New content delivery and revenue models are needed to assist the urgent pressure on news outlets to shift even further online; digital readership must be the main focus. But how can you deliver in a time of falling or stagnating profits and budget cuts? By increasing Customer Lifetime Value (CLV) in modern subscription models offering quality content, digital news media companies are able to offset the relative decline in advertising revenues, by retaining high-value customers and boosting readership. Focusing on customer experience by understanding their journeys and retention strategies is key to increased CLV.
Covid as an instigator of change
Spurred on by Covid-induced lockdowns and tighter budgets, print consumption decreased dramatically over the first quarter of 2020, down from 33% of people using print as a weekly news source in January to just 26% in April, according to the Digital News Report 2020 from Reuters Institute for the Study of Journalism. This follows a continuing downward trend – from a readership of 63% in 2013, with a converse upward trend in both online and social media as sources of news.
Traditionally, revenues in news media come from advertising. In a strategic survey of worldwide news media organizations (both online-only and print) conducted by the Reuters Institute in 2020, 67% reported advertising as being their main source of revenue, and yet only 14% reported stable or growing revenues for the year. The survey surmised that commercial news media outlets with their main revenues coming from advertising have been the hardest hit by Covid.
The revenue challenge
While advertising revenues are projected to recover out to 2024, as PwC Global Entertainment & Media Outlook 2020–2024 anticipates, the rate isn’t likely to match consumer spend. Instead, online news media need to pivot revenue strategies to mimic Software as a Service (SaaS) subscription-based content delivery models (see: Spotify, Netflix) that are favored by consumers:
“Companies find they can deliver immense choice at a price point that makes sense for both supplier and customer, while building powerful direct relationships—all without relying excessively on fickle or intrusive ads. (Entertainment and Media) companies are increasingly in the business of delivering experiences and content directly to consumers, not delivering audiences and eyeballs to advertisers.”PwC Global Entertainment & Media Outlook 2020–2024
Reader-focused business models, rather than advertiser-focused models are the future – and we’re paying attention.
Subscription and membership are now the main focus of revenues for journalistic content, among over half (52%) of respondents in Reuters Journalism, Media and Technology Trends and Predictions 2019. In 2021, the same report indicates 76% now believe that digital subscription is a very important revenue focus. And for early movers, it’s working – with digital revenue now outstripping print.
The New York Times reported $167.0 million in digital subscriptions revenues for Q4 of 2020, now outstripping print, at $148.8 million, with a total of 7.5 million subscribers across both verticals.
“With a billion people reading digital news, and an expected 100 million willing to pay for it in English, it’s not hard to imagine that, over time, The Times’s subscriber base could be substantially larger.”Meredith Kopit Levien, CEO, NYT
But it’s not just about increasing subscription levels – it’s about retention, cross-selling, up-selling, and support.
Strategies to improve Customer Lifetime Value (CLV) in digital news media subscriptions
In the world of subscriptions, CLV in subscriptions is now the most important financial metric for increasing revenues.
Strategies have been put in place for customer acquisition over the course of the last few years, which does require constant monitoring and tweaking. However, CLV is a better indication of future revenues – and thus needs the most attention.
CLV is a combination of Customer Acquisition Cost (CAC), cross-selling, up-selling, and support over time. Strategies to increase CLV are guided by customer behaviors, segmentation, and testing.
1. Identify problems in your customer data model
Which customer data are you gathering and where are you storing it? Your customer data collection strategy and modelling needs to start from the very first click. Incomplete or incorrect data can lead to segmentation and targeting problems, which in turn drive down CLV.
Problems with your customer data may include:
- An incomplete picture of a customer’s demographics
- Not including data such as dwell time
- Not capturing their purchase journey
- Failing to capture cross-channel journeys
- Using only traditional sales funnel software
- Disparate customer data sources
All these issues will result in not knowing your readership well enough or being able to segment them – which is only possible through rigorous data gathering and manipulation activities. Not knowing your audience well enough can result in poorly informed customer experience throughout the subscription journey and lifecycle, leading to falling CLV.
