Utilizing LifeTime Value to fight “Subscriber Fatigue”

By Daniel Williams Published April 10, 2019

Targeted Growth ModelLast month, my colleague Anthony Botibol, CMO at BlueVenn, discussed how Lifetime Value metrics have the power to transform, or indeed wreck, a business. When calculated accurately it can enable a media business to pivot every acquisition or retention initiative around the model, and make profitable data-driven decisions. When calculated wrongly however, it can have disastrous impacts on the success of your marketing programs.

In the piece, Anthony repurposes the knowledge from a long-time friend and former colleague at LEAP, who has applied Customer Lifetime Value models successfully at some of the major subscription-based newsmedia companies across the US. Of course, this is where LEAP also excels with a deep history in the newsmedia industry, providing our unique methodologies and technology to aid our clients’ abilities to grow and retain profitable subscribers.

Another somewhat related article I was reading this week on Poynter.org talks about the increased focus on subscription growth and “volume over price”. It talks extensively about “subscriber fatigue”. With many subscription services in play right now (Netflix, Amazon Prime, Music streaming, meal plans and razors, as examples), the monthly subscription fees for households is growing. It hypothesises, the danger to newspaper and/or magazine subscriptions which could start to be seen as one to chop when consumers inevitably start to count the cost of their myriad of $10 subscriptions. They all add up!

How can Newsmedia Companies fight the impending “subscriber fatigue”?

Given the ubiquity of subscription services and the growing ease with which to activate or deactivate them, it is especially important that media companies position themselves to remain an indispensable source of information and value and remain on the winning side of that decision to continue or cancel.  The good news is newsmedia companies operate from a position of advantage given their long-standing, trusting relationships with consumers in their markets, and the variety of ways to capture meaningful data through engagement.

An alternative modeling methodology we’ve applied successfully at LEAP to grow and retain subscribers is the Targeted Growth Model. Although not deployed as a traditional LTV model to predict Lifetime Value, what this does do perhaps better is to remove many of the assumptions that LTV analysis demands, and has proven success in ensuring that optimal effort is directed at high value subscribers. Essentially it models your existing (and lapsed) customers/subscribers and scores them across many attributes, but ultimately defines their total value, or potential total value, to your brand. The unique algorithm, alongside the mapping of our 3rd party data sources, creates 5 discrete segments for acquisition and retention campaigns, alongside an AVG Lifetime Value metric for validation. It provides “share of market” analysis to enable subscription-based businesses to understand their Total Addressable Market (TAM) and provide look-a-like matching to target new high-value subscribers. The score is applied to potential prospects for acquisition segments, as well as to existing and historical customers for reactivation and retention campaigns. Through our extensive experience in the newsmedia market, this model has then been refined further again to segment your best acquisition targets for print and digital subscriptions alike.

Here is an example Targeted Growth Model report:

Targeted Growth Model

Ultimately, LEAP’s Targeted Growth Model provides the ability to identify the highest value potential subscribers and focus your marketing, content and personalized customer experiences at them. As you can see in the report above, the AVG Lifetime Value and % of Total Payments for the ‘HIGH VALUE subscribers far exceeds all others and therefore makes sense to focus acquisition efforts there.  The difference in the Targeted Growth Model versus a strictly Lifetime Value calculation, is that LTV is an “input” to the creation of the Targeted Growth Model rather than an “output.”  LEAP is able to accomplish this by integrating financial data, along with campaign response history, retention rates, as well as demographics, media channel preferences and other interest factors.   By understanding and distinguishing the profitability and value of existing customers, we can incorporate LTV as one of several other factors in the creation of a propensity score that identifies similarly “High Value” potential customers.

These ‘HIGH VALUE’ prospects have the most chance to add profitable gains to the business, and LEAP then also provides its ‘Do It For Me’ execution team to design and coordinate the campaigns that utilize creatives and automated campaigns that are already proven to work for hundreds of subscription brands across the US.

For the largest daily newsmedia organization in the US, LEAP has been able to target in excess of one-million past subscribers for successful reactivation campaigns via the Targeted Growth Model and there are many advocates in the industry already working with LEAP, whose client community now represents over 500 local media brands:

“LEAP has enabled us to identify and merge all sources of online and offline data, and achieve a 360-degree profile of each person in market.  Leveraging this data has allowed us to dramatically grow our digital subscriber base in the most cost-effective manner because we know exactly who to target based on their propensity to subscribe, probability to retain and potential lifetime value."

Vice President, Consumer Marketing, Hearst

For more information, contact us at marketing@leapmediasolutions.com.

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