Upgrade your subscription business

Discover insights from fellow developers who have successfully expanded their subscription businesses

If you read my last article on ‘Outsmarting Subscriptions Challenges’, you should be familiar with the common challenges faced in an app subscription business model, but also the opportunities that come with it. Consumer spend on subscriptions continues to grow significantly on Google Play. However, with so many apps trying to reach buyers, it can be challenging to continue to grow your business.

In my role as Business Development Manager at Google Play, I’ve seen businesses across industries and markets find new and innovative ways to maintain an upward trajectory, whether by growing their subscriber base, increasing Average Revenue Per User (ARPU), or both. In this (rather lengthy) post, I share insights and learnings from developers who have introduced new products, altered their paywalls, expanded their subscriber base, and entered new markets.

Coming up:

• Introducing new products: Tinder, Blinkist
• Altering paywalls: Strava, Univision
• Expanding the subscriber base: Headspace, Wall Street Journal
• Entering new markets: Viki

Introducing new products

Launching new subscription products can unlock more value for your users and provide additional revenue opportunities by growing the pie. Two developers have done this well: Tinder and Blinkist.

Tinder: Going (for) Gold

Tinder — the leading dating app with 1.6B swipes and 26M matches every day — found tremendous success by launching Tinder Gold in 2017.

Tinder had launched their first subscription offering, Tinder Plus, in 2015, with three features originally priced at $9.99/month. As they added more features to Plus, the product started to become pretty dense. Instead of creating a new subscription product that users could subscribe to in addition to Plus (and therefore have two active subscriptions), they created Tinder Gold. Gold had all the features of Plus, with one additional “killer” feature which unlocks the ability to see who likes you before you swipe. People using Tinder Plus could seamlessly upgrade to Tinder Gold (see: Plan Upgrade/Downgrade feature).

Considerations: In creating Tinder Gold, the team considered the following:

• What complementary features could they provide to existing subscribers in limited cohorts that could make the app more efficient or more fun? If the new feature was available to everyone, it wouldn’t be exclusive or special any more.
• What would be the response from existing subscribers? Would they think this is fair? Too expensive? Would they find enough value in a single feature to justify the upgrade? Tinder solved this question through testing and found users were willing to upgrade.
• What would the brand be? Tinder spent a lot of time on the branding of Tinder Gold (which sounds better than “Tinder Plus, Plus”!) They thought about what would get people’s attention with naming and animations within the app.
• Which subscription (Plus or Gold) to merchandise from key entry points? Tinder decided to be conservative when they launched and kept most of the paywalls focused on Tinder Plus. Tinder is gradually starting to merchandise Tinder Gold in more of their top converting paywalls.

Results: Consumers embraced Tinder Gold:

• Nearly 2x subscribers and over 2x revenue in 2017
• 3.1 million average subscribers in Q4, a record sequential increase of 544k
• 2nd highest grossing app globally in 2017
• Meaningful increase in many of Tinder’s other paid products.

According to Jeff Morris, VP of Revenue, Tinder’s framework for creating new products is to think of them as an opportunity to break existing rules.

“My job when I walk in the office every morning is to think of what rules we can break and what features we can give some subset of customers. If you think any rule that you build in your product is sacred, your job is to challenge that. This is how I think of monetization. It’s access and exposure. You can read all sorts of books on game theory and how you design games, but if you just have those two things in mind you can probably go to work and come up with some pretty cool ideas.”

For more information, watch Tinder’s full presentation from our subscriptions event.

Blinkist: Audio for the win

Blinkist is an app that distills key insights from non-fiction books into 15-minute reads or listens. In 2014, Blinkist subscriber growth had slowed down, conversion rates and lifetime value (LTV were too low to scale via paid marketing, and the service didn’t have a sufficient viral factor to grow organically). Blinkist needed to make decisions to set up the business for success.

By talking to users, the Blinkist team gained eye-opening insight that audio was a highly-demanded feature. Given Blinkist is based in Berlin, they had not considered commuting routines of people in the US. They were nonetheless hesitant since introducing audio would be a major shift for the company.

Considerations:

1. Be clear about the goals and expectations: Blinkist defined hypotheses based on the need to increase conversion rates and lifetime value (LTV). They assumed audio would either increase the usability of the product (and therefore increase conversion rates), or increase the perceived value of the product (and allow Blinkist to increase their price point).
2. Make it easy to get out: To cover the down side, they assembled a small cross-functional squad of internal people who were passionate about audio and wanted to drive the project. That squad was intrinsically motivated and committed, even with limited resources. They allocated a small budget to the project, enough to produce 50 audio versions to validate their theories.

Results

• Blinkist launched Blinkist Audio three months after first discussing it, and today, audio is the preferred way people consume content on Blinkist. In 2017, people listened to more than 40 million minutes of audio on Blinkist.
• Since 2014, Blinkist has increased revenue by 10X
• Blinkist increased customer lifetime value (CLTV) dramatically. They set the new premium tier (which includes audio) to $80/year, 2x higher than existing pre-audio premium tier, which had been $40/year. At the same time, they also increased the price for plans without audio to $50/year. With the option of audio, their service had become more valuable, even if some people would not choose the option.
• Audio increased retention because it created opportunities for people to use the product in different settings, such as when on the move. People who use audio stick around for longer, therefore renewals increased, which increases LTV.
• Today, audio is at the center of the company and product. Blinkist got rid of the non-audio tier and now only offer a subscription with audio at the higher price point — with no negative impact on conversion. They are evolving to an audio-first brand and have launched several audio-only ventures, such as their Podcast Simplify.

