Retention discounts aren’t just about retaining revenue

• Aggressive retention offers and “save rates” are about more than just clinging onto subscription revenue. Keeping subscribers onboard can help drive publishers’ businesses in various ways.

As many subscription publishers shift their focus from subscriber acquisition to retention, aggressive discounts and “save rates” are increasingly common. As Poynter noted this week, news publishers in particular will often let subscribers effectively choose their own subscription rate if they attempt to cancel, particularly if a subscriber initially converted on a highly discounted introductory offer. Customer service reps, bots and retention flows are often instructed or designed to keep subscribers onboard at whatever price they can.

It’s tempting to frame such practices as desperate attempts to retain subscriber revenue, and to some degree they are. Once a subscriber has converted, the incremental cost of continuing to serve that subscriber is negligible. A dollar or two a month is better than nothing.

But the element that’s often misunderstood or overlooked when it comes to retention discounts and save rates are the indirect benefits of keeping subscribers in the fold. Yes — everyone has subscriber growth goals to optimize to, and bigger numbers are often viewed more favorably than small ones. But beyond that there are multiple benefits to retaining subscribers, depending on a publisher’s business model and revenue mix. These include:

• Driving advertising and sponsorship revenue: For many subscription publishers the benefits of having a logged-in, paying subscriber base extend far beyond the revenue that’s derived directly from subscription payments. The ability to collect and understand first-party data from logged-in subscribers will be increasingly important for publishers over the coming years as the effectiveness of cookies and other tracking mechanisms dwindles. That data can be used in myriad ways depending on a publishers’ product and revenue mix. Fueling advertising and sponsorship business is one obvious benefit: behavioral and interest data can be used to segment audiences and to target ad placements and campaigns, and sales teams have the ability to pitch a highly-engaged audience with a demonstrated propensity to pay for digital products. Paying subscriber bases are often more attractive to advertisers than drive-by traffic — or even purchased traffic — that other publishers might rely on.

•  Informing product improvements: Beyond informing ad targeting and segmentation, behavioral data is extremely valuable for helping to understand audience needs and demands, and to tweak and develop products accordingly. The larger the subscriber base, the more data a publisher has at its disposal in order to do so. What’s more, the specific behaviors, attitudes and needs of users who have previously attempted to cancel can often prove more valuable to analyze for product development purposes than those of loyal subscribers.
• Cross-selling and up-selling other products. Even if readers aren’t finding huge value in their subscription to the degree that they’re willing to pay more than a heavily-discounted promotional rate for it, that doesn’t mean they may not be interested in other products or services a publisher may offer and that revenue can’t be extracted from them in other ways. For publishers selling events, experiences, training, and other physical and digital products, for example, paying and engaged subscribers often prove far more receptive than non-subscribers. Depending on a publisher’s product and revenue mix, a subscription doesn’t always represent the bottom of the sales “funnel.” In many instances, subscription may represent a mid-funnel step towards driving purchases of other, far more lucrative products or services.
• Keeping readers engaged with a brand and its content: Cancelling a subscription can often represent a hard stop moment in readers’ minds. If they had a subscription and cancelled it, they may be less likely to engage with a publisher’s content in future if they’re cognizant that they may hit a paywall. By contrast, keeping a reader interacting with a brand and its content might be deemed preferable to having them out in the cold, even if they’re paying little for the privilege. (For publishers that are more-heavily reliant on subscription revenue, however, non-subscribers might intentionally be kept at arm’s length to clearly communicate what they’re missing out on.)

Sophisticated publishers increasingly understand that subscriptions often operate best as part of a diverse revenue and product mix, and can form the backbone of a publishing business even if they don’t directly generate the lions’ share of revenues.