[Editors note: We are republishing an article by Faisal Kalim that shares the main insights from the Subscription Performance Benchmark report. This piece was originally published on What’s New in Publishing.]
Piano, one of the world’s leading providers of subscription services, has just published its inaugural Subscription Performance Benchmark Report. It’s based on data from the hundreds of organizations that the company works with globally. They include CNBC, The Wall Street Journal, NBC Sports, Insider Inc., The Economist, Gannett, Le Parisien, TechCrunch, Penske Media, MIT Technology Review, and The Telegraph.
As such the company has access to valuable trends on digital engagement, conversion and retention. The data presented in the report is collated from thousands of websites and billions of visitors and will be useful for publishers looking to launch or optimize a subscription business.
Here are the highlights:
Data from Piano clients show that conversions in the first year are driven by users who visit five or more days in a month. They account for 43% of the conversions. First day visitors make for 33%. This flips in the second year when 41% conversions happen on the first day while the five day cohort makes for 32%.
The shift begins by the third month and indicates that publishers need to start focusing on converting lower-engagement users quickly.
While it’s certainly true that you can expect your most loyal users to convert in the early days of a new subscription offering, you’ll need to pivot pretty quickly to adopting tactics that help convert lower-engagement users.Subscription Performance Benchmark Report, Piano
The report recommends tactics like trials or promotional pricing, refining the product to make it more appealing to readers who may not be familiar with the brand. It also encourages publishers to ensure that they present readers with subscription offers early-on.
It is important to have an effective onboarding process to build engagement. Subscribers who don’t engage early often cancel quickly or become sleepers (active subscribers that have not visited the site for 30 days). Nearly 40% of subscribers on average are sleepers and they make for a large number of cancellations.
The pandemic boosted subscriptions for many publishers and the higher subscription acquisition rate continues. This, according to the report, is because many publishers are now focusing a lot more on their subscription products.
There was a “dramatic increase in the share of visitors on a given site asked to pay,” it states. “By the fourth quarter of last year, the median share of visitors seeing a paid offer was 10.9%—more than double the share in Q4 2019.”
Which leads to conversion rate, i.e., the percentage of visitors who convert after seeing a paid offer.
It’s much more common to succeed with subscriptions through high exposure and low conversion rates than the reverse.Subscription Performance Benchmark Report, Piano
While the average paid conversion rate is ~0.2 percent, subscription businesses see conversion rates ranging from “over 10% to a couple hundredths of a percent,” according to the report.
More from the Fix: Media subscriptions predictions and the “end of history” mistake
This is explained by the frequency and type of subscription messages shown to readers.
The four basic forms of subscription messages include:
Ribbons, or soft paywalls make for nearly 60% of subscription messages but account for less than 10% of conversions. Landing pages have the highest share of conversions. The median values in the chart below show that landing pages lead to 25x more conversions compared to hard paywalls. These in turn have 10x higher conversion rates than soft paywalls, which have double the conversion rate of bottom ribbons.
Readers who visit landing pages tend to have a high intent to pay which explains their effectiveness. Additionally, landing page conversions are often the result of other tactics. For example, they receive visitors stopped by a paywall or those directed by paid campaigns and word of mouth.
The report recommends investing a lot of time in optimizing landing pages. At the same it emphasizes, “the hard paywall, even at a fraction of the conversion rate, is often the lever that has the most impact on conversions overall, since you control the number of visitors intercepted by it.”
While hard paywalls have a lower share of conversions than landing pages, they play a crucial role in establishing the value exchange.Subscription Performance Benchmark Report, Piano
However, the different subscription messages should not be seen as independent of each other, rather as necessary steps to persuading the reader to convert. Like the bottom ribbon which has the lowest conversion rate helps promote subscriptions and convey brand value proposition early on. “An effective bottom ribbon may prime a visitor to convert at a higher rate (or retain better) when they hit the paywall,” according to the report.
Retaining subscribers is critical for the business in the long run. Churn is highest in the first month. This is why it’s important to have onboarding campaigns that inform subscribers about the various benefits of their subscription and encourage them to make the most of it. This builds engagement – Piano data shows that subscribers who have made multiple full price payments are more likely to continue.
Encouraging readers to sign up for annual subscription plans can be very effective in reducing churn. Annual subscriptions retain much better and have higher lifetime value compared to monthly, according to the report. This is because with monthly subscriptions users get 12x more chances to cancel compared to annual.
Piano data shows that at the end of the first year of a subscription only 45% (median value) of monthly subscribers are left compared to 75% of those who have signed up for annual plans.
In conclusion the report states that the metrics, i.e., engaged users, exposure rates, conversion rates and retention rates — “are the most critical to understanding the health of your subscription business.”
“If your goal in 2021 is on retaining subscribers, using pricing to shift the balance toward annual subscriptions, employing trials carefully to reduce early churn, adopting an onboarding program and targeting high-risk users with rescue tactics can have a big impact.”Subscription Performance Benchmark Report
More from The Fix: Most effective subscriber retention strategies, according to publishers