Pure Play

Which social network(s) are you targeting?

If you are considering setting up a social network page/profile it would be relevant to know the demographics of each of the major players.

Via ReadwriteWeb today comes some great information from Rapleaf (an online reputation company).

They have published information for 14 popular services giving the gender and age range information for each.

A spreadsheet with the full data can be downloaded from here.

keith

Guaranteed Startup Funding

Eh, no. But Y Combinator (who slipped a few bob to the young fellows from Limerick) have just posted a list of 30 ideas they would love to fund.

Does dbTwang tickle any of these?

10. Auctions.  Online auctions have more potential than most people currently realize.  Auctions seem boring now because EBay is doing a bad job, but is still powerful enough that they have a de facto monopoly.  Result: stagnation.  But I suspect EBay could now be attacked on its home territory....

That (with our trusted marketplace for guitar trading) is the closest we come - maybe we will stick with our Irish Angel Investors path :-)

Others include:

• Simplified browsing
• Outsource IT
• More CRM
• Dating
• Photo/Video sharing
• Shopping Guides

So some new stuff and some very old stuff.

keith

Somewhere a Telecoms Disruptor is smiling

There is an endless number of posts on this topic - why is the EU split into so many regions for music and film licensing purposes? The most recent one I have read was from Pat Phelan.

This evening this was posted on arstechnica.com

"The European Commission wants online music stores across Europe to be fully stocked, and is eliminating certain restrictive policies imposed by royalty groups. EU regulators ordered 24 music societies across Europe to modify or ditch their agreements that bar music services from selling or broadcasting music across borders......
....Although the licensing bodies are unhappy, EU music fans should welcome the decision. Instead of a different iTunes Store for each country, for example, the changes open the door for there to be a One True™ iTunes Store to rule them all"

For the full post click here.

The implications are that any digital media business will now be able to carry out one set of negotiations and with that launch their service across the whole of Europe. Nice one.

keith

Recurring theme - optimising subscriptions

I posted recently about a free webinar on this topic and a flash version of that live event is now watchable by clicking on the following image:

It is entitled - Optimizing Subscription Paths - How to improve results by 59% or more. If I do not get to it tomorrow I will definitely watch it on Monday :-). This is a crucial success factor for us in the path to making dbTwang a success.

keith

iPhone App Store

Browsing through the new App Store via iTunes7.7 and 2 thought occurred to me:

1. Some of the news apps remind me of the one (whose name I forget) which I used to use on the Palm - which picked up updates via the PC sync and then you could read them on the move.

2. Will we build an iPhone app for dbTwang at some point? I suspect it will be a question of the timing as opposed to if. The Gallery of succulent photos of antique and collectable guitars would be wonderful eye candy for an app. As would a similiar display of guitars available from the dbTwang marketplace. hmmm

This is a selection from the social app's section.

keith

Lets run those numbers one more time

Real world conversion rates for online services/applications are hard to come by so was pleasantly surprised to come across the following from the 2007 SXSW event in Austin.

The post is entitled Web App Autopsy and it is a writeup by ReadWriteWeb of a discussion between 4 online services. The presentation is a zip file from here.

In the midst of all the gems were the following:

For every 100 visitors to Wufoo 7 signed up for the free service and 1 for the paid service
For every 100 visitors to Blinksale 11 signed up for free and 1 for paid
For every 100 visitors to Feedburner 8 signed up for free (paid n/a)
For every 100 visitors to regonline 1.52 signed up for free and 1.14 for paid

Those figures are lower than I would have expected (especially after attending the Selling Online Subscriptions Conference) - however they are all either strongly B2B services or at least B2Geek (in the case of Wufoo and Feedburner).

I would be interested in seeing similar stats for services more like dbTwang - offering a portfolio of services and content into a strongly motivated niche consumer audience.

I don't suppose anyone can oblige :-)

keith

Bankers, the whole lot of them.

They should think before they speak. That is my initial thought having read the following quote attributed to Donal Forde of AIB in the Sunday Business Post

...adding that the fact that the bank lent money to an individual customer should not be seen as a "commentary on the wisdom or otherwise of what he's doing"

Ok - so that was in the context of lending to property developers. And (if true) it will come as a surprise to many in normal business sectors whose lending applications are judged primarily on their ability to repay - an implicit judgement on the wisdom of the underlying business you would have thought!

keith

If you have a subscription model..

..you should consider "sitting in" on this free one hour webinar. I saw the presenter in action at the Selling Online Subscriptions conference and he knows his stuff.

Title: Optimizing Subscription Paths: How to improve results by 59% or more

When: Wednesday, June 25, 2008 – 4:00 to 5:00 p.m. EDT

Presenter: Dr. Flint McGlaughlin, Director, MarketingExperiments

What is it?
Even in a strong economy, selling online subscriptions can be difficult. And in today's environment, you need every advantage you can get.

Optimizing your subscription-path pages is the best way to increase revenue without increasing your marketing budget.

Join us to find out how one Clinic attendee achieved a 200% lift in conversions from our 10-minute live optimization session.

During this free, one-hour Web Clinic, we will also:
– Examine recent tests that improved sign-ups by 59% to 77%
– Discuss how "clarity trumps persuasion" in sub-path pages
– Review and optimize attendees' landing pages (time permitting)

NOTE: To be considered for a live landing page review, please include your sign-up page URL when you register.

Reserve your spot for this Webinar by clicking here.

keith

Subscriptions Online - Credit card issues

The Payments Minefield: Developing a Strategy for Success in a Softening Economy
Paul Larsen, Payments & Operations Consultant

If you think it has been challenging for subscription merchants to meet recent credit card challenges, you may be in for a rude awakening. In the best of times, preventing inadvertent damage to customer relationships, caused by credit card ‘issues’, is problematic. In a softening economy, replete with delinquencies and shrinking available credit, the potential for future fallout is even greater. This must-attend session offers incisive best practices that can help you meet and overcome the challenges posed by an uncertain economic and competitive conditions.

