried raising your prices, you are probably leaving money on the table.
One audience member asked HRNext.com's John Brady if he wishes he had launched at $395 instead of launching at $199 and taking a couple of years to move the price up. "You bet!" he replied.
CashFlowCircle's Shawn Casey said when he tested $47 and $97 per month charges, "twice as many people took $97 so we got rid of $47 immediately."
o Trial length
Last year everyone learned that opt-out trials (where consumers can subscribe at no cost for a while if they give a credit card up front to be charged later) are the killer app. This year everyone talked about their latest tests: How long a trial do you have to offer?
Publishers are testing everything from three days to 30 days, as well as the wording ("30 days" versus "one month") to see what term converts the most subscribers. Results vary by site; what does not vary is the fact that you *must* test it.
o Offer look and copy
You can not just give your marketing creative your best shot and let it sit there on your site forever. You have to test your barrier page, the various links from your home page, landing pages for outside offers, etc.
Once you have found a winner, do not stop. Let the winner become your new "control" and keep on testing new creative until you beat it. The process is endless. Breath in, breath out, rinse, lather, repeat.
Accept the fact that your marketing creative will never ever be "done."
-> 2. Credit card headaches
No matter how big or small a company they came from, everyone was complaining about dealing with credit cards.
On one hand credit cards make auto-renewing possible, and auto- renewing equals much, much higher profits. On the other hand, credit cards are a massive pain to handle.
Three reasons why:
o Banks do not like subscription sites.
They do not want to see your site rack up more than about $50,000 in subscription sales per month because it is risky for them. What if you go under, and then all those consumers ask for their money back? It could happen. It has happened.
o Credit card lifetimes are getting shorter.
Consumers are switching credit cards at a record pace. They are consolidating debt; and, they are taking advantage of low six- month rates and then switching cards the minute the rate goes up.
This means unless you sell to people using corporate cards (which have a slightly longer lifespan), you are going to start getting "hard bounces" on auto-renew accounts due to a card being dead at much higher rates than you ever expected.
AmericanGreetings.com, among other sites, has had to create a complex system of marketing campaigns specifically aimed at hard bounce cards to win that subscriber back.
o Soft bounces cost you money.
Soft bounces, which are when a card account is still active but some of the information you have for the it (such as expiration date) is wrong, wind up costing publishers money because your merchant account charges you a higher fee for soft bounce transactions.
On one hand, you can force the charge through. On the other hand, your profit margin will be smaller than expected.
One solution to credit card headaches is to accept e-checks online. Works best when you are marketing to the older female demographic who are often prefer checks to cards.
Oh, and last but not least, do not even think about relying on 100% credit card offers for European customers. In some countries many consumers do not have credit cards or just do not like using them. Allowing debit card network and phone bill payments may be your best choice.
-> 3. Outbound marketing tactics to get a steady new sub flow
Only a certain percent of your regular visitors or free subscribers will ever convert to paying. Once you have converted that group, you can not grow your subscriber base unless you get fresh blood.
Attracting newbies is mission critical no matter how old and established your site is.
GameSpot, for example, has been around since 1995. When they first switched to paid, 20,000 fans signed up immediately. Then growth slowed to a crawl because search engines had stopped listing most of the site's pages when they went behind the paid barrier. "I was terrified, I had to create new user growth," remembers SVP Vince Broady.
What works? Search marketing, especially pay per click ads on Overture and Google, is definitely effective, as long as you have got tight tracking mechanisms in place before you start and you are willing to tweak terms and copy on a frequent basis.
Dr Flint McGlaughlin of MarketingExperiments.com said he tore competitor's search marketing tactics apart, analyzing which words they were either optimizing or paying for. If a search term was too expensive due to popularity, he brainstormed to find a similar term that nobody else was advertising on yet.
For example, when marketing content about mental health he found the term "depression" cost more than $1.00 per click, but "bipolar" was just .17 cents.
Getting friends to refer friends is also highly effective, although it does not tend to work as if you push it in a big promotion (i.e. Win this prize if you refer your friends!) It is got to come up in a more natural way.
Offering sexy no-cost content (newsletters, games, ecards, you name it) is the best way to attract newbies, but several publishers warned that you still have to account for customer service costs.
Even though people are getting your content at no-cost, they still expect great service. Fast answers to questions, quick fixes to tech problems etc. Since you are hoping they will pay someday, you can not blow them off with a form letter.
-> 4. How to improve visitor-to-sub conversions
Constantly tweak and rotate your site's banners and links that lead to subscription offers. Ugly often wins, more than one publisher had grey utilitarian buttons and boxes that were currently the winning control creative.
