As a long-time fan and a collaborator of the consultancy, we invited Andy to Subscription League Podcast for the second time to draw tips for optimizing mobile app subscriptions.
Andy is a Partner and Co-founder at Phiture, a multi-award-winning mobile growth agency and one of the top 100 fastest-growing agencies worldwide. If you are occasionally seeking advice on topics around subscription optimization and growth, you might already be familiar with Andy's expertise, often referred to by the In-App Subscription community.
In the first episode of the podcast series, All about Retention, Andy shares some valuable insights on how to boost retention. This time, he focuses on paywall practice recommendations for the entire subscription journey and four escalating levels of subscriber intent.
For noteworthy quotes and key takeaways from the episode, read the article - How to optimize mobile app subscription with Andy Carvell (Phiture)
Episode Topics at a Glance
- Subscription economy reality check
- An average number of subscriptions per person
- The escalating sequence of intent
- Is it a good idea to offer promo codes?
- Growth tactics: paywall
- Onboarding tactics of Fastic app
- Setting the price for the lifetime subscription
- Phiture & Purchasely event details (Berlin, October 5th)
More about Andy Carvell
Andy has over 20 years of experience in the mobile industry. His company Phiture, is a Berlin-based mobile growth consultancy and agency co-founded in 2016 with Moritz Daan with over 110 employees. Phiture consults clients around the globe on mobile growth topics, helping them develop and implement holistic mobile growth strategies.
Prior to Phiture, Andy led the user retention team at SoundCloud in Berlin. Andy published the Mobile Growth Stack in 2015, widely adopted as an essential framework for mobile marketers, which he continues to develop.
Andy Carvell’s Links
- Medium
- SoundCloud
- The Mobile Growth Stack: 2022 Redux
- Phiture & Purchasely event details (Berlin, October 5th)
Timestamps
00:22 Introducing Andy Carvell
00:43 Andy and Phiture's background
01:30 How the subscription economy is doing
02:44 How many subscriptions does an individual user have?
04:20 Questions app publishers should be able to answer
06:33 How long it takes users to go from installation to subscription
09:38 How to interact with users
11:28 How do you pick your strategic objectives?
14:28 Escalating sequence of intent
17:40 Do you offer promo codes or discounts?
18:34 Growth tactics: paywall
22:51 Free vs premium products
24:16 Setting price for the lifetime subscription
27:23 Phiture & Purchasely event details
Transcript
[00:00:22.480] - Olivier Destrebecq
Hey Nicolas, are you ready for another great show today?
[00:00:24.960] - Nicolas Tissier
Yeah, very excited.
[00:00:26.440] - Olivier Destrebecq
Awesome, because I've got some great news. We have Andy Carvell with us again today. He's back from Vegas where he gave a great presentation on how to optimize mobile app subscriptions, and we get to ask him all the questions we want today. So welcome to the show, Andy.
[00:00:40.160] - Andy Carvell
Thank you. Hi, Olivier and hi Nicolas. Great to be back.
[00:00:43.440] - Olivier Destrebecq
So some of our listeners might recognize you as you are our very first guest on the podcast and you joined us at the time to talk about retention. But for the others who are just joining us for the first time today, for example, can you remind us what you do at Phiture, which was named app marketing agency of the year for 2021?
[00:01:00.430] - Andy Carvell
Yes, sure. So I'm a co-founder and partner at Phiture. I set up the company six years ago with my colleague Moritz Daan. We were both working at SoundCloud before that, working on mobile growth topics there, and we left SoundCloud to set up Phiture.
[00:01:13.630] - Andy Carvell
So what do I do day to day. I'm working a lot around partnerships. I still to a fair bit of business development, so working to bring in new business, new brands that want to work with us. And yeah, basically company strategy, day to day management stuff, I guess.
[00:01:28.430] - Olivier Destrebecq
Stuff. I like the stuff. Given where you sit, you probably have a good perspective on how the subscription economy is doing? Everybody is talking about the regular economy, but I'm curious about how the subscription economy is doing.