My Notes

• 50% of American CC's within 5% of their credit limits
• The average number of accounts per individual that are overdue by one payment or more - 1
• A lot of businesses do not implement best practice in transactional processing

Transactional best practices:
When re-trying to clear a cc payment you should re-attempt each 10 days and 3 times so that you cover the full 28 day payment cycle.
If you make multiple attempts over a number of days your processor may tighten up your account as they perceive that you are trying to get "dodgy" transactions through.

He gave a couple of examples of transaction recovery (having initially been declined). An observation that transactions under $25 are more likely to get cleared - the figures for three different merchants (with different price points) were:

1. $13 - 51% recovered
2. $24 - 58% recovered
3. $50 - 27% recovered

The second and third ones tried 4 times over 30 to 40 days and they were able to do this because they are digital businesses and the direct cost of servicing a failed transaction is low to zero.

Cleansing of CC data
he then gave an example of merchants who asked for their CC details to be updated by Visa and Mastercard and these produced 2.2% to 5.1% of their details held which were out of date. This scheme in the US is a one time fee and less than a quarter for each update. This is compared to the cost of having payments declined.

[this is particularly relevant to annual renewals of recurring subscriptions]

Gift Cards
These are becoming an issue for merchants [I guess these are similiar to the 3V disposable credit cards in Ireland] and the CC companies are developing a mechanism to give merchants information that will allow them to identify a gift card when a transaction is declined.

keith

Subscriptions Online - Landing page optimisation session

This is a live session looking at a couple of sites suggested by the audience. Lead by Flint McGlaughlin, Director, MarketingExperiments.

We looked at entertainment.com and the very first suggestion was that there should be an understanding of where the traffic is coming from.

We followed the site through to the sign up page for online membership/subscription - click here for that.

The link to that page said Buy An Online Membership - yet this page does not use that term. So there is a Site Flow Interruption or Disconnect - the expectation of the user has been disturbed.

The graphic on the page gets in the way of the eye path - it draws a visitor to it immediately yet it does not answer the What or Why question. This eye path is influenced by:

• Size
• Motion (dangerous)
• Shape
• Colour
• Position

The heading is not clear enough, too many bullet points, text too small.

There was a discussion on the tension on the site between the printed product (they do money off coupons) and the online membership. The team leading the session have done work with the New York Times and they suggested a single form/page that allows the user to select between printed and digital and not split a site in two.

Clarity Trumps Persuasion

What is your offer?
Why should I participate?
    Emphasise positive
    Eliminate negatives - friction and anxiety

New York Times Casestudy - increase subscriptions to the online edition

They reduced a cause of friction - 3 equal buttons for Subscribe Now, Learn More and Free Trial. The Subscribe Now was made larger and the learn now was reduced to a much smaller link. The changes resulted in an increase in revenue of 65%.

They then looked at the free trial option page - which carried contradictions with Free V pricing information and also CC logos - you should not give pricing and CC logos equal emphasis on a Free trial signup - it introduces anxiety.

A change from a two paragraph layout to a single column (on a longer page) and this brought an 80% increase in revenue. Because the page became clearer with a better eyepath.

Next live site analysis - www.wie.org/unbound/

One of the first comments - never build a landing page with boxes, bars and clips - there is no flow, no sequence and no clarity of offer. The actual objective - signing up a subscriber - is "hidden" mid way down in the right hand column.
The page starts with a banner (text in banners does not get read), then text which is not clear on the offering. This is followed by a number of photos of persons whose audio clips are carried by the service. We are now almost at the end of the screen and the user will still have no idea what the page is about.

Phrase used - component thinking instead of dialogue.

next one - MDR - www.schooldata.com/

This home page is unfocused and has multiple objectives. (as an aside - he made the point that the majority of the internet is full of bad pages working poorly - if you make any improvements you will do exceptionally well. This is a new industry and it is still learning)

The MarketTrial subscription page carries no value proposition - the What and Why are not addressed at the top of the page. The Free Trial text is too small - and the trial of what is not explained.

The form is too long - just collect the name, the email address and phone number.
use relevant testimonials here to validate.

next one - Weight Watchers

We looked at a page that is a landing page used for pay for click advertising with google,

Landing page analysis - the page is not clear. Vague heading, multiple options, a learn more button that goes to their home page! Disjointed eye path.
There are 2 columns with identical options. So make it one column, single call to action and they self sort with a radio button choice.

next one - Wall Street Journal

The page we looked at is a landing page (reached from the home page) for online subscriptions.

First issue was a Free Trial button that lead to a page with a lot of pricing - so a disconnect.
Second one is three equal choices - causes friction and unsupervised thinking.

First get them to buy, then to choose. That is the sequence of thought and the flow should support that. So ensure that the offer is understood and the visitor is immediately going to purchase.

next one - http://www.jobsinsports.com/

No clarity, horizontal layout. A button that says Search and Find at the same time - confusing. Went back again to need for vertical and sequential.
(aside - people buy from people, not websites)

Example of good site:

http://www.sherpastore.com/workshop/index.php?9692

• Headline with key offer.
• Next text addresses negatives.
• What they will do
• More detail on how they will do it
• Simple sign up

keith

Subscriptions Online - how to optimise sub-path pages by 30% to 50%

How to increase your ability to optimise sub-path pages by 30% to 50%

Flint McGlaughlin, Director, MarketingExperiments. Also runs research lab at University of Cambridge.

He used 3 cases studies to make points on conversion of visitors to users to customers

First one:

Site offers customisable news feeds and the objective was to improve the conversion rate for visits to signups

The process which he engaged in was during a webinar with over 1000 participants and took 10 minutes

• Make eye path vertical - one column
• Increase font size
• Purpose not clear
• Add credibility indicators
• Put sign up on the main page (typically asking people to link to a second page looses 50% of them)

The simple changes made conversions rise from 3.9% to 6.6% and then also reduced marketing spend by focusing on keywords which lead to highest conversions.

