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Is great onboarding the secret to reducing subscriber churn?

For marketers selling software as a service (SaaS) using a subscription model, the vital importance of onboarding has been understood for years. Today, writes Julian Thorne, more and more publishers are following suit and creating onboarding programmes for subscription customers.

Julian Thorne

Posted on: 27 November 2018


Netflix: it is hard to differentiate between the product and the onboarding process because they are so intertwined.

 

I recently received an email from one well known publisher containing the phrase, “This email is one of a limited number that we will send you as part of your onboarding journey”, which betrays a misplaced confidence that even the general population is now familiar with the concept of onboarding. But what exactly is onboarding, and does it matter?

‘Onboarding’ is ‘the act or process of familiarising a new customer with your products or services’. A successful onboarding process will result in the customer using your products or services to their benefit. It is the ‘to their benefit’ bit that is really important.

So why does onboarding matter? A successful onboarding process will result in significantly reduced customer churn. A 20% gross reduction in year one churn is more than attainable. And we all know that low churn is vital to high performing subscription models. Onboarding definitely matters.

Given that a good onboarding process has a measurable positive impact on churn, why have consumer publishers in particular been slow to create specific subscriber onboarding journeys? It can’t be because onboarding journeys are inherently expensive to create. Some of the best examples are little more than a series of emails and iPhone created videos.

“A successful onboarding process will result in the customer using your products or services to their benefit.”

Role of the subscription marketer

One possible reason is that many publishing subscription marketers view their job as acquiring customers and then in a limited technical and procedural way renewing those customers. Many publishing subscription marketers do not yet see their role as being able to influence the product or service. God forbid that a subscription marketer would dare to tell an editor that the product had lost its way! And yet it is the product that a subscriber renews to not a renewal letter, or payment method or tenure or acquisition source code or any of the other measures used to commonly predict retention rates. To misquote Bill Clinton horribly, ‘it’s the product stupid’ that has the strongest influence on renewal rates. It is use of the product that an onboarding process is designed to promote so maybe because subscription marketers see the product itself as beyond their influence, they simply forget to promote it during the onboarding process and settle instead for a prosaic order confirmation communication. Or maybe far too many subscription marketers just have no real interest in the products they are selling.

Whatever the reason, publishing onboarding processes can and need to improve if churn is to be reduced and lifetime values extended. What useful lessons can be learnt from other subscription and membership marketers?

The first insight is a conceptual one involving the purpose of an onboarding process. True, the aim is to reduce churn but churn is a measure of customer behaviour not a cause of customer behaviour. A leading US membership marketer, Robert Skrob, has developed a concept he calls the ‘Retention Point’ which he defines as “…the moment when your members become so emotionally invested in what you deliver they become ‘lifers’” (by which he means long term members not criminals). The ‘retention point’ is usually reached long before the action to renew is taken.

In his book, Retention Point, Skrob goes on to hammer home that the quicker you can get a member to the emotional ‘retention point’, the more money you will make due to reduced churn. Publishing subscription marketers usually make no effort to promote emotional involvement in the brands they sell, leaving that entirely up to the subscriber and the editor via the product itself (digital or print) to somehow work it out between them.

In her excellent book, The Membership Economy, Robbie Kellman Baxter provides three practical steps for an onboarding process that will help get a subscriber / member to the retention point fast. They are:

1. Remove friction

2. Deliver immediate value

3. Reward desired behaviours that will drive member success

In reality, for a paywall digital subscription, the above steps might translate into:

1. Make account creation and login seamless. Would single sign-in using Facebook, Google, Twitter, LinkedIn help here?

2. Ensure that the subscriber has instant access to the article behind the paywall that prompted the subscription order in the first place.

3. Encourage opt-in to receive regular subscriber-only email newsletters with exclusive personalised content.

For a print-only subscriber buying online, the steps might be:

1. Enable the subscriber to choose to receive the issue on sale now within 24 hours or wait to receive the next published issue.

2. A copy of the editor’s favourite article from the last three months optimised for the device the purchase was made from.

3. Access to subscriber-only email newsletters and offers on completion of account sign-up to enable the subscriber to self-serve.

