Building a subscriptions business for all seasons
How to succeed with subscriptions on Google Play
Subscriptions have become a hot topic among app developers for a good reason: over the past three years, subscription spend has grown over 10 times on Google Play and in the past year active subscribers on Play have doubled. Moreover, recent research from Google Play has reaffirmed that people are willing to pay for subscription apps.
Having worked in the app industry for half a decade, I know how truly amazing this achievement is by the development community. It underlines how you have found ways to create sustainable value in your app businesses that your audience is happy to pay for on a regular basis.
However, building a subscriptions business is not easy and a lot of parts must work together to make it successful. You have to build a good product that answers a key user need, which people are willing to pay for on an ongoing basis. This requires figuring out a lot of details, like what to include in the paid subscription or where to position the paywall. You have to figure out how to convert users to paying subscribers. And you must find ways to retain subscribers and optimize their lifetime value.
The Google Play team have invested heavily in understanding how subscription businesses succeed. While every business is different, many subscription app businesses share a lot in common regardless of size, industry, and market. Increasingly, we’re seeing that to succeed you need to do three things:
- Build a product with subscriptions front and center.
- Apply a variety of tactics to convert users into subscribers.
- Keep subscribers as happy as possible for as long as possible.
Let’s look at each of these in more detail.
Build a subscription product
To build a successful subscription product it’s important to make subscriptions the key part of product development, to have a clear value proposition for users and to pick the right subscriptions model.
Providing your users with the best possible product experience is essential for every business. To offer users an excellent subscription experience, the development of the subscription has to be at the core of your product development process rather than building a product and just adding a subscription as another form of payment.
A great example of building a subscription focused app is health and fitness app Freeletics. Users can access a catalog of exercises in the app for free. However, Freeletics ideal user experience is the app’s subscription only “coach” product, which provides subscribers with individualized training plans on a weekly basis. It makes a very good subscription product because every week subscribers see what they are paying for.
To make sure your users understand what they get out of the subscription, it’s important to have a clear value proposition. For example, HBO Now users subscribe for its great content, Bumble users for finding good matches, and Runtastic users to get in shape. The subscription research published by Google Play in June 2017 offers great insight into what users look for in a subscription product.
Finally, you need to determine the subscription model you’ll use. The common models offerings are:
- Hard paywall: the subscription enables users to get access only past a “hard” paywall. For example, Netflix content can only be watched after subscribing.
- Free with additional subscription: combining a free tier with a subscription tier that offers additional content, features, or services. For example, Tinder offers a free experience and a subscription to Tinder Plus includes a set of premium features.
Both options come with pro’s and con’s, e.g. a hard paywall can be very lucrative but requires a strong brand that users trust already. Make sure you pick the model that fits with the proposition of your subscription and brand.
Hence, whether you’re starting to build an app with a subscription tier, considering shifting your business model to subscriptions, or increasing the focus on your already existing subscription business, keep the above in mind to build a great subscription product. An excellent product is the foundation for a successful apps business.
Apply a variety of tactics to convert users into subscribers
With a product developed to focus on subscription, the next step is to acquire subscribers. We have learned many great tactics for this by working with leading subscription developers around the globe. I want to share four of them with you.
Conversion tactic 1) Understand what drives users to become subscribers.
According to our research, the top two reasons users subscribe to an app are content and discounts.
A further breakdown by category shows how one may be more pronounced than the other, but, in general, combining access to additional content with an offer is very appealing. Remember that you can set up subscription offers by using introductory pricing.
Conversion tactic 2) Position your subscription service accurately in marketing and communications
It is important users know what to expect from the app and its subscription. Marketing and communication can help you set the right expectations and increase your audience’s desire to become subscribers and get the most out of the app.
When Runtastic launched their app for bodyweight training called Runtastic Results, they initially promoted it as free. However, when new users landed on a paywall and couldn’t find the free features, it resulted in poor ratings and low conversions. To change this, Runtastic updated the store listing, marketing and ad copy, and moved the paywall back a step to make more content and functionality available to users for free. With the actions taken, ratings, downloads, and conversions improved.
In another example, Zattoo, a TV live streaming app from Switzerland, found that repositioning their brand led to a 25% increase in subscriptions sales. While Zattoo initially promoted itself as a free streaming platform, with the increasing focus on subscriptions they were keen to shift customer perceptions to understanding Zattoo´s value as a premium content provider and a real alternative to cable TV. Therefore, they adjusted the product offering, UX, and messaging down to the detailed level of changing the call to action from “Watch TV for free” to “Test for free”.
Conversion tactic 3) Experiment with trial periods and offers
It makes sense that users want to “try before they buy”, which is why 78% of subscriptions on Google Play start with a free trial. Free trials, as well as introductory pricing, on Google Play Billing allow developers to create compelling offers for users.