Clarity trumps persuasion

(he mentioned a clients $5M web redesign which was awful because it was unclear)

Optimisation is about leading the visitor to a single objective - too many objectives confuses the user and the page

Two questions to ask about a site and how it works: (you must fill two cognitive voids)

1. What is your offer? (you have 3 seconds to get them oriented)
2. Why should I participate? (if I am your ideal customer why should I purchase from you and not anyone else?)

Our tendency is to rush to the "why" before we have answered "what"
Our tendency is to answer "why" before we have made the questions, itself, relevant
Our tendency is to answer "why" with presumed authority rather than actual credibility (quantitative is better that qualitative). If you do not have quantitative then use someone's else's qualitative.

Marketing Sherpa offers subscription to knowledge

Q - does a feature matrix on the trial page help or hinder subscriptions conversions

The answer was yes - an increase in 1.12% conversions to 1.97% (75% increase) with the matrix - despite the matrix making the page longer and pushing the subscription signup to the end!

Subscriptions to an internet hosting subscription - currently at 1%

3 pages shown - original and 2 treatments. All 3 have a matrix

Wording on top - simpler headings, more focused proposition -  Our best every hosting packages won!

1.31%, 3.44%, 2.05% (relative difference 162%)

Beware of unsupervised thinking by users!

(He uses his 13 year old son and when a page is done he sits him down in front of it and asks him - What is this page about?)

During the Q&A he said that using credibility indicators randomly does not work - for example littering the home page with 3rd party references. Instead use them at relevant decision/value proposition points and make them specifically relevant.

The amount of copy should be just enough to answer the 2 questions - what and why. You can use "popups" to carry additional content for more detail.

keith

UPDATE Dec 2011: My new blog which covers areas like conversion is here.

Subscriptions Online - Online Subscriptions Entrepreneur of the Year 2008

Online Subscriptions Entrepreneur of the Year 2008 - Reaching New Market Segments

Every year we celebrate an entrepreneur whose inspirational story shows you can start a subscription offering that succeeds online without major corporate backing. Past winners include AskTheBuilder.com and TheLadders.com. Find out who will win this year!

My Notes

Paul Allen is the winner this year - he founded ancestry.com and a number of others and in 2007 he started familylink.com (family record site).

This now competes with ancestry.com which turns over about $150M per annum. This is a mature segment where the users are usually over 60.

Founded 2006 with 7 from original team - now 32 ee's. They raised seed funding of 1.2M last Autumn and they have a very traffic successful Facebook application. They started the development of that the day it was announced and it changed their marketing strategy to focus on piggybacking on the traffic from the social networks.

They have about 2.5M unique visitors a month (over 100k active users a day)
and they have 30,725 paying subscribers from a standing start in 2007.  They have
He spoke about their sales channels - with affiliates accounting for 39% of their sales. They pay a 40% commission to them.

They have content partnership deals with over 30 different businesses and organisations.

He spoke more about Facebook and where they see it going for them. They spent an initial 15k to advertise it and none since - all adoption since is viral with over 3.5M downloads since October 2007. The facebook app showed a lot of Canadian activity and this lead them to the fact that the over 50's in Canada use Facebook a lot more than the US. Facebook in Canada was not launched as a college service.

He then presented some of their experiences with worldvitalrecords.com and facebook. They gather email addresses by offering to send emails which help with your research and this has a 4% conversion rate.
Searches done on the application give summary results which if clicked on bring you to a sign up page. Each page of the app carries a surname search box.
They have a special offer for Facebook users which is 99c for a month - taken from iTune track pricing which the facebook users are familiar with.
They reckon they will have 10 million facebook users by year end. They are collecting 2,700 emails a day.
.26% conversion rate for the 99c offer - with a lot of click throughs but a 4.15% conversion rate for those to give their CC or paypal details (paypal slightly higher).

Q&A session
Why are affiliates so successful - Paul said they treat them properly with the 40% one off revenue share a fair payment for their contribution to the business.

He said that the social networks can deliver really targeted advertising because of the profiling information that they have gathered - this offers tremendous opportunities for businesses.

On a humorous aside he said that he does get email for the MS Paul Allen and does forward it if it appears to be legitimate (via a friend who knows the real one) :-)

keith

Subscriptions Online - A/B Testing

A/B Testing Case Study

Encyclopaedia Britannica has been prolific in their use of A/B testing over the past 18 months. This information–packed session calls upon the findings of a number of tests (both winners and losers) designed to enable marketers to revisit all elements of a campaign including strategy, design, execution, and of course, results.

Dan Smith, Senior Vice President, Consumer Marketing, Encyclopaedia Britannica

My Notes

I missed the first part of the talk. They have premium subscriptions, adverts on the free areas and they also have ecommerce offerings.

Caught him as he looked at various payment option bundles. They eliminated monthly option and went straight through to annual with incentives - 117% lift in free trials, 61% lift in paid subs, 130% lift in Revenue.

They tested one page order form. They tested one page one column, one page two column and two page control. The one pages did not perform well for them.

Article Page CTA Test

They show an abbreviated article and ask for details to read the rest - free trial offer. They changed the wording from Click here to read the rest to Click for Free Trial - less click throughs  but higher conversions - so more committed traffic.

They also trialled an MSN advert on the landing pages (which may have distracted from the Free Trial offer). They lost free trials but the advertising revenue from the link meant an increase in average revenue overall from each visitor.

They also tested a Hackersafe logo on a one page sign up and this brought a 13% uplift on numbers signing up. This gave external validation of the credibility of their security.

Q&A Session
Joe said that the growth of Wikipedia has expanded the sector - it has increased awareness of online information sources.

They do not have a registered free user category (without a CC requirement as they do have now) and are planning to try this. He sees their advertising revenues growing to be bigger than their subscription revenue stream. Although their subscriber base is picking up again having dropped a little.

They tried to get 400 subscribers to each test page to get valid results which takes about 2 weeks. (he said that their traffic is 1/187th of Wikipedia!). They usually test only one variable at a time.

keith

PS - all 12 of my posts from this conference can be seen here:
http://bohanna.typepad.com/pureplay/selling_online_subscriptions_2008.html

Subscriptions Online - The Economy of Paid Search

The Economy of Paid Search: When and How to use it for Maximum Effect

This case study will detail recent paid search campaigns for AG Interactive properties. Get practical information on the relationship between SEO & Paid Search/Media, the impact of other media on branded search terms, and the impact of the high costs of search terms.

