The choices you make and the actions you take will always be inextricably intertwined with the business goals and benchmarks you want to meet. The app business is no different, but the path to growth is not always so well defined.
Monetization models are rising through the roof. Advertising, driven by rewarded video, is proving to be a crowd-pleaser, netting and converting high-quality users from the get-go. At the other end of the spectrum, sweeping changes by Google and Apple–providing app companies a bigger piece of the action and a bigger slice of the recurring revenues pie—are encouraging more companies to offer their app as a subscription model. We continue our Women In Mobile series, recognizing the women who play a pivotal role in the App Economy, with Lotta Weigeldt, a growth marketing Jedi who has an impressive track record and expertise in performance marketing, product, ASO and CRM.
She outlines your 3-step personal action plan—where you need to focus time, money and effort–depending on your priorities and your goals for your app. Whether you want to achieve goal-oriented growth and profitability or lay the groundwork for a subscription app business built to last, Lotta draws on personal experience to offer actionable advice.
Lotta is enjoying her life and accomplishments as a freelance growth consultant for the moment—and more power to her after making her mark as the Head of Growth at Runtastic, one of the world’s number one health and fitness apps. The company is well known for its significant portfolio of apps and its enviable “exit” in 2015 when the app company was acquired by Adidas Group in a deal valued at €220 million ($240 million). Lotta took the helm after the deal and saw the running and fitness apps take home gold for several growth hacks and strategies. These include one notable campaign where an experiment to test the *real* value of presenting user reviews on a paywall delivered a 44% boost in paid subscriptions on Android and a case study where a more granular smarter approach to audience segmentation increased overall campaign ROAS by +241%.
MOVING MARKETING IN THE RIGHT DIRECTION
Growth starts often with new users. But where is the best point to start, and what are some key facts to consider? Here you’re laser-focused on moving the needle fast, but you also want to make sure it moves in the right direction. Get some insights on your marketing channels and messaging to be set for successful growth.
Marketing channels: Growing your user base should not be done by simply increasing spend on your common marketing channel. Experiment with channels and creatives to make sure you’re not missing an opportunity. Mix it up, and don’t aim for mastery. If a channel or approach is working well, then you have a choice to make. You can dial it up or move on. No matter if it’s ASO or Instagram, you need to focus effort where it will pay off most. “It’s not just about making an effort to optimize what already is proven to work,” Lotta explains. “It’s about making the effort to look for other opportunities.”
And don’t miss out on the opportunities you have for internal marketing. Is your product applicable for a refer-a-friend program? Do you have long-term website users, to whom your app is on-site and via email promoted? Look at your entire marketing set up to accelerate growth – be it paid campaigns, organic growth improvements or internal promotions.
Messaging: Campaign goals and messaging have to be in sync, and the story should be compelling. It sounds simple but it’s not a walk in the park. Communicate your app value proposition clearly and consistently and watch where you’re missing the mark, Lotta explains. Amplify your brand and voice by using all channels at your disposal – including email, push notifications and out-of-home – to re-engage users and reinforce their commitment to your app.
“Getting users to install and open your app once isn’t the hardest part. Make sure your communication is, and has been, compelling enough to lead users to use your key features from the get-go in order to experience your offering’s value. Through this, they are more likely to be engaged users. Engagement is the most valuable of the three key factors (acquisition, engagement, monetization) – it reduces ever-growing acquisition costs and increases your opportunities to monetize”
CHOOSING THE RIGHT SUBSCRIPTION MODEL
Reams of recent research shows users will pay for your app – and more will start to. But to convince your audience to open their wallets, you have to show your app provides value for money. This is where the right mix of monetization model, messaging, and (more importantly) pricing come into play.
Monetization model: Not all app companies that can offer their app as a subscription model should do so. Before you think about marketing your offer, make sure your app is a fit with the model. Ask yourself: Do I offer a service that a user can’t get elsewhere for free? Draw from your audience data to determine realistic benchmarks. “Think about how large your user base is and the conversion rate you can expect,” Lotta explains. It’s unlikely that 50% of your base will want to purchase a subscription right away, so factor that in.
If you see conversion rates where your subscribers bring enough to the table, perfect. Otherwise, it is quite common to have a mixed strategy. Monetize your non-paying users by displaying ads (nice side effect – “no ads” is a great upselling argument) and offer your subscription with even more functionality and continuous new content/features. This mix is well known and quite accepted by most users already.
