With circulation declining and digital advertising being commoditized throughout the media industry, it’s more critical than ever to establish a direct relationship with users and enable a direct-to-consumer revenue stream. Adding a subscription product can be a scalable, reliable and lucrative way to do so.
But the shift in paradigm from a business revolving around ad revenue to one centered on users themselves can be a massive undertaking that requires brands to learn new skills, understand unfamiliar metrics and think differently about both their customers and their business.
Piano has worked with thousands of content websites and apps on successful subscription launches. Our experts in strategy, research and marketing know how to identify and build the right subscription product, then optimize the customer journey to drive higher engagement and revenue.
In working towards those goals, Piano has developed a process designed to help companies get started. Our product development process includes four main phases, with specific stages along the way:
- Phase 1: Understand your audience
- Phase 2: Develop feature ideas
- Phase 3: Model business scenarios
- Phase 4: Create your go-to market plan
Phase 1: Understand your audience
Most successful subscription products meet an existing, unmet customer need and integrate into current user behavior. The foundation for creating the best product for your business, then, should be understanding both that need and your audience’s behaviors.
In Phase 1, we suggest focusing on quantitative analysis and qualitative research so you can better understand your audience, business, content and market positioning:
- Define target audience profile and size;
- Identify user personas and map to specific audience segments, their goals and unmet needs;
- Build internal alignment around potential goals and challenges, shared between all key stakeholders; and
- Complete a competitive landscape analysis, including product comparison and pricing.
Step 1: Analyze your audience and user behavior
Consider what audience segment (or segments) is consuming the largest share of your content. For most brands, it’s a relatively small proportion of users — between two and 12 percent — who account for roughly half of total page views. It’s these highly engaged users who you want to focus on.
What content are those users most interested in? Which devices do they use? How do they get to your site, and what are their habits once they’re there? Have they subscribed to a brand newsletter or otherwise provided an email address to you?
Through this knowledge you can begin to identify your target audience and their content behaviors. You’ll also establish the size of that audience, which is essential to understand the full business opportunity.
Step 2: Develop a richer profile of your loyal users
Consider recruiting a small focus group that mirrors the demographics of your audience. Use the number of audience segments you’ve identified to determine the actual size of the group. Interview these users, either individually or together, to uncover information about their media habits and interactions with your brand that first- or zero-party data might not be able to answer.
The goal is to understand their habits both on your and competitor sites to create a set of user personas that paint a clear picture of general routines, goals, needs and pain points within your content category. What do they value? How does content consumption fit into their routine? What would they change or improve about their experience with your brand?
Pairing these qualitative insights with quantitative data will help you better understand your audience's “jobs to be done,” or what they’re really trying to accomplish in their lives when they interact with your brand.
Step 3: Talk to your team
Have a conversation with all of the key stakeholders on your internal team — including leaders from editorial, marketing, ad sales, product management, data and insights — to collect potential opportunities and challenges as you develop a subscription product.
By speaking to stakeholders that represent every aspect of the business, you’ll begin the process of aligning multiple departments around the idea of a user-focused subscription launch.
Piano has found that internal alignment is one of the biggest challenges brands face when launching paid products, so be as thorough as possible in this step to gain the buy-in you need.
Step 4: Review the competitive landscape
You have a better understanding of your audience by this step. But what about your competition? Understanding the competitive landscape before formally developing a subscription product will be vital for its ultimate success.
Explore how the other brands in your category or market are positioned through both short- and long-term intelligence. Think about things like market share and rising revenue vs. looming regulations or risks within the vertical to get a more realistic view of the big picture and where you fit within it.
Then, consider what those brands have to offer for their users. Do you serve exactly the same audience? If so, how can you drive preference? What differentiates your site from theirs? Do they have a subscription product that you can use for insight into offer and pricing structures?
Phase 2: Develop Feature Ideas
Phase 2 centers on building out the best ideas for your subscription product and ensuring you have an offering that stands out. At this stage, you’ll bring that stakeholder group you interviewed in Phase 1 together for an intensive session — ideally two days away from the office — on your subscription product to:
- Define target personas and roles to support the product
- Brainstorm product opportunities prioritizing those ideas
- Refine product concept designs based on user feedback
As the people who know your content, business and users best, the stakeholders in this session should be able to offer the perspective needed on business goals, challenges and audience behaviors as you create your new offering.
Step 1: Bring insights to the table
Review the audience personas you developed in Phase 1 with your group of stakeholders, sharing the goals and unmet needs that have already been identified. If any recordings were created as customers were interviewed, it would be helpful to play them back so the working group can hear the insights directly from your users.
You’ll also want to review the results of the competitive landscape to validate or change the initial findings you collected. In short, everyone in your intensive session should be fully briefed on the insights you collected to ensure everyone has the same foundation on which to build your best ideas for a new subscription product.
Step 2: Establish subscription goals
As you review personas and competitors and begin documenting potential problems to solve, consider how they could relate to core business objectives. For example, if a common concern across users is that ads are causing content pages to take too long to load, a goal could be to offer paid access for ad-free content. It resolves a customer concern while still generating revenue for the business.
Once you have this list of problems and user needs, prioritize it. In some cases, you’ll need to create a solution for one problem before you can move on to others. At the end of this step, you should ideally have three to five priority problems to solve that ladder up to a main goal for launch.
Step 3: Brainstorm solutions
Next, consider how to solve the problems for each persona by brainstorming potential solutions for each. Every participating stakeholder should document as many ideas as possible, whether big, small, individual features or whole product concepts. No one needs to worry about feasibility yet.
