Headway - Unlocking growth and diversification: the power of web and in-app subscriptions with Yeva Koldovska

[00:00:01.300] - Voice-over
Welcome to the Subscription League, a podcast by Purchasely. Listen to what's working in subscription apps. In each episode, we invite leaders of the app industry who are mastering the subscription model for mobile apps. To learn more about subscriptions, head to subscriptionleague.com. Let's get started.

[00:00:20.450] - Olivier Destrebecq
Welcome, everybody. Today I don't have a co-host, actually. Jeff ditched me. So Jeff, if you listen to this in the future, I miss you. But I'm sure you'll come back for the next episode, so that's fine. I am joined by Yeva Koldovska, a product manager at Headway. Welcome to the show, Yeva.

[00:00:37.040] - Yeva Koldovska
Hi. Thank you for having me.

[00:00:38.640] - Olivier Destrebecq
You're welcome. You've been at Headway for about four years. You've actually worked over there in the early stage, and you've seen the company grow to 170 people. How's that trip been?

[00:00:51.550] - Yeva Koldovska
It's been great. It's been nice to see the growth of a startup from an early-stage company to a bigger company with a lot of products and a lot of people, and it was great to grow with the company as well.

[00:01:04.900] - Olivier Destrebecq
You're based out of Ukraine, right?

[00:01:07.500] - Yeva Koldovska
Yeah, Headway is a company with Ukrainian roots. We have offices in London, in Kyiv, in Warsaw.

[00:01:15.040] - Olivier Destrebecq
That spreads the team all over the world. That's great. I hope you guys are safe and doing everything you can to stay that way.

[00:01:21.160] - Yeva Koldovska
Thank you.

[00:01:22.190] - Olivier Destrebecq
Headway is one—I was going to say one of the most—but is actually the most downloaded book summary app worldwide with over 18 million downloads. I'm sure that takes a lot of effort to get there. Can you tell us a little bit about that?

[00:01:35.340] - Yeva Koldovska
Yeah, that's right. It took a lot of work and testing and trying different approaches, different audiences, user acquisition channels, different ways to scale. It wasn't an explosive growth at one moment. It was very iterative, and I'm glad that we've achieved this result.

[00:01:55.210] - Olivier Destrebecq
Nice. Now you're launching a new product that's called Nibble, which is also in the education space, I guess. But instead of being book summaries, they're short lessons. Did I get that right?

[00:02:09.100] - Yeva Koldovska
Yeah, these are short and interactive lessons on a variety of topics like math, science, logic, finance, even arts, and history. So Nibble is more about knowledge and Headway is more about ideas.

[00:02:21.770] - Olivier Destrebecq
Oh, interesting. I'll have to get them both on my phone and start using them so I can get more knowledge and ideas. As I was looking into Headway and chatting with you, one thing that stuck out is how you allow subscribers to subscribe either through the web or in-app. How did you get there? Because that's two flows to maintain, two flows to build, and all that good stuff. I'm sure it wasn't a light decision.

[00:02:45.450] - Yeva Koldovska
Yeah, exactly. Headway is a multiplatform product. Users can purchase a subscription and use it on iOS, on Android, and on the web. I would say that these are three different flows. Having a web-based subscription and a web version is not common for a mobile-first product. We've launched Headway on Android—actually, it was the first platform—and it wasn't something we had included from the start. The reason why this option exists is because it helps us boost our revenue and at the same time diversify our audiences, UA channels, and revenue streams.

[00:03:21.400] - Yeva Koldovska
We started working on the web version and web subscriptions as one of the ways to prepare for the iOS 14.5 and the privacy updates that came with it. As I'm sure you know, these changes created obstacles for user tracking and led to a decrease in attribution quality for all mobile app campaigns. We understood that we had to search for some different revenue streams and some different channels and audiences because there was a risk that it would impact us as well.

[00:03:51.360] - Yeva Koldovska
We also understood that there was always an audience for whom the web product and web purchases were easier and more, I would say understandable, than mobile apps. These users tend to be a bit older, usually, and we wanted to capture that audience as well. We saw one of the growth streams for us there. We also understood that we relied quite heavily on the revenue streams from the app stores, from Google and Apple, and we were in search of some diversification there too.

[00:04:21.880] - Yeva Koldovska
As a result of all these factors, our need for diversification grew only stronger. So to address these challenges, we started exploring the web and web subscriptions and we managed to establish a strong source of new users and additional revenue there. It's something that we've looked into and researched a lot, and it's a strategy that has greatly contributed to our growth as a company.