[00:01:40.700] - Andy Carvell
Yes. So I think that the subscription economy is essentially going to be a lagging indicator of the regular economy and we're going to see the same trends there. I think it's fairly clear at this point, most of the analysts would agree that if not recession, then certainly a downturn and a lot of folks are using the word recession.
[00:01:59.570] - Andy Carvell
So I would expect consumers to become more price conscious in pretty much every market. We're not seeing yet that reflected in subscriber numbers. But you've got to remember, some folks, a lot of folks will be on longer term subscriptions, maybe yearly subscriptions, which won't show that downturn for a while yet. I do expect we'll start to see some downward pressure on monthly subscriptions.
[00:02:21.520] - Andy Carvell
What we are seeing is on the app publisher side, a strong and healthy demand for subscription optimisation services. I think everyone realizes that everyone's going to need to work a little bit harder in a downturn. That includes Phiture working harder to bring in our next customers, and for our customers who are app publishers, they're going to need to work harder to bring in their next subscribers and keep them engaged.
[00:02:43.260] - Olivier Destrebecq
Yeah, definitely and so there's been some debate, and I'm sure that's a debate that will keep going on, about how many subscription an individual user might have for their phone. What's your take? Where do you fall in that debate?
[00:02:55.310] - Andy Carvell
Yes. So in my presentation at MAU in Vegas, I referenced an article, I think it was from Forbes from a couple of years ago, that gave an average of two subscriptions per subscriber. So in other words, people would have typically two subscriptions, not more.
[00:03:10.820] - Andy Carvell
Now, I do think that's probably out of date. I think Nicolas shared with me a more recent report, which was a little bit more upbeat and suggested also that number is growing, which makes total sense to me that's also that we see. Just look around, like a lot more subscription products on offer and people are getting more comfortable with the subscription model.
[00:03:28.200] - Andy Carvell
So I think two is probably a minimum for folks who are going to be subscribing, rather than an average these days. But yeah, I don't have like really hard and fast data to say what a better average would be. But I would guess it's maybe closer to three or four these days.
[00:03:42.050] - Olivier Destrebecq
And I think one of the things you mentioned in your presentation is how do you usually have one for like the big media, saying like Netflix or Apple subscription or something like this. And so that means for founders, they have to fight for that second slot, essentially?
[00:03:53.880] - Andy Carvell
Yeah, exactly. So we can debate whether it's two slots or three slots. And of course, it depends on the user and also the market as well, but as to how many of those slots are available. But I think it's very clear that there is an increasing number of apps fighting over a very limited pie. So everyone wants a piece of that pie. So it definitely becomes harder to get people to open their wallets in the first place and sign up for another subscription and to keep them on that subscription. You have to work hard every month to keep them on.
[00:04:20.110] - Olivier Destrebecq
Yeah. Since you're talking about, you know, working hard to make sure you keep them on subscription, in your MAU presentation, there's a few questions that you mentioned that founders, or people that works on mobile app with subscription, should be able to answer. Is there a few ones that you want to highlight and maybe tell us, you know, what they are and why they're so important?
[00:04:37.860] - Andy Carvell
Yeah, so it's really important to have a good handle on your subscription analytics, right? To actually understand, what is that subscriber user journey? Another thing that I mentioned actually in the talk is that there are multiple user journeys typically, but there are definitely some key questions that anybody running a subscription business should be able to answer.
[00:04:56.610] - Andy Carvell
So that would include things like how long does it take for a new user to get from an install to a subscription? And what's that install to trial conversion rate? If there's a trial period for each plan, what does that conversion rate look like? How do paid users retain over time? As well as things like subscriber churn rates and what are the reasons for that churn?