Jon Eggleton, VP Acquisition Marketing, AG Interactive

My Notes
His business hosts over 3.7 million eCard subscribers. They also provide content to various IM and social networking sites and finally they have purchased a couple of photo sharing sites. Subscriptions are their primary revenue streams with advertising second and a couple of other revenue streams.

Their paid seach is mature - their sites are in a crowded category and so they have high CPC's (cost per clicks). Their annual subscriptions are low - $19.99 for a lot of them.

Their CPC trends 2008 V 2007 - Click Through Rate is going down 9% and CPC's have gone up 267% (for their branded sites). This is the result of competition in their sector.

Competition - varies from the various offline businesses such as Hallmark to non-sectoral businesses such as Wal Mart, Coca Cola, Amex and Sears. These businesses are bringing big changes to the CPC's as their business models, revenue streams and volumes are very different. They make money from consumers in different ways and they have large budgets.

He showed an example of a search results page around Valentines Day when a number of affiliates ran CPC adverts against the main branded sites which was illegal - but it meant a skew in the market in a very busy time for the business.

What did they do for Valentines Day?

• Deployed selective aggression (they decided that they would not be outbid on certain words)
• Reduced broad match keywords
• Focused on landing page quality
• Utilised real time reporting and keyword-level bidding
• Expanded long-tail keyword lists

This approach resulted in

• Impressions up 119%
• Clicks up 23%
• CTR down 44%
• CPC up 11%
• Subscriptions up 26%
• CPA up 4%

Tactical advice:

• Launch with 2nd tier engines
  •     Ask.com, Miva, looksmart
• Utilise international traffic
• Switch to Standard match on Yahoo

Strategic Advice

• Focus on profit, not CTR
• Test, test, test creative
• Purchase path crediting

He contrasted an SEO V Paid Search page - the SEO page is more content rich but the Paid Search page has a higher conversion. Obviously the content has to be retained somewhat on the SEO page as it is directly related to the search engine ranking but there are design elements of the Paid Search page that can be improved upon.

keith

PS - all 12 of my posts from this conference can be seen here:
http://bohanna.typepad.com/pureplay/selling_online_subscriptions_2008.html

Online Subscriptions - Maximizing Customer Lifetime Value

Keep them Wanting More: Maximizing Customer  Lifetime Value through Strategic Offer Development and Delivery

The presenters discuss the techniques and tactics that they have successfully implemented to extend LTV (lifetime value) of their paid members. With effective site optimization to creative CRM email marketing strategies, TheLadders.com dramatically increased their revenues and LTV of their customer base. These implementations along with their successful execution, allowed TheLadders.com to experience package mix shifts to the longer–term subscriptions at initial sign–up along with increased subscription conversion to longer–term subscriptions post sign–up. Learn new approaches on how messaging, design and timing create longer subscriptions for your customer base and increase the bottom line in revenue.

  Michael McCurdy,  Director, CRM, TheLadders.com
  Leslie Semegran, Director,  Online, TheLadders.com

My notes

This site is for 100k plus jobs only. They charge jobseekers a subscription to get access to the job listings. They offer packages
$30 a month
$120 for 6 mnonths
$180 annual

Their research showed that the lifetime values of customers went up substantially as they moved from monthly to bi-annual to annual.
So how could they migrate customers upwards?
They looked at influencing the point at which monthly upgrade and what they upgrade to.

Leslie talked through the page on which users are invited to upgrade. They tried various things:
They moved the default to the 12 month
They spelled out the various lengths instead of using numbers
(neither of those worked)
They then showed all options as a monthly rate to
This resulted in a 15% decrease in the monthly and 250% increase in the yearly. The 6 monthly did not change much at all.
However this resulted in a lot of people contacting them to say that they thought they had signed up for a month by month charge (because of the wording) and asking to be moved back to the "proper" monthly.
They changed the page again - being mnore descriptive on the various options while keeping the monthly price. And they had a Total Charge very clearly on the page

This had the effect of reducing the uplift to yearly but it is still better than the original - more in 6 monthly now and less refund requests. They are also using a horizontal layout for the options and showing the total amount charged before the final button so people are very clear.

Leslie also explained how they also developed a different sign up page for people who had been members previously - same options but pre-population of the page with CC details already held etc.

379% increase in conversion rates on that page versus normal page with this page!

Michael then took over and spoke about some work with email campaigns where they offered discounts to people who had left with matching landing pages. They experimented with various discounts.
The offers varied from $5 dollars to 33% off. The 25% off one was the most successful. The testing only changed one variable - the discount. So the "A/B" testing was easy to analyse.

You would have expected the 33% off to have been most successful - however the 25% offer had the highest conversion to the yearly subscription.

He then spoke about a campaign to rescue people who were coming to the end of their subscription period - offering them 25% off their premium subscription. They tested this by keeping the discount the same and on 2 emails they experimented this time with changes in the data given to them in the email - varying from all data in the email to having them click  through to a page on the site. The one which included in all the data in the email was more successful.

Then he talked about one click subscription extension - where people were offered 2 months free to upgrade their package. This was very successful in encouraging upgrades.

In the Q&A Leslie said that a 3 month options is being used in their UK site and they may consider this for the US - it is very successful in the UK. On the question of the effectiveness of their TV advertising Leslie said that  as they could not track the increase in business directly they have been monitoring the change in categories and subscriptions against the pre TV age.

keith

PS - all 12 of my posts from this conference can be seen here:
http://bohanna.typepad.com/pureplay/selling_online_subscriptions_2008.html

 UPDATE Dec 2011: My new blog which covers areas like conversion is here.