A video streaming service saw great success when they added free trials to their subscription offering. They had first launched with a free tier, making a small subset of content available for free and a subscription necessary to unlock more content at a relatively low price. After five months they found users were not converting to subscribers as expected. So, they introduced a 30-day free trial which led to a significant increase in memberships. They continued to optimize by testing a shorter 7-day free trial, which worked even better; conversion to paid subscription increased by 26%.
Anghami, a popular music streaming service from Lebanon, used introductory pricing to offer users a subscription at a discount price for the first three months and saw a 400% increase in daily orders.
Of course, there are some notable exceptions to the rule, such as Freeletics, who benefits from users’ impulse purchases and found that 70% of users don’t try a workout before subscribing.
As always, run experiments to find out what works best for your subscription product.
Conversion tactic 4) Be creative with different conversion triggers along the user journey
Many developers have created conversion “sweet spots” that work well for them, such as day-of sign up, after a user has displayed a certain engagement pattern, or used the app for a certain amount of time. However, very few developers tend to go “all in” by offering different conversion triggers along the full user journey.
Memrise, a language learning app, highlights different subscription triggers along the user’s journey segmented at day 0, 7, and 90. At “D0” they try to convert as many users as possible by highlighting the value of the Pro subscription. For example, they trigger an upsell prompt for users that tap on an audio button more than once to replay a spoken word (a Pro feature). For “D7” conversions they invest a lot in understanding the user flow and unlocking individual Pro subscription features to users to demonstrate the value of the full product experience. For “D90” Memrise focuses on what motivates these long tail users — for example, learning streaks and leaderboards — and offers discounts to celebrate achievements. These different triggers for users at various stages of their journey enables Memrise to convert a high percentage of users.
Keep subscribers as happy as possible for as long as possible
Having invested a lot of hard work in building and optimizing your product and converting users into paying subscribers, you want to optimize your subscribers’ lifetime value (LTV).
As with conversion tactics, understanding why subscribers may churn is a good starting point.
According to our research, content is not just the main conversion driver: it’s also what retains your audience the most as well. 44% of users indicate that content is a key reason for continuing to pay, followed by frequency of use. That means your job in optimizing content and engagement is not finished with the first conversion, it´s when the job really starts. This is further underlined by the research results for why users stop paying, the most common reasons: needs change, low engagement, or content.
A good example of how to leverage content for retention is Univision, a US TV network. While big events are key acquisition drivers, it is the on-demand content that improves subscriber tenure. Therefore, they keep adding content to their video-on-demand library and help users find it through messaging and the user interface (UI) to increase user retention.
Another key subscription retention tactic is to constantly remind users of what they get out of their subscription. Take Anghami, the Middle Eastern music streaming service I mentioned earlier. They do several things to increase LTV. First, Anghami reminds users of the benefits offered by their subscriptions. They noticed subscribers churning after downloading music, thinking they did not need the subscription anymore. To address this, Anghami added the following reminder to the downloads tab and reduced subscriber churn by 40%.
Second, Anghami rewards current subscribers. Around the holidays they gave existing users a gift to send to friends. Current users loved it, and Anghami got great publicity through word of mouth and also improved retention.
However, no matter how great your subscriber retention is, some subscribers will churn. It’s simply part of every business. You can tackle this challenge by creating ‘win back’ strategies. Anghami does this by looking for uninstall patterns in their users’ behavior. If they find that subscribers churn despite the actions they take to increase user engagement, they offer the user a discounted premium subscription for a short period to win them back.
Of course, this is not an exhaustive list and there are many other things to consider, but focusing on the three major areas and applying the tactics mentioned will help you to put your subscriptions business on a very solid footing.
So, what is next? How can you start your app subscription business or make it more successful? Let me propose three simple steps:
- Start by analyzing how your app could become a great subscription product for users or, if you already have a well-defined subscription product, analyze how you can further optimize the value of it based on what you learned reading this post.
- Define conversion tactics across the full funnel, remembering what is likely to drive conversion for users in your category. Set up a hypothesis, test, measure, implement, and repeat.
- Develop tactics to constantly optimize lifetime value by engaging subscribers and reminding them of their subscription benefits and applying win-back strategies.
I hope you found this article useful, and if so, there is absolutely no shame in hitting the recommend button. Also, I’d love to hear your opinion on this topic. Which best practices stuck with you the most and how did implementing them help you move forward with your subscription business? What did we miss or what topic would you like to hear more about? I’m looking forward to a great conversation in the comments section. Finally, there are a lot of resources on our developer website for you to get started with subscriptions on Google Play.
What do you think?
Do you have questions or thoughts on building a successful subscriptions business on Google Play? Continue the discussion in the comments below or tweet using the hashtag #AskPlayDev and we’ll reply from @GooglePlayDev, where we regularly share news and tips on how to be successful on Google Play.