[00:05:16.400] - Andy Carvell
So if we take that first one, so in other words, the path from new user going from install to subscription. If this is taking a long time, if it's taking more than a couple of minutes in the very first session from an install, maybe it takes multiple sessions. Maybe we see the average time is a week, then that would be a good indicator that by working on reducing the friction and trying to get people through that journey quicker, get them into a subscription ideally in the first session, would be a great surface area to work on.
[00:05:45.740] - Andy Carvell
And then if we look at things like the trial to pay conversion rate, you know, that's likely to change fairly significantly, depending on which plan people are converting into. So good to look at your overall conversion rate, just like how many people are you converting from a trial to subscription. But then depending on the relative conversion rates of the different plans, maybe you've got like a monthly plan, a yearly plan, maybe you've even got a lifetime subscription, something like this, it's going to be useful to understand the relative conversion rate to those.
[00:06:14.560] - Andy Carvell
And then closely tied to that, how long are users staying subscribed, which, of course, is partially a function of the length of subscription, but looking at those renewal rates as well. So all of these things that I've just mentioned, these are key stats which a publisher should have a good handle on, in order to be able to make strategic decisions on where to focus optimization efforts.
[00:06:33.930] - Olivier Destrebecq
I'm curious on the how long does it take for new users to go from install to subscription. You mentioned maybe not as short as possible, but not too long in a way. Is it because in a way users that take longer will eventually drop and you'll never see them? Or is it an indication also that as a publisher you're not able to surface the value of the app enough that the user will subscribe?
[00:06:57.880] - Andy Carvell
It's likely to be both. I think what everyone has to bear in mind with a mobile app, or mobile users in general, and I guess just people in general, is that these days, people have very short attention span, but get very easily distracted and move on to the next shiny thing, which gets their attention, whether that's a TikTok video, or a new app, or whatever it is.
[00:07:17.190] - Andy Carvell
So you don't want to be spending weeks, slowly convincing somebody that your app is valuable and that they should be signing up for a subscription. If you're doing that, you can have a hell of a drop off. Like the general retention rates on mobile apps, never mind subscription, but just the amount of people who never open a mobile app for a second time, having installed it, it's pretty low, you know.
[00:07:38.660] - Andy Carvell
It can be in some cases just maybe 10 or 20% of the users who opened it the first time. So with those scary retention curves, there's definitely a high incentive to try and get people to experience the value of the app very quickly to understand the value proposition, and ideally to capitalise on any early intent to purchase or to try to generate some intent to purchase while you've still got the user's attention, which statistically is in the very first session.
[00:08:05.160] - Nicolas Tissier
And how do you do that?
[00:08:07.480] - Andy Carvell
Great question, Nicolas. So yeah, I've talked about this actually in a few different presentations that I've given over the last year, about the need to really align what it is you're talking to the user about. The messaging that you're putting across that starts in the app store, starts in your adverts actually, starts in advertising or however you're talking about your app, that needs to be then consistent messaging in terms of talking about the user benefits and value proposition.
[00:08:32.260] - Andy Carvell
Consistent messaging to what people will see in the app stores, when they click on an ad and land in the app stores or what they're browsing if they land organically in your app store page. It should be talking about the same things. It should be emphasizing those same benefits in the screenshots and the description, maybe even in the app title. And then in the very first session within the app, never mind paywalls to start with, but just in the very first few screens of the app, it should also be consistently showing that same value prop, speaking in that same language, pushing whatever is the key benefit that the app is giving, it should be there also in the very first session in the app, so the user has a coherent experience.
[00:09:08.990] - Andy Carvell
And then, of course, assuming the user has come through all those steps and yes, they want this benefit, whether that's ability to take notes wherever they want, in the case of Evernote, for example, sometimes an example I give, then also you want to be able to hit them up with a paywall, which also talks about those benefits, you should be hitting them up with that paywall sooner rather than later because they might not come back.
[00:09:29.820] - Andy Carvell
And if they do come back, show them the paywall again and use the same benefits and the same language unless you've learned something new about the user, which you can use to personalise it further.