Subscriptions Online - Segmentation and Usability

Take a Look Inside: Building Your Subscription  Base through Segmentation and Usability

Building a loyal, relationship–focused experience for both new and returning visitors starts with increasing the usability of the site. In the process of testing features like ‘Look inside the Magazine,’ guest checkout, and a variety of site search results pages, Magazines.com has developed experiences tailored to many audiences in order to maximize the functionality of their site and appeal to and deliver relevant content to all visitors. Hear lessons learned around acquiring online subscriptions, establishing long term consumer education goals, and site optimization based on customer behavior.

Kate O’Neill, Director  of Customer Experience & Product Development Magazines.com

My Notes

They have over 1M subscriptions per annum. Kate "owns" the site so has responsibility for all aspects of it.

She first spoke about what customers wanted from them and she focused on the ability to browse without registering. They brought in a number of new features and then tested them.

The process of usability testing is complicated by the fact that users do not know why they do what they do - so asking them why they have clicked on a particular option does not really lead to usable data.

So instead you should use multi-variable testing (changes various elements of a page) and use website stats to find both the high traffic areas as well as the duds.

The challenge is still that you may have various user types and so the aggregate data may hide relevant information on high use of features by one group and low usage by another.

Kate went through the test detail in some detail. Elements of the results were unexpected and so she also pointed out that you may not be able to understand some of your results - this is inevitable when testing with humans!

In the Q&A session she said that slow V fast internet connections did not appear to make a difference to subscription rates.
You should also consider using paper prototypes to explore other options for the features you tested.

keith

PS - all 12 of my posts from this conference can be seen here:
http://bohanna.typepad.com/pureplay/selling_online_subscriptions_2008.html

Online Subscriptions - Subscription Business Forecasting

Title: Subscription Business Forecasting: Developing  a Comprehensive Model for Sustained Growth

Detail: ShareFile launched in December, 2005 and today has over 130,000 users in 120 countries with over 2,000 paid subscription accounts. Early in the business they built a mathematical model to run "what–if" analyses and determine the answers to key questions including:
  –How many months will it take to recover our customer  acquisition cost?
  –How many subscribers will we have in six months? One  year?  Three years?
  –At a given level of ad spending, how long will it take to reach  5,000 customers?
  –What impact will an improvement in registration process  have on product revenues 12 months down the road?
  –How much money should we spend to acquire new customers?
The presenter will share the concepts behind the development of subscription business modeling tools and walk through specific examples of how the models have helped in understanding the business and projecting future subscriber numbers.

Jesse Lipson, CEO,  ShareFile

My Notes:

[Sharefile are a subscription only business - no free version]. He described them as a business file transfer tool.

Launched Nov 2005. Average revenue per month per customer $37 - currently working to move up to $41.

180,000 users, 2,600 paid accounts, Users in 120 countries.

Two key points
Modeling is extremely valuable, especially for subscription businesses
The underlying approach is the same for all businesses

Modeling is a simple representation of a complex phenomena. Business modeling involves taking the key elements of the business and breaking them into simple quantifiable elements
The key is the balance between complexity and overly simplistic.

Modelling helps you to value a customer and therefore helps you understand how much you can spend to acquire them.

Subscription Model Development:
7 Key variables

1. Cost per lead
2. Lead conversion rate
3. Lead conversion time
4. Organic growth rate (Word of mouth/viral)
5. Churn rate
6. Average revenue per customer
7. Average marginal cost per customer (include customer support costs)
8. Ad budget

Calculated Variables:

• Cost per acquisition
• Time to break even
• Gross profit per customer
• Lifetime value of a customer
• Net present value of your acquisition

He suggested that you build a model - even in advance of having some or all of the data. The sooner you start the sooner you will start to learn.

One example of how they use their model - which he showed us. With a lifetime value of $828 he reckoned that they could spend $200 to $400 to acquire each one.

He then spoke about a program they ran to increase free trial conversion rates. They designed a test to see if follow up calls to ex-trial users and found that the conversion rate for phone calls versus not was 61% against 57%. Which seemed marginal - but when they put that into the modelling they found that over 4 years this action would result in a $538k increase in the value of the business!

He then showed an example of a reduction in churn rate which resulted in a $10m improvement in the business value after 4 years.

keith

PS - all 12 of my posts from this conference can be seen here:
http://bohanna.typepad.com/pureplay/selling_online_subscriptions_2008.html

UPDATE Dec 2011: My new blog which covers areas like conversion is here.

Online Subscriptions - Revisiting Subscription Revenue Strategies to Support Changing Business Models

Title: Revisiting Subscription Revenue Strategies  to Support Changing Business Models

Detail: What's the right mix of free and paid content? How do I balance advertising, subscription, and single item revenue streams to meet quarterly goals and maximize long–term profitability? If you are like many strategists in the world of online subscriptions, you're looking at adjusting your revenue mix formula and adjusting your marketing strategy accordingly. Don't miss this spirited discussion to learn how a shift in the "big picture" will affect your efforts to boost traffic, increase conversions, and optimize revenue per subscriber.

Bobby Burton, Chief Operating Officer, Rivals.com - could not make it, Marybeth Gavin, Senior Marketing Manager, Hoovers.com, John Boris, VP Marketing, Zagat Survey

Moderator: Sean  Donohue, MaketingSherpa

My notes:

His intro went over the turmoil over the last year in the subscription model talking about the move back to the advertising model. He reckoned that this is cyclical and only applies to certain content which is explicitly up against similar content.

Adverts versus subscriptions - he asked them about the hybrid business models,

Marybeth explained that Hoovers supplies B2B information with a subscription service that takes advantage of their propriery content.
They found that their subscribers became a valuable group for advertisers and they were approached to carry adverts. So they did! And it now comprises about 10% of their revenue - but it is carefully done

John said that Zagat has bounced backwards and forwards between subscriptions and adverts for the last couple of years. Now they are on a hybrid. A specific change they have made in the last year has tripled their advertising revenue.
Advertising is the fastest growing revenue stream from their sites and they are debating moving to a free model - but giving up a guaranteed revenue steam from subscribers is difficult and may not be necessary. Subscriptions are still larger than advertising though.

Sean Donohue asked how they decide to place content on either side of the Free V Paid barrier?

