In the pivot to paid, publishers fear the churn spiral
Getting a paid subscriber is step one, but keeping the subscriber quickly becomes step two.
Churn rate is often calculated by how many subscribers are lost in a given time period, or how many renew. A report from subscription software company Zuora found that churn rate was 30 percent for consumer publishers in the last year. While it depends on what is sold, several sources say a churn rate above 40 percent indicates the product or the customer experience is lacking.
Political magazine The Spectator measures retention rate by how many people are still subscribed six and then 12 months after the end of its 12-week introductory offer, so its retention rate is between 75 percent and 85 percent, according to editor Fraser Nelson.
“Our problem is persuading people that we are not a magazine that bangs on about Tory politics,” he said. “Politics is just a fraction of what we do. If we give people a trial, the odds of their falling in love and staying with us for years are very high.”
The number of people who unsubscribe and the reasons vary hugely, making churn rate a difficult number to compare outwardly. Typically, it will take until the second year after launching a paywall for churn to catch up. Customer acquisition in the last week of a quarter will likely be higher than in the first week as sales teams try to hit targets. If these are less valuable customers, then churn will be higher in the following months. Equally, special offers and reduced pricing can lead to eventual churn bubbles.
How long people have subscribed to a publisher has an impact, too. The more engaged, habitual reader is more sticky. The Times of London has found that new prospects, or those who have subscribed for up to six months, are five times more likely to unsubscribe than those who have subscribed for two years, said Chris Duncan, managing director at the Times and Sunday Times.
“You have to explain things like where you are in the customer acquisition cycle, how much you’re charging, whether you’re aggressive about growth, or whether they are new or old prospects,” he said.
Publishers use various editorial, product and marketing activities to reduce churn by making audiences aware of different products, showing how these can add value, and communicating with audiences on more emotional levels, said Grzegorz Piechota a research associate at Reuters Institute for the Study of Journalism.
Managing churn rates takes granular forecasting of different audiences: A new subscriber needs to be introduced to the different products and services, while an 18-month subscriber needs more relevant messaging. Publishers like the Financial Times have a raft of ways for keeping churn down, from events to speeding up their sites.
Die Welt uses models to figure out customer behavior and understand when people are likely to churn. The Axel Springer title has created six customer groups based on about 25 metrics, including how often people visit the site, how much time they spend on-site, how many times they visit before subscribing and what types of articles they favor.
The Times has used its own engagement index for the last four months to understand the behaviors that signal someone will unsubscribe to then reel them back in. It’s early in the testing, but the Times has discovered a link between a lapse in engagement and churn: People at the high end of the engagement score are 25 times less likely to leave.
“Churn is an oil tanker to turn around; acquisition is an oil fire,” said Duncan, adding that over the last two years, the Times has reduced churn by a third. During this time, it’s made changes that have affected the value of its subscription, like raising the price, adding dining rewards and film downloads, and it’s understood more clearly what content customers read.
Managing churn requires a mix of skills. Clearly, a grasp of analytics is needed to understand what’s happening in a publisher’s subscriber base and knowing the drivers of churn rather than simply what the rate is. Boosting engagement requires strong marketers, and preventing people from leaving necessitates good communicators. Duncan said the Times retains more than half the people who call to cancel a subscription, partly thanks to good product knowledge. Rather than convincing readers to stay with discounts, informing them of what they’ll miss out on in the future is a stronger deterrent to unsubscribing.
However, there’s a point where if churn is too low, then a publisher is not trying hard enough to get new audiences. “If you manage the business to reduce churn rate, you’ll almost certainly reduce growth rate,” said Duncan. “Balancing churn with growth is the holy grail.”
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