[00:09:38.580] - Nicolas Tissier
Okay, so onboarding is key and should you, according to you, make it as short as possible or should publishers try to interact and engage the user asking questions and so on?
[00:09:51.250] - Andy Carvell
Another great question, because I don't believe that there's a one size fits all approach to this. One of the best onboardings I've seen is Fastic. Fastic is an intermittent fasting app. So they make the onboarding fun, engaging. It's got lots of nice little delightful animations and it doesn't feel like a chore, but it's about 15 to 20 screens long. It's really long, but it's asking you lots of questions, right?
[00:10:14.060] - Andy Carvell
Users generally like to be asked questions, because it makes them feel like the app is going to be personalising the experience based on that and they're going to get a more tailored experience and tailored value from the app. Now, of course, if you're not delivering that tailored value later, then you've got another problem.
[00:10:29.330] - Andy Carvell
But Fastic does a great job of asking the user, you know, what's your goal? You're trying to lose weight? Like, if so, what's your target weight? How tall are you? Various questions through this onboarding. And what it's great at is that it starts to use that information already. At the end of the onboarding, when you see the first paywall, it's already personalized to saying, hey, you've subscribed now and then you hit your target weight of 75 kilos or whatever it is.
[00:10:53.230] - Andy Carvell
And yeah, it does, I think, a really great job of soliciting relevant information from the user and then immediately using that information to start personalizing the experience, starting with the paywall.
[00:11:03.260] - Nicolas Tissier
Okay, so you align the promise with the user expectations and the way to do it is to collect those expectations during the onboarding and then how a customized paywall somehow to show that the value will be there?
[00:11:16.370] - Andy Carvell
I have yet to see that approach produce lower impact than a generic paywall, or to flip that around it to a more logical sentence, every time we see that it works better than a generic paywall, yes.
[00:11:28.200] - Andy Carvell
Another thing you advised, you talked about in your presentation, was to focus on a limited list of strategic objectives, to help you move forward with your subscription. How do you pick your strategic objectives and do you have example to give us?
[00:11:42.790] - Andy Carvell
Yeah. So I think the list that I gave in the presentation was like, this maybe like five or so key areas that you might want to focus on. And my main message actually was like focus on one of them for a quarter, for three months, rather than try to do a whole bunch.
[00:11:58.210] - Andy Carvell
So all of those five, it was increasing the number of users starting a free trial or the proportion of users who are starting a free trial, assuming you're offering a trial. Increasing your trial to paid conversion rate, in other words like trial completion rate, or successful trial completion rate. Improving the subscriber lifetime. So in other words, like improving your subscriber retention rate or reducing subscriber churn.
[00:12:19.520] - Andy Carvell
Yeah, upselling users to a higher tier plan, and ability to reactivate churned users. Yeah, so out of those, like depending on what your data tells you, which goes back to that first point about being able to answer some key questions and be on top of the numbers and have a good handle on your subscription analytics, depending on where those analytics show you the biggest gaps are, would generally give you, point you in a direction where you can see, okay, maybe for this quarter we're going to work only on trial onboarding, as I would call it.
[00:12:47.060] - Andy Carvell
In other words, like taking people from a free trial to a page. So maybe your conversion to trial is not too bad at all. Maybe it's like, 30, 40% of folks are going into the trial, but maybe only 5% of them are coming out the other end subscribing. And you assess that there's an opportunity there to increase that number and get more people from a trial to a subscription.
[00:13:05.990] - Andy Carvell
Obviously, there's lots of different ways you could approach that from an initiatives point of view. But my advice is, if you see a gap there and you think that you can get that number up, don't try to do that and reactivate churned subscribers and do a little bit of also work on the initial paywall to try to get people into a free trial.
[00:13:24.660] - Olivier Destrebecq
Why not?
[00:13:25.300] - Andy Carvell
If you're working on three or four surface areas at once, I guarantee, first of all, it muddies up the analytics to some extent, it's for sure not impossible to isolate those different experiments, although you will probably need bigger cohorts to do that. But it's just like unless you've got a huge team...