[00:04:45.790] - Olivier Destrebecq
One thing you mentioned that struck me was how the web flow could potentially be easier for some users, especially the older one. It's very interesting because there's always that thought of in-app purchase being very fluid. It's set up with your account and it's just a couple of tap and you're done, compared to a web flow where you might have to get the credit card out and all that good stuff. I'm curious, how did you measure that being easier or how do you get to that conclusion?

[00:05:14.250] - Yeva Koldovska
That's a really good question. You're right about how hard it is to enter your card details on the websites, and that app stores and for example, iOS, they allow you to make a purchase just in a double click. So I would say that these groups of users, the users who buy on the web and those who buy on the app are quite different. Even the Facebook algorithms bring different types of users for these two channels. There are different events. It works really differently.

[00:05:47.450] - Olivier Destrebecq
Interesting.

[00:05:48.100] - Yeva Koldovska
So I would say that the core difference lies in where these users make their purchase because in the app campaigns for the app subscriptions, the user makes a purchase within the app, and in web campaigns, they do that on the web funnel. Only after purchasing a subscription there, they can either use the product there or proceed to the App Store or Google Play Store and use it somewhere else.

[00:06:14.580] - Yeva Koldovska
So you're right that since the payment is processed on the website, the user needs to input their card details even for a free trial. Even to get this free offer, you still have to enter your card details, your name, et cetera. This nuance creates a very significant difference because the level of commitment required from the user to input their card details is much higher on the web than in the app.

[00:06:42.300] - Yeva Koldovska
On the web, the users need to be really convinced that your product is worth paying for. As a result, the conversion rate to purchase on web funnels is generally much lower than within the app. This is also something that seems quite bad, but it's not. I will talk about that later, I hope to.

[00:07:00.460] - Olivier Destrebecq
Okay, please do.

[00:07:02.860] - Yeva Koldovska
Okay. The files on the web, they tend to be longer and more sales-oriented, I would say, because more persuasion is needed to convert these users. But I would say that there is an upside to all this, a silver lining because the users who purchase on the web, they typically have a higher level of commitment to their subscription than app users. They have higher retention in the product, higher rebill rates, they cancel less, and they are also easier to re-engage with the product. That is also something that stems from the fact that they have to enter their card details on the web, so it's a bigger commitment.

[00:07:41.950] - Yeva Koldovska
Also what we've already talked about is that the demographics of these users can also vary. In Headway, web subscribers tend to be older than app subscribers. This age difference impacts their content choices, their format preferences. So we have these different ways to explore the content in audio, in reading. These users like reading more and also their behaviour within the product can also change because of that.

[00:08:09.550] - Yeva Koldovska
I would say that these are really two different sets of users that are attracted separately to your funnel. And a great thing about having a web version and web subscriptions is that you can actually have access to this audience that you would never have if you only used app campaigns.

[00:08:27.090] - Olivier Destrebecq
It's fascinating to hear that in a way just the preference in payment method has such an impact on even the usage of the product like you seem to imply. They consume different content and go different places in the app. That's really interesting. Any other differences that you've noted in behaviour? And I guess how much differentiation do you guys do when you design the product, keeping in mind the source of the customer, I guess?

[00:08:55.720] - Yeva Koldovska
That's also a good question. Because we mostly design the product for all users so we don't have this really specific segmentation in the product. But there is great segmentation in terms of the funnels and the questions that we ask the users and the paywalls, the offers. As I said, the funnels tend to be longer because of this higher level of commitment that is needed. So we always have longer funnels for these web users. Also, I would say that they like taking tests more than app users in our case.

[00:09:27.770] - Yeva Koldovska
Another difference in behaviour that I could highlight is that when we have some tests in the product, they like to do it. Sometimes we can prioritise these content, I would say formats and different summaries, new summaries, new collections for these users. But generally, in the product, they still have all these features that every other user has.

[00:09:54.430] - Olivier Destrebecq
One last question on the differences between those two source of users. Do they have a different lifetime value or anything like this that makes it very different in a way?

[00:10:04.800] - Yeva Koldovska
Yeah. The source of acquisition, app or web, has a significant influence on the LTV. It's very important because web subscriptions typically have a much higher LTV compared to app subscriptions. It can even be like three times higher really. There are different factors that have an influence on that.

[00:10:23.910] - Yeva Koldovska
Firstly, there are no app store commissions. As we know, we give up to 30% of revenue to Apple or Google in exchange for benefiting from their infrastructure. But this reduces our mobile app LTVs all the time. In the case of web, there are only the fees that you pay to your payment providers and they are typically much less than 30%. So your LTV gets higher just from that.