Best practices

When developing new products, Blinkist focuses on user-centric product innovation and has shared the following tips:

• Impact is hard to estimate beforehand. It’s important to do research but you also need to trust your intuition. You have to take a leap of faith at some point because you’ll never have perfect data.
• Learn by doing while keeping the down side covered. Focus on quick learning via experiments rather than perfection. Assemble a small team and give them autonomy and authority to make decisions.
• When it comes to pricing, people often create their own pricing analogies for your product. You can be very strategic about pricing but keep in mind that users often create their own analogies for your product (e.g. they compare it to Netflix, Spotify or other services they pay for) and you can’t really influence this.
• Be ready to fail. You can’t always be right. Sometimes the best ideas fail. Start small and don’t bet the whole company on any one idea.

For more information, watch Blinkist’s full presentation from our subscriptions event.

Altering paywalls

Another way to grow your subscriptions business is by changing your paywall or packages without necessarily changing your product. This can be challenging as you have to overcome what existing subscribers are already used to, but when done right, as with the example from Strava, it can have a big upside. You can see from Univision’s example, even if it doesn’t work out, the learnings you gain makes it worth it!

Strava: More options, improved results

Strava is a health and fitness app that allows people to track their fitness. Strava’s premium subscription offering became too “loaded” as the team kept adding new features to serve different customers, which led to diminishing returns and the app being too complicated to market. The Strava team decided to split the premium offering into three different packages: training, analytics and safety.

Process

Strava ran surveys and in-person interviews to understand what bundles of features people use, and which packages would be most intuitive. To get real-world verification, they built a fully functioning front-end with no backend at all — regardless of what packages users bought, they received all the features. Even though they were giving away their full package at a lower price, the learnings made it worthwhile because it gave the Strava team the confidence needed to move forward.

Results

Splitting up a subscription offering into multiple packages worked well for Strava. They brought in new subscribers who weren’t willing to pay for the whole package. Strava saw:

• 40% increase in conversion rate
• 52% increase in projected LTV based on early data. Since the new prices were cheaper, annual subscriptions surged

Lower price points directly drove incremental adoption:

• 23% chose a single package, $2.99/month
• 13% chose two packages, $5.98/month
• 64% chose all three (original offering, same price)

Univision: A lesson well learnt

Sometimes new tiers don’t always work out as intended. UnivsionNOW is a Spanish-language broadcast television network and Univision’s app offers content directly to consumers via subscriptions. The app has a free tier via authentication for people already paying for Univision through their pay TV company, and a paid subscription tier for those who aren’t.

Univision had access to hundreds of hours of new content they wanted to bring into the app. Therefore, they decided to launch a lower tier subscription option for $2.99/month which offers access to that content only. They also raised the price for their top tier package from $5.99 to $7.99/month and removed their annual plan for simplicity.

Results

The free to paid conversion rate for the top tier was unaffected. But new users weren’t sure which package to choose–this added friction and confusion decreased Univision’s conversion rates significantly and increased monthly churn. Univision realized they were presenting too much information too soon, so they’ve now simplified the acquisition flow and removed excessive text. Conversions rates returned to their normal levels and have steadied. And the team has renewed its focus on offering an annual plan.

Said Scott Levine, “What we’ve learned from this is it’s ok to experiment. It’s ok to put something into the real world and fail. But fail fast and learn and adapt.

Expanding the subscriber base

In addition to rolling out new products or packages, sometimes getting creative with how you acquire customers can make a big impact in growing your subscriber base.

Headspace: Partnering for growth

Headspace is a leading meditation app for which habit formation is a key factor for retention. But forming new habits (especially healthy ones) at scale is hard. Headspace uses partnerships at every stage of the conversion funnel to educate the masses on meditation, create content that fosters new habits, and develop a fun and trustworthy brand.

Awareness

Headspace partners with well-established companies to help build their brand and drive awareness at the top of the funnel. An example of this is their partnership with the NBA for players to use meditation in training and recovery. By associating itself with an established brand, Headspace is positioned as an aspirational brand, which leads to organic growth.

Engagement

The next step is to actually get people to meditate. An example of how partnerships help here is Headspace’s deals with over a dozen airlines to integrate meditation into in-flight entertainment. Airlines have a captive audience and Headspace provides content to help that audience in the right moment, and thereby introduce them to meditation.

Conversion

Once people are engaged with Headspace, the next step is to get them to subscribe. One tactic Headspace uses is bundling: paying one price to get two subscriptions. Here Headspace forms targeted partnerships with companies like Spotify or Planet Fitness. Subscription bundles help lower the barrier to entry to meditation and let people try it with low commitment. The more someone meditates, the more likely they are to convert to a paying subscriber, so Headspace leverages platforms and technology which facilitate access to meditation. An example is connecting your Headspace account to Google Assistant, enabling voice actions.