[00:13:39.330] - Andy Carvell
Okay, so caveat, like if you've got like 200 people working on subscriptions, sure, do all five of these at once, you know, like you've got enough people. But in a typical team, and I include teams that are fairly big brands, you know, we're working with some fairly major subscription apps and still they don't have tons of people working on subscriptions.
[00:13:55.200] - Andy Carvell
So generally speaking, in a resource constrained environment, you should focus on one thing until you can really decide, okay, either you've been able to move the needle significantly, in which case you might still want to work on it next quarter because you might still see more upside. Or you've not been able to move the needle at all. Maybe all your experiments have actually failed and you've worked on it for a whole quarter and you realise you're out of ideas. Maybe it's not possible to move that number much, in which case, sure, move on to a different part of the funnel.
[00:14:18.940] - Andy Carvell
But I think there's a big danger in general with working on growth or actually working on anything of like trying to do too many things at once and not really making much progress with any of them.
[00:14:28.940] - Olivier Destrebecq
There's something else in your presentation that you mentioned that, to be honest, went over my head. So I wanted to make sure to ask you the question. So you mentioned identifying the user intent to convert to help tailor how subscription is presented or offered, and I'm probably misquoting that completely. So I'll let you put back in order.
[00:14:44.530] - Andy Carvell
No, that was great, Olivier. But I'm sorry this went over your head. I'll work on that slide for next time I present it to make it a bit clearer.
[00:14:51.090] - Olivier Destrebecq
Thank you.
[00:14:51.890] - Andy Carvell
Yes. So basically what I presented at MAU was what I would call an escalating sequence of intent, or escalating indicators of intent. So starting with the lowest level of intent, up to the highest, those four levels that I presented.
[00:15:06.120] - Andy Carvell
So the first being indirect intent. So this is what we would say is like the user is doing something in the app. They're in the app, they're using the app, presumably on a free tier because we're talking about intent to purchase in this case. So they haven't subscribed yet, but they're using the app. They're doing something a lot. And if they're engaged basically, like, there's something obviously is very app dependent.
[00:15:26.110] - Andy Carvell
But if they're in the app and they're using it, that's a level of indirect intent. Like you've got at least a chance to upsell them. Ideally, that a premium account would somehow provide extra benefits to this user because they're already getting some value out of the app. So we call it indirect intent. So why not direct intent, let's explore what that would be. Direct intent would be that they're attempting to access some content or features which are behind the paywall.
[00:15:47.940] - Andy Carvell
So they're triggering the paywall, not necessarily because they're going pressing a buy button somewhere, but rather they're may be seeing, I don't know, let's say you take the example of Headspace. There's content which is behind a little padlock button, or like any paywall content that might be shown that it's somehow locked away behind a paywall. Maybe it's not obvious to the user, but they're curious, and they're trying to reach stuff and they're seeing the paywall. That would be what we call direct intent, because they're showing interest in paywalled content or features.
[00:16:15.040] - Andy Carvell
Then the third one, second highest level of escalation, would be a combination of the two, and that would be quite common, in other words, indirect and direct intent. So they're using the app regularly and they're triggering the paywall regularly. So these are pretty engaged users showing interest in features which they would need to purchase.
[00:16:31.390] - Andy Carvell
And finally, the highest level of intent, an abandoned type scenario. In other words, not only have they triggered the paywall, but they've initiated the purchase flow, but dropped out before actually paying either, because, I don't know, they didn't have their payment methods set up or maybe they just canceled it at some point, which could be for many reasons.
[00:16:47.820] - Andy Carvell
But they actually click the buy button on a particular subscription plan, like that's the highest level of intent. And the reason for presenting these four levels of intent is to say that you should treat these users differently, maybe with the level of aggressiveness that you want to sell, like try to up sell them to a subscription, because obviously the folks at the higher end of the scale are definitely going to be more receptive to a direct sales approach, maybe at the bottom end, maybe they need some more education.