Often done, but not advisable is the mix of paid and free versions. “Users don’t necessarily understand the difference between a paid app and a free app with a subscription model and in-app purchases. Running those alongside each other can work, but you need to be extremely careful on how to market and communicate those. If more than one of those models are inevitable, I would suggest to focus all communication on only one of those upselling methods and have the other one run quietly on the side. To reduce customer confusion and complex communications needs, think twice before keeping more than one of those options in place.”
Messaging: Be personal and prove your point. “Really show that the product you offer is worth the market value you’re selling it for,” Lotta advises. Her rule of thumb is to “make offers they can’t refuse now or later. From my experience, it pays to reduce your prices two times a year and match that messaging with a campaign that really resonates with your audience.” Be careful to keep the promotions to a maximum of three times a year, to ensure you are not devaluing your brand. Of course, you need to back up your messaging with content that is fresh, relevant and compelling. The easiest are seasonal sale reasons – Black Friday or the start of summer. A nice surprise could be your sale after the launch of a new feature or additional product, which can be aligned with a bigger overall marketing campaign. If you are transitioning users from a free app—supported by in-app purchases, advertising, or both—to a subscription model, pay special attention to what you say and where you say it. “If you have the email addresses of your users, send them a newsletter to tell them about your decision and offer them a free trial of your subscription app.” Support it with blog posts that existing users will be sure to read. “Months before you launch your subscription app, start making a case for the value-add your app offers for money and offer your users a free trial period.”
Price: Be critical with yourself and the service you are offering. What is it worth to the user? What would the user pay somewhere else for a similar service? It’s the obvious trade-off: conversion against price. But it’s not always that simple. The price should also be a symbol of the value you bring, and keep in mind that it needs to offer you a bit of leeway to run your promotions. If you are running your app internationally, adhere to local pricing standards: e.g. €9.99 for Northern Europe, €9.90 for Spain and avoiding any number with “4” in many East Asian markets – a symbol of bad luck.
OPTIMIZE YOUR PAYWALL
Digital products have the advantage of allowing number-driven optimization. Tests are a vital part of all areas – be it performance marketing campaigns, ASO, registrations forms or paywalls. If your aim is to increase your bottom line, it’s advisable to start optimizing the paywall: “Optimization and testing on the paywall can be powerful, as every little move of the needle here brings in people who are going to commit to recurring payments.” The two main parts to optimize on a paywall are your communication and your subscription options.
Subscription options: App companies should test pricing options and provide plenty of choices to back them up. “You can offer a 12-month package that can cost, say, €24.99. But you should also be ready to offer a Silver plan or a Gold plan, or even a Gold-Plus plan. And vary the duration with maybe one for one month, another for six months and the full-out package for 12 months,” Lotta explains. “Whatever you do, always give the user at least two choices.” And it’s not just good for the customer. “For testing purposes, it’s great to have at least two options.” But be aware, that too many choices can prolong decision-making process and might put users off. Two to four choices seem to be a great start, but even better, test what fits your users and your product best.
Communication: For those different subscription options discussed, ensure that you highlight a “most valuable” or “customer’s favorite” package accordingly. “Tests I ran with several companies have shown that it brings a clear uplift to display prices comparably – e.g. display the monthly price for your monthly, 6-month and 12-month subscription more prominently than the entire subscription package price.”
In addition to the promoted packages, think about your benefit communication on the paywall. Are the benefits crystal clear to each user who lands on your paywall? Great! It might be best to focus on the packages without much further explanation. Otherwise, be sure to highlight those features that have convinced users to make a purchase in the past or are frequently being used by your current subscribers. Especially on our mobile screens, ensure to be concise – if the user’s way to the paywall follows valid upselling arguments, subscription options are what the user expects and should be the primary information on your paywall.
THE BOTTOM LINE
No matter the monetization model you use to make money with your app, Lotta observes that similar rules apply. “At a high level, it’s all about turning every user interaction into an opportunity to connect and convert,” she says. Drive results but don’t drive your business blind. Follow the data breadcrumb trail of who your users are and where they come from and optimize those channels. Be open to new channels and new approaches that will allow you to wash, rinse and repeat your successes.
“At all times, communicate what makes your app special and identify creatives to tell your story in a way that will resonate with your audience.” Get it right, and you’re on your way over the biggest hurdle in-app marketing: finding the appropriate and effective way to engage users who understand and genuinely appreciate your app, and in the end, become content subscribers who are valuing your product and spreading the word about it.
This article first appeared on the Apptopia Blog.