[00:10:46.850] - Yeva Koldovska
Secondly, web subscriptions have higher rebill rates. One of the reasons why is this higher level of commitment to the web subscription that I mentioned earlier. Also, some users find it more convenient to use the product on a different platform even after purchasing on the web. So cancelling a web subscription might not be as intuitive for them as they need to find this option within the app or somewhere on the web.

[00:11:09.830] - Yeva Koldovska
Of course, this is something that you can manage and it's better to let them have this option within the app but still, they have to go to the website and unsubscribe there. It's not as straightforward as just doing it in the settings like on iOS.

[00:11:25.610] - Yeva Koldovska
Finally, I would say that non-trial payment plans perform quite well on the web because this requirement to input card details is the same whether the user is purchasing a trial or non-trial plan. On the web, the users might find it confusing to input card details for a free trial because, if you say that you offer a free option, "Why should I input my card details?" It's a bit counterintuitive. Of course, you need this data to extend their subscription in a week or so. But still, for the users, it's basically the same. Either to pay or not to pay, they still need to enter their card details.

[00:12:04.680] - Yeva Koldovska
On the web, non-trial plans usually have the same conversion rate to purchase as the trial plans, but they don't have this drop-off between starting a free trial and subscribing. So LTV also gets higher because of that. All these reasons impact the higher LTV. With increased LTV, it's possible to acquire users at a higher customer acquisition costs, which allows access to this different audience beyond app users. These are people who generally pay more, they like non-trial plans, and it can greatly diversify your audiences because it doesn't cannibalise your existing user base on the app. These are different people.

[00:12:45.250] - Olivier Destrebecq
What I find fascinating there is there's a lot of debates on whether Apple and Google's fees for that matter are worth paying and whether you should just go on the web. But what I take away from what you said is no, you should have both because you capture different audience and there's people that like an app purchase, there's people that don't, and just offer both side. This way you get both groups. It's really great.

[00:13:10.010] - Olivier Destrebecq
You told us a lot about some of the benefits of having web and app. Are there some benefits of the web funnel versus the app funnel that you've noticed over the years?

[00:13:20.190] - Yeva Koldovska
Yeah, of course. There are a lot of additional benefits and advantages to this. The first big advantage is the ability to roll out any changes quickly on the web. Unlike with apps, you don't need to wait for Apple or Google review to release a new version of your funnel or your product. This allows for quicker A/B testing, quicker bug fixes, and gives you flexibility in terms of release scopes. It is just easier to work with web in that way.

[00:13:48.110] - Yeva Koldovska
Secondly, as the web funnels are typically longer, you have many great opportunities to interact with your user. You can connect and empathise with them, understand their pains better, and even give them real-time feedback customised to their answers on onboarding. You can even create multiple customised user flows and direct the user to the one which is best suited for them. In my experience, it is easier and just faster to implement this on the website.

[00:14:14.640] - Yeva Koldovska
Another benefit stems from the fact that in order to process the payment on the web, you need the user's email or phone number. In my experience, most digital-first companies use emails. When you get that email from the user, you can then utilise emails as a way to communicate with them. It can help boost both your revenue and retention. And it works much better for web users than it does for app users as email is a more native communication tool for web platforms. Also, I saw that for app users, email communication is not always as effective as for web users.

[00:14:50.270] - Yeva Koldovska
Also, the last thing I would add is that web funnels also offer additional testing opportunities. Essentially, what they do is they increase your A/B testing capacity and you can retest and roll out the successful tests from any platform, iOS, Android, web, and it significantly increases your overall success rates on all your platforms.

[00:15:10.200] - Olivier Destrebecq
Cool. If a user starts in one of the funnel, can they jump back and forth between the two funnels? Or are they kind of locked in one path based on whatever Facebook decide to throw them in?

[00:15:22.440] - Yeva Koldovska
Sometimes users may see the ads for app campaigns and for web campaigns. The same user can do that. But usually, these groups of users are different for us. So it's not the case, I would say, in 90% of the cases. It's not easy for the user to see the ads that lead them to a different platform. But they can definitely go through the funnel on the one platform and then log in with their credentials on the other platform and start from where they finish their journey the last time.

[00:15:56.210] - Olivier Destrebecq
Yeah, and then they can pick whichever platform works best for them. If other people wanted to do the same, having that web-to-app approach, and I guess having both App Store and Webflow, what should they look out for?

[00:16:08.280] - Yeva Koldovska
Of course, implementing this web strategy, it comes with its own set of challenges. I'm confident that these are worth facing, but you should definitely be aware of them and take them into consideration while making this decision. The first thing I would mention is that a significant amount of additional resources are needed to work on the web funnel and the web products effectively. You will need at least front-end engineers, new backend engineers, web designers, but ideally a whole new team that will take over this platform, this growth channel.

