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Apr 19, 2004
Article

5 Specific Ways Subscription Sites are Leaving Money on the Table

SUMMARY: Could your subscription service be more profitable? According to SubscriptionConnection head Joe Meth, who gets unhappy emails from other sites' subscription customers every day, most online publishers are leaving money on the table in at least one of five specific ways.

Find out which common mistakes may be slowing your revenues down:
How many subscription sites are there on the Web?

Joe Meth, head of the consumer portal SubscriptionConnection.com, says, "Right now we list about 500 publishers. Those 500 have 725-730 different membership products and in total there are 1,100-1,200 different pricing options. Plus, I have another 250 publishers in the queue we'll be adding."

In total, he estimates content subscription services online including niche b-to-b offerings may be as high as 2,500 by the end of 2004.

In comparison, the print subscription newsletter industry has more than 5,000 titles and in 1995 was estimated to sell at least $2 billion in subscriptions per year, plus an additional $800 million in ancillary revenues mainly from list rentals and items such as special reports sold directly to subscribers. Now, almost a decade later, it's certainly significantly larger.

If you assume the two industries are fairly similar in terms of selling targeted high-value content directly to end users, this means there's plenty of room for the online subscription industry to grow.

However, from his vantage point as an observer, Meth says that while there's plenty of evidence that sites are growing their subscriber bases, the initial surge of new subscription offerings has slowed dramatically.

"Most sites in our directory were established over 18 months ago. Most of the ones we find to add are a year to three years old. I don't really see many new ones starting up. I keep looking for new ones...."

Meth also doesn't think current sites are using best marketing practices to truly achieve their growth potential. Here are five specific weaknesses in today's tactics that could be holding back the industry from more profits:

#1. A fast-rising tide of consumer mistrust

We've noticed several sites recently promoting "No Credit Card Required!" as a sales point for their trial offers. Why would they do that when every past Case Study ContentBiz has run proved grabbing that card up front is infinitely more profitable than relying on consumers to pro-actively convert on the back-end?

Meth says it's because there's a rising tide of consumer mistrust against subscription sites' recurring billing practices.

"Web publishers are underestimating the impact of bad customer service and misleading recurring billing offers. I get a lot of letters from consumers related to free trials and autobilling afterwards. Consumers don't know they signed up for that. When they try to cancel, the site's contact information is frequently obtuse and obscure, so they contact me. We'll go to the site, to try to find out how customers can cancel and email then a URL to it. But, it's often impossible to find out.

"Sites try to make it difficult to cancel because it's expensive to lose customers. But you have to balance that off against negative comments customers have."

And according to the laws of customer service, every time you annoy a customer enough that they'll actively complain to a third party, you can bet they are also badmouthing you to at least eight friends.

By hiding terms or cancellation contacts in fine print, subscription sites are poisoning the well both for themselves and for the industry.

#2. Don't rely so much on search and email marketing

The biggest lessons of the past six months have been that you can't rely on either search marketing or email campaigns to third party lists as your main traffic drivers.

Meth notes that subscription sites were no different from the rest of the Web when Google launched its now-infamous Florida update last fall. Rankings and traffic plummeted for many. Plus, the dramatic increase in paid search marketing has also created a corresponding increase in search results page clutter, and lowered clicks.

Increased filters and spam overload have also made it harder for sites relying on email to third party lists.

If you're not constantly testing new tactics, including direct (postal) mail, radio, ads in trusted email newsletters, and co-marketing partnerships with other subscription sites, you'll miss out on revenue streams.

#3. Test pricing changes

"I really haven't seen people experimenting with different price points," says Meth. "Only a handful of sites have changed prices this year."

In the print subscription world, this would be a shocking lapse. It's even more irresponsible online where there's so much less industry data on what prices and terms the marketplace is willing to bear.

Without price testing, publishers are leaving money on the table -- guaranteed.

#4. Offer a wider variety of payment options

Meth says he gets a steady stream of emailed notes from consumers asking if he knows of a way to purchase online subscriptions without a credit card. Some prefer PayPal, others want to use direct debit cards, or simply to send a printed check in for their order. (35+ aged women in particular are notorious in the offline direct response world for preferring a printed check option.)

While multiple offer options such as length of term or type of service may decrease your conversion rates, many offline publishers have found offering both multiple response options (web, phone, postal mail) and payment-type options (card, check, etc.) can increase incremental sales. Yet, while Meth sees many sites offering a variety of terms, few offer the more appealing response and payment-type options.

#5. Use non-subscription "one-off" content to gain new sales

When you sell a subscription to someone, you have to convince them to make two different decisions at the same time --
o Is this the right information for me?
o Do I want an ongoing relationship/commitment to buy it?

Meth wonders how many sites lose potential sales from consumers who answer the first question positively but get hung up on the second. He suggests publishers create a one-off product to take advantage of this -- perhaps a PDF or printed report that's a collection of some of the content that's behind the paid subscription barrier.

You can either market this as a premium (free gift with order) for subscribing, thus making consumers feel that they're getting so much gratification right away by ordering that it's worth taking the relationship risk; or, you can sell it as a one-off report to capture sales and contact info from folks who aren't ready to take the relationship plunge.

Meth notes that offering content, that's part of your site, in a PDF or printed format is valuable to customers because it's handy. They don't have to seek out this information for themselves. Repackaged content, especially in print format, can have tremendous perceived value.

You can even offer "best of" reports to current subscribers as an add-on sale to increase revenues per account. (This is one of the ways the offline subscription industry makes roughly 40% of revenues from ancillaries.)

Meth's suggestion -- test this first with a print-on-demand vendor so you don't have to invest too much in inventory. Luckily the print on demand industry has been growing over the past couple of years, so pricing is reasonable.

Plus, offering a printed book or report helps your site gain a level of trustworthiness. You're not simply virtual anymore - you're tangible.

Useful links related to this article:

SubscriptionConnection
http://www.subscriptionconnection.com


Print on Demand Initiative - a useful trade association of vendors
http://www.podi.org/


Data on print newsletter industry:
http://www.newsletters.org/page.cfm?name=faqs

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