After everyone has had enough time to think, the group should come together to share their thoughts and decide which ideas resonate the most. Those are the solutions you’ll want to use to define product concepts.
That doesn’t mean all of the brainstorming was for nothing, however. Bank all the features and solutions that were ideated, even those you choose not to pursue immediately. They may help in developing other product concepts or future iterations of the main product as your offering becomes more mature.
Step 4: Validate solutions with users
Once priority solutions and concepts have been identified, conduct another round of user interviews. You’ll want to uncover information like:
- Does the product seem appealing?
- Do your users understand the product and what it does?
- Is their interpretation of the product the same as your internal team's?
- Does it help with their problems and ease their pain points?
- Most importantly: Would they be willing to pay for this product?
With this feedback in hand, you can make further refinements to the product concepts to take into Phase 3.
Phase 3: Model Business Scenarios
With the product concepts in place and stakeholders firmly aligned on user needs, this phase is when you refine the new business model and ensure it will hold up long-term, building on earlier phases of research and the fundamental business questions you’ve determined will drive subscription success. In this phase you will:
- Test user willingness to pay for your product,
- Identify the specific price point of the product,
- Estimate your audience conversion rate and
- Confirm the access model you’ll use.
Step 1: Define your product bundles
Before testing price, define the specific product bundles you’ll present to your users. Use the prior research on product concepts and features to establish several versions of the product offering — perhaps basic and premium tiers of your product, or different combinations of features to test which are the most appealing.
Step 2: Research product bundles and pricing structures
Understand the product bundles that appeal most to users, the willingness they have to pay for that product and the price they would feel comfortable with by conducting even more research. You’ll want to tap someone in-house with proven experience in pricing for this, or use the expertise of an external strategic team.
This research will also help you understand how to use pricing to align to business goals, whether the priority is maximizing subscribers, increasing total revenue or ARPU.
Step 3: Model revenue scenarios
Take the results from the price testing and use them to model revenue scenarios. Piano uses a proprietary modeling tool that includes every key factor: meter, freemium or hard paywall, product price, mix of annual vs. monthly subscriptions, proportion of audience exposed to offers, notification type, offer conversion rates, promotional tactics, paywall carve-outs, potential lost ad revenue, retention and much more.
Phase 4: Create Your Go-to-Market Plan
By Phase 4, you’ll have a clear understanding of your target audience, product features and the pricing that will drive business goals.
This phase is when you put all of that knowledge into action, building out your subscription product and the go-to-market plan to support it:
- Develop a pricing plan
- Create an audience targeting plan
- Outline customer messaging
- Map the desired customer journey
Step 1: Define your initial pricing
You’ve learned what users are willing to pay from the pricing research undertaken in the previous phase, but most likely that research delivered a range of price points, with some sense of a ceiling. In most cases, Piano recommends testing that range when you first launch.
By comparing a handful of prices, you’ll understand initial conversion rates at different price points, which provides real-world data to tune your business model. You’ll also want to decide if you’ll offer both monthly and annual subscriptions.
Something to consider, based on Piano client data: Annual subscriptions bring in more upfront revenue and maximize customer lifetime value. Offering a monthly option in addition to annual, meanwhile, often boosts conversion rates significantly, but could lower lifetime value due to higher churn rates.
Step 2: Define your initial target audience and access model
Decide how many users you want to focus on for launch and identify your conversion goals within that group. From there, you’ll begin to identify your most likely subscribers. Piano offers a feature known as LTx that uses modeling algorithms to easily identify these users.
Based on the behaviors you know about this user group, determine the access model that will be likely to resonate strongest with that audience. Soft paywalls or metered access, freemium or membership options, hard paywalls or dynamic paywalls are all up for consideration.
Step 3: Craft your messaging
How will you talk about the benefits of being a paying customer? What will resonate best with your audience? Base your messaging on the values and problems to solve that were identified in earlier research phases as well as feedback from users during the product concept tests.
Define different messages to test and experiment with broad-brand messaging versus specific benefits messaging. Which of these drives the highest conversion and the best retention rate? And where else can those messages be replicated?
Step 4: Map your customer journey
Lastly, plan how your users will evolve from being net new to the site all the way through to being an engaged, renewing subscriber. Each step — from awareness to engagement to consideration to conversion — requires its own tactics and messaging to encourage an audience to take a specific action.
Think: Which trial could finally convert a user group from considering a paid subscription to actually purchasing one? Is there a particular discount or freemium access that you could offer an audience to entice them to become return visitors? Nail these onsite and in-app customer journeys before bringing external marketing efforts into the fold.
Prepare for Launch with Piano
With a clear understanding of your audience, product and business opportunity, and a plan to go to market, the next step is deciding on the right software platform to power your subscription business before you go to launch. But the work doesn’t end there.
There are new reader revenue metrics to understand; a new culture of experimentation and improvement to develop. It takes constant testing and evolution to refine your initial decisions, fine-tune your marketing and learn what works best for your users, as well as your editorial and business teams.
Developing the best subscription model for your audience requires constant learning and a wide range of new skills that might not currently exist within your organization. For support during this exciting time for your business, consider Piano Strategic Services.
This team works as an extension of your organization and is composed of publishing executives, product strategists, marketers, data analysts, copywriters and designers — all with a deep understanding of digital subscriptions and user behavior. Backed by Piano’s benchmark data, Strategic Services give organizations the context they need to continually improve site experiences, drive performance and grow revenue.
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