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Aug 02, 2007
Event Presentation

Top 3 Subscription Marketing Tests From AmericanGreetings.com

SUMMARY: This is a must-read article if you want to find inspiration in the top three subscription marketing tests from AmericanGreetings.com and lift your own ROI.

Josef Mandelbaum, President & CEO, AG Intellectual Property Group, exclusively revealed the tests (and lots of results) at MarketingSherpa's Selling Subscriptions Summit this year in New York City. Includes creative samples and his top three takeaways about subscription marketing.
“We always test. We are doing, I don’t know, tens or hundreds of tests in any quarter around all the different variables that [marketers] do today,” says Josef Mandelbaum, President & CEO, AG Intellectual Property Group.

To offer insight into some of AmericanGreetings.com’s testing procedures, Mandelbaum told attendees at MarketingSherpa’s Selling Subscriptions Summit about their top three tests. Here are the tests, results and Mandelbaum’s explanation on each:

-> Test #1. Upsell at time of purchase

Like all marketers, Mandelbaum’s team wanted to see what else they could sell customers once they purchased an item. Going in, his team knew the consumer’s attention is focused, they’re in a purchasing mindset and their credit card information is readily available. Mandelbaum wanted to see where the highest priced offer needed to be situated. They tested three offers in different order:

- eCard Membership
- Create & Print Membership
- Get Both!

RESULT: By putting the highest price point on top, they increased their average revenue per user 27%.

“It is something actually counter-intuitive at the beginning because you think that you want consumers to get acclimated and not be scared off by a big price,” Mandelbaum says. “The reality is we've tested it -- significant testing -- and the highest price point up top leaves the highest conversion and, obviously, increases your ARPU significantly.”

-> Test #2. Add a reminder system

Mandelbaum’s team knows that an engaged consumer is a more valuable consumer. That’s why when a user signs up for their subscription service, they’re asked if they want to be reminded of any birthdays or anniversaries. Or the information can be captured and stored when a card is sent.

The reminder page doesn't actually sell a product but engages visitors to use their Reminders Service. The page simply asks new users to enter data into three fields to set up their first birthday reminder:
o First name
o Last name (optional)
o Birthday month and day

Mandelbaum’s team tests included adding one, two or three reminder fields to enter. After this initial page, users can always add more reminders into the system.

RESULT: By adding the Reminders Service, they saw a 64% lift in birthday reminders per order and then a 14% overall lift. They also learned it worked best to offer three reminders.

“We spent probably a little bit too much money on this service than I would have liked, but we found that reminders are a high correlation to actually how many people end up renewing their subscriptions,” Mandelbaum says. “The average number of reminders of an engaged person is about 15, which is really good for us, and we see a high correlation again reaching renewal and the more reminders you have. You get about a 32% lift if you have more than like six or seven renewals in there.”

-> Test #3. Raise gross subscription retention rate

“Who doesn't feel guilty when a birthday comes and you forget it? We actually did 15 different variables, and we tested around 14,000-15,000 people, looking at which variables have a high correlation to retention,” Mandelbaum says.

First, he had his team divide the population into equal segments and test converting their free trial into paid membership along these variables:
o Total eCard usage
o Total Click and Print usage
o Age
o Gender
o State
o Number of different eCard categories
o Number of different eCard products
o Number of different Click and Print categories
o Number of different Click and Print products
o Time since create date
o Number of reminders
o Number of address entries
o Credit card type
o Benefit
o Marital status

RESULT: They increased retention rates by 21% through many of these different variables. Individually, the highest correlation coefficient that told if a user would extend their trial into a paid subscription was age.

Breaking down by age group:
o 56-105, 92.1%
o 47-55, 90.4%
o 40-46, 88.0%
o 33-39, 82.8%
o 13-32, 75.5%

The findings surprised Mandelbaum, and he realized that they could cater their marketing to specifically target the people they think have a higher likelihood of renewing. "We also could target the ones who may be in the last bracket --13-32 -- who may only have a 75% chance of extending. I may be able to do things with them to actually increase that from 75% to 80%.”

In his speech at the Summit, Mandelbaum also offered three takeaways:

#1. Test. Test. Test.

“This is classic direct marketing -- it's just transformed here. If you don't have an internal business intelligence group, I encourage you either to start getting one or to start looking for partners. It is not an easy analysis, and a dedicated team will help pay for itself, I guarantee you 100%.”

#2. Find the right offer for your audience.

“Segmenting your market allows you to increase your lifetime value, get better cross-sells and upsells to the customer and the right customer at the right time. That can only be done through really good segmentation studying, and it takes time to get enough of a base to do a segmentation study. I don't recommend it right away, but over time, this is something that you should look at.”

#3. Create two teams: one dedicated to internal changes to make your site better; the other to get you the big bang.

“If you have limited resources, it's important to separate these into two buckets. ... Incremental changes may not have the big bang, but if you don't do the incremental changes, you'll never get the big bang. So, have a small team that's looking at how do I optimize or test different offers, different prices, different terms, different cross-sells or upsells. Then, have another team dedicated to trying to find that big bang. It can't be the same team because the mindset is different, the thinking is different. Unless you allocate resources to both individually, one will be swallowed up by the other.”


Useful links related to this article

Creative samples from AmericanGreetings.com
http://www.marketingsherpa.com/cs/amergreetings/study.h
ml


Transcript for Selling Online Subscriptions Summits 2007:
http://www.sherpastore.com/selling-subscriptions


AmericanGreetings.com
http://www.americangreetings.com


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