The subscription economy reality check

The subscription economy exploded nearly sixfold from 2012 to 2021, according to the Subscription Economy Index by Zuora. But Andy believes the subscription economy is following the downward trend of the regular economy. With widespread "subscription fatigue," stemming primarily from the ever-increasing number of subscription services and mounting cost, app users will become more price-conscious, and app businesses should expect downward pressure on monthly subscriptions. This implies increasing demand for subscription optimization services since bringing new subscribers and keeping them engaged is becoming more challenging.

The questions every subscription business must answer

Every subscription business must be able to answer: how long does it take for a new user to get from install to subscription; what's the install-to-trial conversion rate; what does the trial conversion rate look like; how do paid users retain over time; and what are subscriber churn rates and the reasons for that churn. Answering these is a critical step toward deciding where to focus optimization efforts.

"Flirt" appropriately with users at different levels of subscription intent

Andy defines four escalating levels of subscription app user intent: indirect intent (users on a free tier, engaged but not subscribed), direct intent (users attempting to access content behind the paywall), indirect + direct intent (users regularly using the app and regularly triggering the paywall), and abandoned type, the highest intent (users who initiated the purchase flow but dropped out before paying). Apps should engage users at different intent levels with different paywall content, using a more aggressive approach for higher-intent users and more education for lower-intent ones. For users who abandon payment, promo codes or limited-time offers could generate higher conversion, though apps should be mindful of the impact on margin.

It's okay to push it a little bit far

Many app owners fear driving users away by pushing growth levers like push notifications, content recommendations, and paywalls too hard. But many users don't return for a second session, and users who see a paywall in the first session and don't subscribe are unlikely to subscribe in a second session either. Andy's advice is to be a bit bold, push it a little bit far, and dial it back when there are adverse effects on growth metrics, working with data rather than fear.

Episode 10 sneak peek

• On the subscription economy: "A lot of folks will be on longer-term subscriptions, maybe yearly subscriptions, which won't show that downturn for a while yet. I do expect we'll start to see some downward pressure on monthly subscriptions."
• On average subscription number: "I think two is probably a minimum for folks who are going to be subscribing rather than an average these days. I would guess the average maybe closer to three or four these days."
• On app onboarding: "There's definitely a high incentive to try and get people to experience the value of the app very quickly to understand the value proposition, and ideally to capitalize on any early intent to purchase while you've still got the user's attention, which statistically is in the very first session."
• About paywalls: "Push it a little bit far, and when you start to see negative effects in terms of your data in whichever metrics you're worried about being negatively affected, when you see that happen in a controlled test environment, then don't scale that version, dial it back a bit."

More about Andy Carvell

Andy has over 20 years of experience in the mobile industry. His company, Phiture, is a Berlin-based mobile growth consultancy and agency co-founded in 2016 with Moritz Daan, with over 110 employees. Prior to Phiture, Andy led the user retention team at SoundCloud in Berlin. Andy published the Mobile Growth Stack in 2015, widely adopted as an essential framework for mobile marketers, which he continues to develop.