John said that the key piece of information behind the barrier is the review of a establishment and they now also have other stuff like video and tours which (if they are community generated) are behind a free sign up barrier.
Their mobile content is new and behind the subscription level.

Marybeth - they use the free site as a lead generation tool (they do not have a free registration level) and they tease with summaries for which the detail is available behind the subscription barrier. All their proprietary and analysis content is subscription only. The primary benefit they offer is that even with the non proprietary information they can save vast amounts of time by gathering and summarising it in one place.

Sean mentioned Rivals.com (missing panellist). It gathers information and communities around college sports. They realised that the community they service is really active at certain times of year and so they ramp up their content and marketing to match those natural peaks in interest.

Sean then asked about the community/Web2 levels of content - these are very typically kept behind free registeration. He asked Marybeth if Hoovers have been considering this area?
She said that they have implemented community forums, blogs and podcasts. More recently they have added self listing for individuals to add themselves as executives on company listings. However she said that their client base is time poor and the takeup has been poor. They have launched a separate site to promote those features.

Sean said that Rivals.com (who charge $9.95 a month) have found that the community features have been a key attraction for their subscribers.
He then asked how the panellists prioritise their attention across the various revenue streams?

John - they have two teams focused on advert V users/subscribers. They have started to promote their free offering online to maximise advertising revenues and then subscriptions (to combat the perception that they are a paid only site).

Marybeth. They focus on bundling contextual content and wrapping advertising or sponsorship around this content bundle. They also line up free trials and other benefits that complement the content.
As they are used a lot by job seekers looking up background information they have also run job adverts on company pages (ie Dell openings on the Dell page)

Sean asked them each for one quick tip to share with audience

John - they used to have multiple subscription offerings and they eliminated the lower price offering. They did not reduce the conversion rates.
They also changed their cancellation policy - now by phone only and their cancellation rate has reduced by 40%. [this seems dumb to me, keith]

Marybeth - a livechat option is used as a conversion tool - if a visitor delays at a conversion page for too long they are presented with a livechat box asking them if they need anything - this has a very high success rate.
They have also used webinars with a lot of subtle background inferences on how Hoovers can help the audience for the webinar.
What really, really works commercially is to ask an advertiser to sponsor one of those webinars.

Q from audience - someone whose business model is more subscription than advertising. She asked about how they are doing the financial modelling on the future revenue models.
John said that they gather a mix of quantitative information and informed opinions. If they forecast an inflection point in the future then they do need to decide on if they make a short term decision to pre-empt the future change.

Q - are either of them using widgets etc to push some of their content into social networking sites etc?
John - they are working on this at present to increase awareness but they are a strong destination site and this influences their approach.
Marybeth - they have developed a Google live search widget and a couple of other things but they have not yet seen traction with those.

Q - how do Zagat move people up the value train?
They have seen the biggest success in moving people from visitor straight to subscriber. Conversion from user to subscriber is less successful. They have offered a trial subscription with some success and use various onsite messaging to change people.

Q - product development split between free and subscription sites
Both said that their content is shared and so the product development is similar for both.

keith

PS - all 12 of my posts from this conference can be seen here:
http://bohanna.typepad.com/pureplay/selling_online_subscriptions_2008.html

UPDATE Dec 2011: My new blog which covers areas like conversion is here.

 

Thanks to Ina

Had meant to put up a Kiva (micro-finance) banner here for ages and inspired to do so by seeing one on Ina O'Murcha's blog - she was a speaker and panellist at CreativeCamp and we spoke for a while about the semantic web amongst other things :-)

keith

XCellerate 2008 - 'Bang for the Buck' - Marketing 101

Michele Carroll, Carrollco Marketing Services
Diane Roberts,
Chris Gill, SVASE
Gareth Coen - Partner in xCell Partners

Michele gave an initial presentation on marketing for the early stage start-up. She covered the standard phases of internal and external assessment, defining positioning, developing marketing materials and then moving to targeted sales.

Important
Focusing on the right person and not wasting their time. Be direct.
Don't be too humble
Take the time to make sure they "get it" fast. So listen.

(the preparation of the pitch is an iterative process, it takes time)

Lead generation

Focus - Plan - Execute

Focus - define value proposition, define target audience (the people who are feeling the pain, the decision makers, who is in the best position to champion your product/service internally?), set objectives

Plan - doing research, generate cold call list of your ideal clients, articulate the value proposition by target (she recommends the use of Hoovers DB for gathering target data)

Execute - 5 to 6 calls, a couple to identify the right person and 2 to 3 leaving voicemails to attract their attention.

Shoestring Budget

• Create and then leverage success (with reference/marquee clients)
• get your WWW sorted - polish and craft your online presence
• Go barrel fishing - set up events targeting your audience
• Americanize your message - direct, targeted and focused without loosing your Irish'ness!

Tips for Gaining Access to your targets

• Leverage personal networks
• Leverage Technology Buzz (for Tech businesses only!)
• Leverage hot reference clients and celebs (if relevant)
• Leverage upcoming trips and conferences

What works and what doesn't

Works:
Being Irish helps!
Limited time offers
Confidence and compelling Story
    Strategic, high level tone
    Enter at the right level
    know, feel and convey your value to the prospect
    Keep it high level - you are gaining access not selling. You are there to ease their pain

Doesn't Work
    Courtesy calls with no purpose
    Fuzzy invitations with no dates
    Telemarketing

Ready, Fire, Aim - Multiple iterations!

Discussion on persistence of trying to get to a target. Michelle said that female voices work better, Irish female perfect! Gareth said that if someone persists you start to believe  that they have something worth listening to.

Diane - do Irish startups  do this right? Chris - said that he only knows US start-ups and said that they do not usually get it right as they are dominated by engineers who do not want contact with the marketplace - they want to build something!
Gareth said to be very open when you  contact people (maybe keep the secret sauce secret) but otherwise spread the word! You will generate opportunities without trying.