Test cartoon-style characters, test animation, test text-only ads ala Google, and absolutely test pop-ups targeting site leavers. Even MIT Technology Review (who you might expect to be fairly staid with their up-market image) pop-ups site leavers if they have bailed on a subscription offer.
CashFlowCircle constantly offers new teleseminars where subscribers can ask name-brand experts questions about how to improve their businesses. All past teleseminars are stored as audio-files on the site as well, adding up to a critical mass of content that is hard not to subscribe to.
AmericanGreetings.com has tested offering everything from tote bags to a Mikasa crystal candy dish. "Absolutely nothing worked," noted CEO Mandelbaum. Until they started offering three subscriptions for the price of one, which is a big winner. (People buy one for themselves and give friends or relatives the others.)
Variety tested offering a whole bunch of different subscription levels. "Platinum, gold, silver, pewter, we had all these tiers," said Variety's Travis Smith. "Now we have one. We learned don't be coy; businesspeople want to get it over with and get it all in one."
In other words, it is hard enough to sell subscriptions, do not annoy people or confuse the issue with a choice of many different offers.
Matchmaker.com tested making its subscription process easier. In the past new buyers had to fill out pages of information to create an online profile for the system. Now Matchmaker has separated this process so becoming a subscriber is quick and easy. Only after the order is submitted are you next prompted to fill out the longer registration form. If you abandon it there, at least Matchmaker has not lost the subscription altogether.
When it came to marketing copy, everyone agreed that your site *must* have a human-feeling personality. People do not buy from sites or from computers, they buy from people.
Hype-ridden copy (long a staple of offline circulation marketing) is out. You need to build trust far more than excitement. If you are attracting the right people to your site, they are already excited about your topic, now you just have to convince them that you will deliver it well enough to please them.
Outrageously good customer service can go a long way in that regard. Photos of staffers, links to communicate, and a definite brand flavor help too.
In fact, if you acquire another subscription site in your niche, you may do better if you do not merge it into your brand. Run them side by side, each with a unique personality, instead.
-> 5. Three solutions to raise renewal rates
Subscription sites have made a tremendous amount of progress in marketing renewals in the past year. What was once rather slapdash has begun to turn into a true science.
Everyone is doing auto-renew. Consultant Bill Baird of Baird Direct revealed data that showed annual subscriptions offering autorenew have an average renewal rate (after cancels) that is 27 points higher than subscriptions that consumers have to proactively hand-raise to renew.
That said, auto-renewing month to month does not mean you will have a great annual sales rate.
One attendee at our cocktail party said he had an average five month month-to-month subscription term. Another said his average was about 15 months but predicted it would fall when his site grew beyond the initial circle of heavy fans.
Three tactics were definite winners to raise auto-renew stick rates:
o A badge:
Month-to-month subscription sports site Rivals.com is hugely seasonal and had a 20% fall off the month after football season ended in 2002. They tested giving all subscribers a virtual "Badge" that notes how many months they have been members. The personalized badge appears on that member's home page whenever he or she visits.
Rivals.com's Bobby Burton says that members have posted "I love my badge" on the message boards, and many stick with the site off-season because they do not want to lose months. (If they cancel and subscribe next season they have to start from zero badge months again.)
o Phone cancels only:
Both Rivals.com and AmericanGreetings.com sites only allow subscription cancellations by phone. (Not by email, and not by site form.)
When people call in to cancel, they are greeted by trained customer service reps who have scripted replies (as well as income bonuses) to help them save the account.
You might be surprised how often an account can be saved. After all, someone who has subscribed before is your best prospect to buy again.
o Printed invoice:
If an auto-renew account is cancelled due to a credit card bounce, try sending out a printed renewal invoice. There are plenty of vendors ready to handle this for little more than 50 cents per piece. Just send them a regular data file and keep mailing notices until the cost outweighs the benefit.
Forecast: We expect publishers to continue increasing focus on measuring and increasing average subscriber lifetime value by improving renewals and cross-selling ancillary products (or adding more ad sales back into the mix).
This is the key to a profitable subscription site.
Useful link:
You can get the entire 250+ page transcript of this Summit, including loads of data not included in this article, at the link below. Includes Q&A, PowerPoint slides (very useful charts), handouts, and of course speeches.
Or call (973)895-1717 to place your order, and/or enquire about bulk discounts.
P.S. Every year the transcript is a best-seller, for which we are deeply grateful because it helps us keep this newsletter no-cost. Thanks to everyone who supports us year after year, you know who you are :-)