[00:16:40.670] - Yeva Koldovska
Also, payment management is more difficult when processing payments on the web. You will need to set up new integrations with payment providers, communicate with them separately, and handle chargebacks yourself. This is something that Apple and Google does for you and it's something that you pay them for, which is all right, I think. Also, tax management is also a responsibility that you will now have to take on yourself. Taxes differ from country to country, and you will also need to pay a lot of attention to this part. It's also quite complicated for me definitely.

[00:17:16.250] - Olivier Destrebecq
In a way, you have to be big enough that it's worth the hassle of taking care of all of those, essentially.

[00:17:22.070] - Yeva Koldovska
Yeah, that's right. And as there is no mediator between you and the user like Apple or Google, you will also need to be extra cautious in order to comply with all legal requirements, like the right paywalls, the right unsubscription processes. It's also very important, and you have to research it and check it yourself. Apple or Google does that for you when they review your app.

[00:17:47.110] - Yeva Koldovska
Lastly, selling on the web will always be more challenging than in the app. The reason behind this is that app stores provide a safe space for the user to buy a subscription. They have already reviewed the app, there are real customer reviews. The App Store page is structured in a familiar way and the cancellation process is easy and clear.

[00:18:08.190] - Yeva Koldovska
And most importantly, as we've talked earlier, the user doesn't have to input new card data in the app because it is already tied to their account. Imagine when the user visits a web page, there are no trust signals like this. Each website is different and it looks different every time. This makes the challenge of selling on the web much harder than in the app because app environment helps you do that actually. So you will have to employ all your growth tactics and zero tricks to achieve success. But it is definitely achievable. But you should know that it will be harder and the conversion rate will always be lower on the web.

[00:18:44.360] - Olivier Destrebecq
Actually, coming back to one of the things that you said originally that the age of people buying on the web seems to be higher. Does that mean that in your mind, if somebody is targeting younger generation, they should probably stick with subscription, in-app purchase for now until they're really looking for an extra demographic to grow in?

[00:19:06.340] - Yeva Koldovska
Yeah, I would say so. Also, this highly depends on the product. If your product is mobile-first, if its use case is mostly mobile, then you should definitely start with mobile platforms like iOS or Android, and use web as an additional source of scaling and additional audience. Sometimes for some products, web just seems logical. It just seems like a use case that would be useful for some users, for a lot of users. So in this case, you should definitely start looking into it faster and earlier.

[00:19:38.650] - Olivier Destrebecq
All right, cool. You've obviously done paywall for web and for app. Do you have any paywall optimisation platform-specific things or maybe differences I guess would be interesting to hear what you can do in mobile, but wouldn't work on the web or vice versa, or is it all the same?

[00:19:58.110] - Yeva Koldovska
A lot of things are the same, but there are some things that are different, and I would like to talk about them more. The first thing that isn't utilised as extensively in apps as it is on the web is long paywalls.

[00:20:13.040] - Yeva Koldovska
As I mentioned earlier, users need more persuasion to make a purchase on the web. So you have to take advantage of product images, FAQs, a lot of social proof like reviews, ratings, media mentions, whatever, and lists of product benefits on the paywall page. It helps you reduce fears, uncertainties, doubts, and helps the user make this decision to purchase easier. Because usually on the app, the paywall is quite simple. This is the step when you have one action: subscribe. That's all. But on the web-

[00:20:45.040] - Olivier Destrebecq
"Click here."

[00:20:46.190] - Yeva Koldovska
Yeah. On the web, it should be a bit more persuasive, I would say. So the user still makes a decision to buy there and it's very important. Another tip that I have is to personalise the offer. Typically by the time the user arrives at a paywall, they have already completed a long quiz or test or onboarding and provided you with a lot of information about their interests and preferences. And highlighting how your product meets the specific needs of this particular user can be very powerful. I would say that it is a bit easier to do on the web as the funnels are so long.

[00:21:22.940] - Yeva Koldovska
So when the user feels like you have heard and understood them, they are more confident that the product suits them and are more likely to buy as a result. Websites offer a lot of opportunities to include a lot of personalised details on the paywall page. Also on the web, you can use limited-time offers. It utilises urgency to get people to convert in this session.

[00:21:46.120] - Yeva Koldovska
For example, a discount countdown timer is a great way to do it. This works by triggering loss aversion, fear of missing out, and urgency biases. Users don't want to miss out on a great deal and tend to overlook other minor concerns if they see this timer, and it is something that is easier to implement on the web, it is okay to do that. If you really implement this logic. When the timer ends, the tariffs go higher, the prices go higher, it's all right. This way the users make a decision to buy more quickly.