Diane asked about the power of blogging and the virtual connection - is this enough! Chris reckons that the power of bloggers is probably overestimated, especially by bloggers. (note from Keith - I do not overestimate my own power here!). There is nothing to beat personal contact with your customer - connecting without being physical present is far less effective.

Q from the audience - what is the power of the PA/Admin in gaining access to the target? Very high - Chris said if you call a business and directly ask for the PA/Admin of the target then you have a pathway through. Treat them like real human beings.

Gareth mentioned Jigsaw and Linkedin as very good sources of contact data.

Diane invited Pitches from Startups in the audience

Ivan from Rococo - incubating a startup which allows you to use stagnant car-time to dial a phone number to manage to-do's and other "stuff" - Freemium business model.

Helene - Nubiq. Have you ever searched for content on the mobile web and tried to download a normal website. Nubiq break down the barriers to mobile adoption by creating mobile safe websites. They also wrap other mobile relevant services around this. They have partnerships with O2 Ireland and T-Mobile Netherlands. They have over 10,000 registrations for their Zinadoo service.

They have an ARPU of one Euro per user per month (SMS services). They have just started online advertising to US users. Also charges for inclusion in a mobile directory.

Liz Gill - Carpool Ireland

A service for facilitation car sharing - launch targeting the Oxygene music festival and also the car-runs for parents etc. Free service and working to make the website sticky. There is a UK business (with boring website) starting to target the Irish market. Business model is transaction fees on things like petrol cost sharing facility.

Jan Blanchard - Touristr.com
Travel destination site. The need - too much information available when booking trips including hotels, flights, tourist destinations. Touristr aggregates the reviews you need and leverages your social networks.
Their opportunity is working with the Semantic web team in Galway and the model is percentages from booking transations. He has executive summary available for anyone who wants one in the audience.

Person whose name I missed
Service is automated generator of soundtrack music based on existing video footage, royalty free. They won SeedCorn regional competion in 2004. They got EI money, developed prototype and raised angel investment. Looking to raise further funding round.

XCellerate 2008 - Key Issues in Funding Your Business

Brian Caufield, Aepona and ex Trinity VC
Laurence Naughton, Hall & Stewart LLP, Boston
David Smith, Merrion Rock
Gráinne Lennon, EquityNetwork

Laurence gave an overview of the US funding space. Similar to the scenario painted by Chris.

Tips on Raising Finance from US Firms
Laurence is based in Boston so he sees more of the East coast deals. He said that there are a number of companies there that are looking for and at European and Irish deals.

• Target your fund (he almost reckoned that if you fall for the "use our site to submit your business plan" you will not get funded!
• Be aware of the process - went back to the need for trusted referral
• Don't ask for too little - you will get none. Be aware of the difference in scale - VC's need scale to be able to manage the investment properly. They will need a requirement over the lifetime of the investment of $10 to $20M.
• When defining the size of the market be aware that any VC will want to invest in the top 3 in any sector. Think at the upper end of your ambitions.
• Be aware that some US VC's will only invest in US registered corporations
• There are style differences between European and US VC's - in the US they do not expect the founder to be the exit CEO. Bigger scale, bigger expectations, less hands on involvement, more rigid timetables/milestones focus.

Discussion
Laurence asked Brian about his feeling for the market in Ireland. Brian said that it has changed very recently as the majority of funds have raised new capital or will have done in the next 6 months. He reckons that things are now pretty positive and it is a good time over the next 3 or 4 years to raise funding. David agreed and said that there are a lot of term sheets out there at the moment.

Laurence commented on the Government investment into funds and the panel agreed that this is a very positive  move. Brian also said that Enterprise Ireland offer a lot of non-financial aid - however getting a good development advisor (DA) is crucial. (my comment on this - Brian is right, however it is difficult to the point of almost impossible to switch your DA).

Grainne mentioned the BES scheme as being useful. Brian said that because it is tax driven the likelihood of getting either smart investors or the ability to follow through in scale can be very limited.  David also added that the typical BES profile to date is not a high risk one - companies with established revenue streams are preferred.

Laurence asked is debt a viable funding source. Brian said absolutely not as regards banks, however venture debt is becoming available. However it is limited to businesses with quality VC investment - where the existing VC partner will not walk away! You need to be close to cashflow positivity, close to closing a funding round or where existing investors cannot agree on the funding strategy.

How to prepare for VC engagement?
Brian said get your pitch short and very convincing. David said show your familiarity with the sector and show external validation. Grainne said you need a 2 pager - picking up on Brian's point.
Brian made a follow-up point. Any Irish startup at the First Round investment stage should not be targeting US VC's - the US firm will need large scale ($10M) and an investment that has been "scrubbed down" - where local VC's have validated the business.
Laurence added that an early stage he needs to visit an investment 10 times in a year so the physical distance is important.

Q on leadtime from intro to deal done? Brian said that a strong deal and competitive pressure will bring an early term sheet, otherwise a VC will take their time. Laurence asked about the specific time - Brian and himself both agreed that 6 to 9 months is average and allow for August is a dead month in the US! No matter what allow for this time scale even if everything is strong and positive. David agreed that having 2 VC's in play can make a big difference!
For Angel Investment it can be faster - less than 6 months.

Topic of Irish VC's co-investing with US VC's. Brian said that there are only in exceptional circumstances could Trinity do it - the US involvement would usually mean a shift in the centre of gravity with the liklehood of a new management team and moving of the HQ. That is not always appropriate for a business. Laurence added that a US VC's lack of knowledge of the sector in Ireland/Europe is a limiting factor.

keith

Interesting attempt to gather ID information

Received this to my gmail address from [email protected]. I guess they use the CV information to make credit applications etc!

keith

UPDATE - I should make it clear (after a comment left by someone with an actual fexco email address!) that this email is not from Fexco.

________________________________________________________________

FEXCO Group Ireland Job Opportunity ........

........This is a great opportunity to work for 1 hour daily from home with FEXCO Group Ireland.

FEXCO Group Ireland is a privately owned company, based in Ireland is a focussed provider of global payments and processing. Through our five core product groups Global Payments Services, Outsourcing Solutions, Financial Services, Travel & Leisure Internet Offerings and Consumer Money Transfer we distribute millions of international payment transactions annually.