For Netflix, the immediate onboarding process is incredibly simple and follows Baxter’s three steps to the letter:

1. Click from order confirmation to launch immediate viewing on any device.

2. Deliver exceptional customer experience by combining high quality streaming and high-quality content.

3. Design first episode content that engages at an emotional level and drives future episode viewing.

As the Netflix example illustrates, it is hard to differentiate between the product and the onboarding process because they are so intertwined. The product is actively designed to facilitate a great user onboarding experience from the moment of sign-up. Far too often for publishers, the exact opposite is true. Waiting six weeks for your first print issue – really?

“Publishing onboarding processes can and need to improve if churn is to be reduced and lifetime values extended.”

Achieving empathy

Back to Skrob’s point about ‘emotional investment’. As any amateur psychiatrist will tell you, the secret to emotional engagement is empathy and the route to empathy is listening. Outside of huge ticket subscriptions (think B2B multi-site licenses), it is not physically practical to literally listen to customers. The scalable solution is to use engagement data to ‘listen’ to what customers are telling you. In many respects, this is even better than asking subscribers what they like and don’t like about you because they will usually lie to protect your feelings but their actions and the data trail they leave behind do not lie. By looking at the actions taken by subscribers who do not churn compared to those that do churn, you derive real data insights to help define Baxter’s third step; what are the desired behaviours / actions that will drive member / subscriber success? The insights are usually very simple, bordering on boring. For example, access the site for more than one session within 48 hours of sign-up, sign-up and open an email newsletter within 24 hours, enable push notifications, provide a mobile phone number to receive SMS comms, buy a complementary product or upgrade etc. Boring but important.

In all the examples given, the action is related to engaging with the content and / or with the provider. This is not a coincidence. Good engagement leads to emotional connections. There is little about a straight order acknowledgement that leads to emotional engagement aside from assuaging a paranoia you might have been conned.

Focus on outcomes

Encouraging customers to undertake the actions that will lead them to get value and success out of your product is easy. But it is surprisingly easy to get it wrong. The most common mistake is to tell customers what to do, with no explanation why they should bother. At a human level, we know this approach doesn’t end well so why do we do it as marketers? For example, if my Dad had told me to go to my room and revise for my A levels five nights a week, it would not have worked as well as him telling me that if I passed my A levels, I could leave home and lead an independent life. Dad sold me the outcome not the work. Downloading a mobile news app is work, getting immediate curated news updates is a valuable outcome.

But even before you talk to customers about taking further actions to extract value from the subscription they have brought, it is sensible to reassure them that the big action they have just taken to buy your product was a deeply wise one. Again, not a difficult thing to do but often overlooked. How many publisher order acknowledgements start with, “Congratulations on securing yourself a massive 35% off our normal price and joining 15000 other committed stamp collectors who subscribe to Stamp Collector Monthly…” or something similar? The most common mistake here is not immediately validating the customer’s motivation for buying with the reality of the service or product. Put simply, make sure the sales promise is delivered upon plus a bit … or a lot more. Broken promises equal broken relationships.

The lessons for publishers from other recurring revenue marketers can be summarised as:

1. Always design and adapt the product itself to specifically minimise customer churn.

2. Listen to customers (via their data) to understand how they extract maximum value from your product.

3. Over-deliver on your initial sales promise every time.

4. Drive down churn by building an effective onboarding process to help new customers to get value quickly and bring forward the magic ‘retention point’.

5. Sell the outcome of engagement with your product to the customer not the work of engagement.

Do all five things (or at least three) and more and more of your new subscription customers will reach Skrob’s nirvana of becoming “…so emotionally invested in what you deliver they become ‘lifers’”. And you will make a load of cash. Win win.

“The most common mistake is to tell customers what to do, with no explanation why they should bother.”

About Julian Thorne
(Details last updated: 23 November 2018)

Julian Thorne is the founder of The Big Wheel Consultancy which provides specialist marketing consultancy and data insight services to publishers seeking to maximise their membership, subscription and / or recurring revenues. Previous roles have included CEO of Dovetail Services, marketing director at Saga and circulation director at Dennis Publishing. He is a Fellow of the Institute of Direct and Digital Marketing and regular speaker at industry events.

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