[00:22:18.320] - Yeva Koldovska
My final tip that is web-specific is to include a variety of payment options. On the web, you can offer PayPal, Apple Pay, Google Pay on top of standard card payments. This allows users to choose the method that is most convenient to them. Also, the diversity of these payment methods increases the trust in your website and your product. It is not as easy to integrate PayPal, for example, as someone can think. So if you have this PayPal and Apple Pay and Google Pay, it means that these companies have approved your website and it's also great in increasing trust and conversion rate.

[00:22:55.100] - Olivier Destrebecq
Interesting. You were talking about people not wanting to miss out on a great deal and opportunities. One of the things that I have noticed is in the Headway app, if you dismiss the paywall, you get a discount offer that is actually pretty steep. I was curious, A, the logic behind it and the business results and reason for putting that in place.

[00:23:18.700] - Yeva Koldovska
We have this discounted offer both on the web and in the app. They're a bit different. The reason why we have this is that there is always a portion of users for whom the main concern is the price of the product. These users, they are just not ready to buy the product at the price that we're offering. And if we're talking about the app, they are even not ready to take a free trial.

[00:23:43.590] - Yeva Koldovska
For them, the problem is not that there is no trial, the problem is the price. And as we assume for these users, if we give them a big discount, they will be prompted to buy. Also, this is also a limited-time offer. So this pop-up, you see it only once, and the user feels like if they don't take it now, they'll disappear. This is why it works quite well on the app. On the web, there is no free trial. So there is always this concern of the users that, "Oh, I haven't seen the product. How can I buy it? How can I pay for it already?" This also, I would say, intensifies this concern for the price.

[00:24:28.060] - Yeva Koldovska
For these users, we give an additional discount and allow them to subscribe at a discounted offer for the first subscription period. For example, if it's a monthly plan, we give them the first month at a big discount. This essentially works like a free trial, but it's still paid. It's just a very discounted trial period, and it helps them try the product at a lower price, and it also performs quite well. These are quite different on the app and in the web, but their logic is similar.

[00:24:56.770] - Olivier Destrebecq
Okay. And do you notice…? I mean, I don't know. I don't remember, actually. Is the discount just for the first payment and then they get to a normal price? Or is it for the lifetime of their subscription?

[00:25:06.330] - Yeva Koldovska
On the app, it is for the yearly plan, so the discount will stay the same each year. And on the web, it's only for the first period. So it's only for the first month or the first year or the first quarter, whatever the plan is.

[00:25:19.820] - Olivier Destrebecq
Okay. Do you notice any… Do those guys churn more easily or do they tend to stay longer? Or any difference with people that paid full price, I guess? I mean, I'm assuming the LTV must change since the discount is pretty steep.

[00:25:33.620] - Yeva Koldovska
Yeah, the LTV is different. We don't see any major behavioural differences between these two groups of people. Of course, we can find it if we want to, but still, this definitely lowers the LTV because the users pay less. But in our case, we've tested it, and we still got a much higher purchase rate on these screens that covered this lag in LTV. For us, it was ROI plus in the end.

[00:26:02.630] - Olivier Destrebecq
Yes. Business is driving decision. That is good. You've answered all my question and provide tons of value. I'm sure people might want to learn more about you and about the web-to-app flow that you're doing over there at Headway. How can people get in touch with you or learn more about all this?

[00:26:20.720] - Yeva Koldovska
Thank you for the question. You can find me on LinkedIn. I'll be glad to connect and chat. Simply search for Yeva Koldovska and you should be able to find me. I'm always open to discussing topics related to my work, to apps, web, paywalls, web dev, optimisations, [inaudible 00:26:36], whatever, and making new connections in the field. So feel free to write.

[00:26:42.590] - Olivier Destrebecq
Awesome. Well, they'll find you on LinkedIn, I'm sure. It was a pleasure to have you on the show today. You really gave a lot of value to our listeners. So thank you very much for joining me today.

[00:26:52.660] - Yeva Koldovska
Thank you very much for inviting me. It was very nice to talk to you today and to share some insights.

[00:26:57.720] - Olivier Destrebecq
Thanks.

[00:26:58.040] - Yeva Koldovska
Have a good day.

[00:26:59.890] - Voice-over
On behalf of the Purchasely team, thank you for listening to the Subscription League podcast. If you've enjoyed what you heard, leave us a five-star review on iTunes or other audio platform. To find out more about Purchasely and how we can improve your subscription business, visit purchasely.com. Please hit subscribe in your podcast player, and don't miss any future episodes. You can also listen to previous episodes at subscriptionleague.com. See you soon.