The role will involve taking care of purchase orders online because you will be working directly with our customer care department and we will provide you a login and password to access our website, invoicing, chasing suppliers, liaising with clients, answering phones and ad hoc duties as required. We will als provide you a personal toshiba laptop if you are successful with your application.

To apply please send your CV and your resume letter to our customer care department via email :  [email protected]

FEXCO Group
http://www.fexco.com/

Should I take this as a compliment - my content being ripped off?

One of my Technorati watches turned up this blog podcastingforyou.com. Where in one of the 3 sections each of my posts is partially used to populate it.

My blog was licensed under the Creative Commons Attribution-Share Alike - linked here and this use does not appear to break that license - except that it does not attribute. I have changed my license to the more up to date one that explicitly excludes commerical use and will watch with interest!

Anyone any thoughts on this? Should I care?

keith

BTW the domain admin contact is:
Administrative Contact:
Gates, Wardell [email protected]
19143 Patton St.
Detroit, Michigan 48219
United States
3132131335

Somewhere in Canada there is a happy penguin colony

Two weeks ago I did a slot on KCLR96FM (Kilkenny Carlow radio) about Club Penguin. This is an heavily moderated (to ensure safety) online community for children from 8 to 14 and we discussed it's appeal for kids and how it helps to protect them online.

My daughter had been listening to the interview and afterwards went to the site and signed up. As did my son - who is usually more inclined towards the action genre. Both of them now have paid memberships and have played on it regularly since which was very interesting for me as an indication of its appeal and stickiness.

€700 million
This is the price (€350M in cash and €350M in earnout potential between now and 2009) that Disney have just paid to capture the eyeballs of an emerging onine generation. They now have over 700,000 paying members in their sights and a great opportunity both to cross sell to them and also to follow them into their teens with other online services. For more on this story follow this link to paidcontent.org.

Well done to the founders  - almost overnight since they only opened for business in the latter half of 2005.

keith

Innovation - take 5k and see what you can do with it

From the email newsletters of Wexford CEB and the South East Enterprise Platform Program. Although it was oversubscribed last time around my off the record understanding is that the quality of the applications was not great so this may be less competitive than it seems.

keith
_________________________________________________________________

The 2nd phase of the Innovation Voucher initiative will open from Monday 2nd July @ 9am to Tuesday 31st July @ 5.15pm. Enterprise Ireland were delighted with the response to the initial pilot phase.  The number of applications exceeded the number of vouchers available (200).

What is the Innovation Voucher Initiative?

If you own or manage a small company and you have a business opportunity or problem that you want to explore, why not apply for an Innovation Voucher worth €5,000? The objective of the Innovation Voucher initiative is to build links between Ireland's public knowledge providers and small businesses and create a cultural shift in the small business community's approach to innovation.

What's in it for my company?

The Innovation Voucher allows you to concentrate on running your business while knowledge providers come up with a solution that could take your business to the next level. The Enterprise Ireland guide is linked here.

Back to basics - and I have already missed one

Eoghan McCabe has just posted a nice simple list of things to do if you want to start building trust using your website. All common sense yet almost there are few sites that will implement them all.

The first three are

• Publish your phone number on every page of your site.
• Publish your address too!
• Maintain a personalised “about us” page, with names, short bios and contact details of the people behind the business.

For more see his post at: www.eoghanmccabe.com/naive-by-design/how-to-build-trust-online

[the one I have breeched is the "about me" on my consultancy site. That I need to change.

keith

CFI - Corporate Finance Ireland

Back after a couple of days away and need to catch up on a couple of posts. This one comes from someone that I know for years who asked me my opinion on a business called Corporate Finance Ireland - link to their website here.

The context is an early stage business looking for assistance on the finance raising side of things. Anyone know CFI and/or had any experience with them? Email me if you do not want to share in public - all will be treated with absolute confidence if required.

UPDATE - thanks to a couple of email responses I now know that two start-ups whose experience I respect have used CFI and recommend them. Appreciated folks.

keith

Become a paid expert

This one makes a lot of sense - aggregate informed opinions in a focused way and build a viable business model around it.

"Companies can use the Techdirt Insight Community to get a confidential instant focus group of experts, who can give feedback, test ideas, review products, make strategy suggestions, help with purchasing decisions or any number of other services that require a dedicated group of experts."

It's here: http://www.techdirt.com/ic/

keith

Google buy YouTube

Flashback - to the late 90's when convergence and content were the talk of the town. Dot-com was in full swing and the silly money was on eyeballs.

2006 - convergence and content creation are now happening. Eyeballs are where it is at (although there are now sustainable revenue streams out there as well due to a critical mass of broadband users) and YouTube have delivered - $1.65B was the price on that deal (Google press release here)

I hope that mega-deals such as this add to the infrastructure and experience of using the internet rather than merely setting us all up for another dot-bomb.

keith

Oxfam Ireland - Fairtrade online

There are a number of challenges in niche markets (the subject of my talk at Barcamp Ireland)  and these include:

• making money
• getting your message across
• distribution

Fairtrade has come a long way since the days of what was genuinely horrible instant coffee in the 1980's. The products these days are acceptable to a western audience while still containing references to the cultures they come out of.

Distribution, especially in a country like Ireland, is still an issue. A couple of years ago Oxfam pulled their fairly traded goods out of the majority of stores (I guess issues around logistics were big there) and focused them on a couple of key outlets in Ireland. Which was great from a quality and presentation point of view but lousy for those of us who do not live in the major cities.

Today they have taken the logical step of launching an online store for Ireland. They are accompanying that with some net savvy marketing techniques (contacting blogs both in advance and on the day and runnng an adsense campaign) so the marketing challenge is (partially at least) being tackled in the digital world.

If you are looking for anything from coffee to corporate gifts to toys for the children for Christmas or even jewellery and crafts have a look at www.oxfamirelandshop.org

Well done to Oxfam Ireland and to Karl Cronin, the webmaster behind this.

keith