Results

• ~20% of Headspace’s acquisition comes through paid channels vs. 80% via organic acquisition. Headspace has been growing twice as fast as the meditation category in terms of Google searches.

Dan Kessler, VP of Business Development and Partnerships at Headspace, commented:

“This is all because of the work we’ve been doing to normalize an entire category by aligning ourselves with some of the biggest brands, some of the best personalities and by investing very heavily in the experience around what it means to form a new and healthy habit.”

Wall Street Journal: Small nudges, big results

One of the most recognized newspapers in the world, The Wall Street Journal formed a testing team to set itself up for digital growth.

Examples of successful tests

• Reduced 25% of the fields in the checkout form (from 20 steps completed in ~1 minute to 15 steps completed in ~45 seconds), which led to a 13% order uplift.
• Added actual screenshots to the welcome screen and saw a 110% order uplift.

• Updated the copy on an article roadblock to make it as simple as possible, and saw 37% order uplift.

• WSJ observed that people who login via the mobile app are 115% more likely to be retained at 9 months. They added a link to download the WSJ app to the onboarding flow and got a 95% lift in app downloads.

Tips for successful testing:

• Obsessively hunt the low-hanging fruit. The one-size-fits-all components (e.g. basic navigation, basic design and evergreen copy) can have more of an impact than segment-based experiences, which have to work a lot harder to achieve the same results.
• Subtle changes can have a big impact. You don’t need to make sweeping product changes or build a new feature to get results, but can manipulate the experience just by changing the way it’s presented. The vast majority of the successes The Wall Street Journal has had are by making simple and inexpensive changes to copy and design. You can create value out of nothing just in how you position the product.

WSJ tests everything before it’s launched whether it’s large or small.

Results

• From 2016 to 2018, the WSJ has been able to increase conversion by 64%, including 150% mobile conversion and 100% desktop conversion.

Peter Gray, Director, Product Optimization, commented:

“All you need is a digital moment, lots of traffic, and to know what you want people to do. So you can basically apply it to any digital experience as long as you have all of those things lined up.”

For more information, watch The Wall Street Journal’s full presentation from our subscriptions event.

Entering new markets

And last but not least, one of the most obvious ways to expand your business it to enter new markets.

Viki: Winning in emerging markets

Viki is a video streaming service specializing in Asian entertainment for the global audience. Viki noticed demand in LATAM and therefore started focusing on that market by localizing into Spanish and Portuguese and redesigning their app to make it work better on low memory devices.

These efforts helped drive consumption in LATAM (as measured by watchtime) bringing it on par with North America. However, subscription conversion was ¼ that of the US.

Quantitative and qualitative surveys highlighted pricing at the main reason for the poorer conversion. This led to the creation of Viki Pass Basic, a package with no ads and HD access. It made sense to offer such high value at a discount in LATAM because the cost of streaming and ads CPMs in emerging markets were both very low.

Testing

Viki experimented with the new offering, Viki Pass Basic, for $0.99/month in Chile and Peru versus a reduced price of Viki Pass Standard (their normal package) of $2.99/month (formerly $4.99/month) in Argentina, Colombia and Ecuador. They tracked metrics such as subscription count, advertising revenue impact (as they didn’t want to cannibalize existing ad revenue), plan downgrades (they were worried existing subs on higher plans would downgrade), and trial to paid conversion. The new Viki Pass Basic was a resounding success compared to reducing the price of the existing standard package.

As a result, Viki rolled out Viki Pass Basic with localized marketing campaigns and content-led promotions.

Results

• +2x subscriber growth rate in LATAM
• Net subscription revenue also rose significantly. Viki hit a balance between the rate of subscriber on the Basic plan and limited cannibalizing of the existing plan.

Learnings

Viki’s biggest learning through this process was market segmentation: different people want different things. The experiment showed that even the $2.99 price point for Standard was still too high for most customers in LATAM as the reduction in price didn’t have an effect on conversion rates. And the uptake of the basic plan was much larger than expected, thereby indicating that the $0.99 price point was appealing and that the benefits struck a chord with users. People who wanted access to exclusive content were willing to pay $4.99 for it.

Interestingly, the Basic plan acted as an entry point for Viki to upsell people to more expensive plans. Because the barrier to entry on Basic was so low given the reduced price point, users came in, had a great experience, and as they watched more content, discovered more exclusive content that they wanted to access. Viki saw increasing upgrades to Standard and Plus whereas the downgrade to Basic was contained.

Conclusion

I hope that the learnings and insights from these developers’ experiences triggered some ideas for you to expand your own subscription business. Remember that there is no one-size-fits all model. You have to come up with various hypotheses that relate to your business’ specificities, test them, and launch then accordingly.

What do you think?

Did you find any of these examples particularly relevant for your business? What have you done to grow your subscription business on Play? Let us know in the comments below or tweet using #AskPlayDev and we’ll reply from @GooglePlayDev, where we regularly share news and tips on how to be successful on Google Play.