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Mar 16, 2007
Case Study

Zagat.com’s Web 2.0 Efforts Get Double-Digit Subscriber Growth

SUMMARY: Online subscription sites with a strong brand and good customer base can’t rest on their laurels. They need to continually drive new traffic to their sites in efforts to convert casual users into paid subscribers.

That was the reason behind Zagat.com’s recent addition of community-building features. It’s working, too -- subscriber conversions are up 14%. Test results and a full plate of creative samples.
CHALLENGE
In a time when user-generated content is all the rage, one of the offline pioneers of the concept, Zagat Survey, found itself missing out on the full Web 2.0 potential of its site.

The company famous for its burgundy-covered restaurant guides, which rate establishments based on diners’ scores and comments, had built a successful subscription site with several hundred thousand paying customers. There, subscribers could read Zagat’s restaurant ratings, along with reviews of hotels and other entertainment options, but the site didn’t have much free content for casual browsers.

“We looked at the success of Web sites giving away dining or hotel information for free and thought, ‘Why don’t we take advantage of that audience?’ ” says John Boris, VP Marketing.

So, Boris and his team set out to develop free features that might attract new visitors and funnel them toward the company’s core product, which would remain behind the subscription barrier.


CAMPAIGN
Zagat Survey was built on the notion of sharing user experiences long before there were online communities, which is why they wanted to build online features that extended the notion of the Zagat community. Here are the five steps they took:

-> Step #1. Survey existing subscribers

Boris and his team had researched free competitors and other market factors, so they had an idea what features they wanted. But with lots of corporate experience doing surveys, they knew their existing audience needed to have a say, too.

They reached out to what Boris calls “Zagat zealots,” who tend to answer every survey and buy lots and lots of books, inviting them to participate in online surveys and moderated focus groups. From those activities, they settled on four essential elements for the free offerings:

o Individual member reviews (in addition to the Zagat review, which is a compilation of survey results)
o Member discussions
o Photographs of establishments
o Copies of restaurant menus

-> Step #2. Implement new features

With more ideas than the company’s Web folks could handle, Boris’ team had to stagger implementation of the new features. First priority, based on subscriber feedback, was member reviews. They also immediately added simple features that complemented the site’s core offering, such as establishment photos and restaurant menus.

The user discussion boards were set aside for later, due to the time it would take to develop them. “Unfortunately, it never works out that what’s most important from a consumer standpoint also takes the shortest period of time to develop,” Boris says.

-> Step #3. Announce features to existing subscribers first

It’s hard to tout exciting new features if visitors won’t find any content there. So, they again turned to their core subscriber base to seed the new community features.

An email campaign encouraged the Zagat zealots to post their own reviews in the member reviews section. They included a contest offering a free dinner for two to the subscriber who posted the most new reviews.

Discussion boards were launched in a beta test to select subscribers, giving the technical team to test functionality while subscribers filled the message boards with topics, such as “What’s your favorite cut of steak?”

At the same time, Boris and his team started their broader Web marketing campaign to drive traffic to the new features:

o Paid search marketing
o Links to the new features on the Zagat home page
o Announcements in Zagat’s email newsletters
o Limited online advertising on relevant Web sites and blogs

-> Step #4. Invite restaurants to participate

Besides users, Boris also wanted to get restaurants involved in building the database, so they asked establishments to submit menus and photos.

-> Step #5. Test barrier placement and subscription offers

To access the new features, they required visitors to get a user name and password after submitting their name, address and some basic demographic information. But Boris also wanted to promote the paid subscriptions, determining where to place the free membership and subscription offers.

Different levels of information were offered to different tiers of user:

o Non-registered users could access basic restaurant information, such as address and telephone number, and member reviews.
o Registered users could see this basic info, plus post their own reviews or post on the discussion boards.
o Paid subscribers were the only ones who also had access to the official Zagat rating and review.

When a user clicked on a members-only option, the free registration option got top billing, above the option to become a paying subscriber. This was meant to create a good pool of prospects for paid products. “A free registration means a longer upsell, but there’s the chance for more lifetime value with potential book purchases and other transactions,” Boris says. “We can always encourage registered members to become subscribers through email as well.”

The team also tested different language for the subscription offer, alternating between a “1 year” or “365-day” subscription and listing the price as “$24.95 a year” or “$2.08 a month."


RESULTS

In the six months since adding new community features, Boris has seen a pop in free users and new subscribers. “We’re getting the best of both worlds. We’re indoctrinating new users to join the community, and we’re also growing the direct revenue side of our subscriber base.”

They’ve seen a 45% increase in unique users and in user sessions and a 20% jump in page views. That traffic is translating into a 14% increase in new subscribers.

New community elements are gaining traction with users and the restaurants and other establishments in the database. Restaurants have added 8,000 menus, and up to 200 more are being uploaded each week. Meanwhile, Boris’ team is adding more than 8,000 photos a week. They also have accumulated more than 30,000 member reviews.

The email introducing the member reviews feature had a 65% open rate and a 21% clickthrough rate. Those clicks resulted in more than 5,000 reviews posted to Zagat.com. The email inviting subscribers to beta test discussion boards had a 42% open rate and a 15% clickthrough rate. 11% of the people who clicked actually posted a comment on the discussion boards.

Regarding the year’s membership and pricing, the 365-day subscription outperformed “1 year.” “$2.08 a month” saw a 30%-35% higher response than to “$24.95 a year.”


Useful links related to this article

Creative samples from Zagat’s initiative
http://www.marketingsherpa.com/cs/zagat/study.html


Zagat.com
http://www.zagat.com



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