Once you’ve collected complete, unified data, let a customer experience team take the reigns.
Are you exciting and amusing your customers – at the very least eliciting indifference – or annoying them? This can only be determined by in-depth target market research (using your carefully collected data) and the help of a customer experience team.
“We are responsible for everything from the first onboarding email you get right after you become a subscriber… through to customer service, all the way up to the point that you decide to cancel. Between all of that, we are responsible for retention and engagement marketing — so doing marketing to our customer base to try to make sure that they’re seeing all the best things that the Times has to offer.”Ben Cotton, New York Times Executive Director of Retention and Customer Experience
2. Predictive modeling for customer retention and higher lifetime value
By segmenting your customers accurately, you are able to identify patterns of behavior related to both customer retention (and upgrading) as well as customers with a higher lifetime value.
It’s not only excellent customer service, but also, pricing, and content that will help keep your customers onboard. Investigation into churn, via surveys at exit points and downgrades along with other follow up techniques, can help strengthen retention of similar customers in the future.
If sales are still strong in a high churn segment, this means you have quality customers in that segment staying onboard, with further drilling down necessary to identify what makes these quality customers unique. For instance, is it their postcode, their age, a high number of different IP logins, their news interests, most active viewership?
By projecting these values onto newly onboarded customers, you’re able to introduce strategies to enhance retention and identify potential sales opportunities before they arise. By A/B testing new strategies, you’re able to further optimize retention and spend.
3. Creative pricing strategies
While free trials make it relatively easy to onboard customers, if you want to retain them after the trial period is over you’ll need to engage in creative pricing strategies. These may include:
- Discounts on sale days, such as Cyber Monday
- Customer referral discounts
- Follow up discounts on exit, plus periodic follow up emails after exit
- Cross-selling discounts with other publications, services, or content
- Add-ons for exclusive content
By tracking journey behaviors across purchasing, you are able to identify the degree of success of various initiatives, ideas for further pricing strategies, and any potential missed recapture moments.
Using insights from funnel progression, friction-points, and channel attribution, we can further guide acquisition, abandonment retargeting, and renewals strategies.Using insights from funnel progression, friction-points, and channel attribution, we can further guide acquisition, abandonment retargeting, and renewals strategies.
4. Tailored subscription content
Tailored subscription content is what is now expected by consumers, following in the footsteps of content services such as Netflix, and even social media platforms. For digital news publishers, this requires a shift in attitudes towards an algorithm-based feed. What is presented to the viewer can be a mix of trending topics, interests-based news, breaking news, new content that resonates with a small audience, and more.
It’s important that these are overseen by a human observer to eliminate bias in what is presented to viewers. In times of increasing turn to social media for news consumption, media publishers must seek to create their own algorithms that reflect their mission as well as their customer values and expectations.
The rise of journalistic newsfeeds, or editorial algorithms, is upon us. In fact, the New York Times has been experimenting for some years with contextual multi-armed bandits algorithms. These algorithms present content to viewers based on their personalised data (such as geography and reading history), where the articles are more likely to have a higher level of engagement.
5. Quality content that drives engagement
The Seven Standards Of Quality Journalism ring true more than ever: multiple credible sources, verification, avoidance of bias, balance, documentation, context, and fairness.
If you are maintaining these standards, you are doing your best to maintain journalistic integrity and eliminate disinformation. However, in the world of online marketing, you have additional indicators of quality to measure such as dwell time, shares and likes, engaging with in-article multimedia elements, and text highlighting.
Unfortunately, these types of measures often lend themselves to sensationalist topics and pieces, which, if you are not careful, can lead to amplification of paradoxical reporting. A strategy to balance both is important for journalists and decision-makers to put into practice.
By segmenting your audience well, you will be able to understand your readers better – which ones are reading only sensationalist topics, and which ones are reading across the board. By understanding each customer better, you’re able to understand how to better drive engagement within each particular audience.
Building a strategy around data and analytics to understand the subscriber better, to provide a better experience and thus increasing retention are the keys behind increasing the Customer Lifetime Value.