[00:17:14.730] - Andy Carvell
So like if they're using the app, but they haven't tried to access any paywall content, maybe you want to take a slightly softer approach and maybe talk to them about what else they could be doing if they had access to the premium features, or you know, in other ways, just slightly more softly approach, whereas the folks who already initiated a payment and just didn't complete it, I think you can go pretty hard on just trying to get them to go back and complete the purchase.
[00:17:37.840] - Olivier Destrebecq
Yeah, they're just one step away from finishing, I guess.
[00:17:40.360] - Nicolas Tissier
So for the abandoned cart? Do you have a strategy that you've been testing and that works pretty well? Are you using something like promo codes or limited time offer?
[00:17:49.230] - Andy Carvell
Promo codes? Yeah, it's an interesting one. So what I would always say is, see how far you get without promo codes before immediately throwing discounts at people. I think sometimes people go straight to the discount. And of course, you will always generally get a slightly higher conversion rate if you're offering discount, but you need to be able to do the math on the back end of that. Ensure that you're not putting away all of your margin by discounting too deeply.
[00:18:10.920] - Andy Carvell
And to really understand what is the difference between running a discount, versus just re-engaging the user and saying, "Hey, did you want to come and actually buy this?" Maybe you don't need to offer a discount? So I would always say start with a benchmark of not offering any discount and just see how many users you get to complete the purchase just by re-engaging them with an abandoned type campaign. You can always then increase that completion rate by offering a discount, figure out where the sweet spot is.
[00:18:35.120] - Olivier Destrebecq
So earlier when we talked about paywalls, and you mentioned Fastic as a great way of using the information that was gathered during the onboarding for the paywall and during your presentation, you gave some other examples, including Blinkist that we interviewed Eveline Moczko from the Blinkist team in Episode five. So for those of you guys listening, if you haven't listened to it, go check it out, it's really interesting.
[00:18:55.810] - Olivier Destrebecq
But you had some other advice in your presentation. One of them was to show the paywall early and often. So we talked a bit already about why you want to convert people to subscription quickly, but can you tell us more about specifically the paywall being shown early, and often?
[00:19:11.070] - Andy Carvell
Yeah, absolutely. So this advice that I would give actually goes beyond just paywalls. It's a more general growth tactics advice. What I can say is like what I see a lot in the industry is folks who care very much about their product, they care very much about their users, and they're very reluctant to... Maybe a bit too polite, like they're a little bit reluctant to push things. Whether that's push notifications, recommending content or any of these standard growth levers, which would include, of course, paywalls.
[00:19:41.940] - Andy Carvell
And of course, there is definitely a point where being too aggressive with paywalls will negatively impact your metrics and you'll start to see users falling off, and if it's showing a paywall every other screen, you're going to create a terrible user experience. And I think particularly UX designers and product people are understandably nervous about creating bad experiences, nobody here wants to create a bad experience.
[00:20:02.560] - Andy Carvell
But since I'm a growth guy, I'm going to make the case for being a little bit more aggressive. Let's see if any of this sticks. So first of all, with a paywall, not everybody is going to know that this app even has a subscription features. Maybe some of them would actually really love to avail themselves of all the premium features and content within the product, and maybe they didn't get that from the app store page or from the onboarding. Maybe they didn't even realise that there's a paid product.
[00:20:27.350] - Andy Carvell
This often happens. We see this a lot, where folks are so shy about talking about the premium stuff that they don't even show the paywall until like two weeks in when most of the users have gone home, figuratively speaking. So the first the time we show the paywall, you're actually just also saying, hey, by the way, you can buy this stuff if you want. These paid features and capabilities, this exists. Right? So you're actually just making people aware of it, first of all. And so at least everyone has the chance to participate in the premium features. So that's number one.
[00:20:56.560] - Andy Carvell
Secondly, yes, as I mentioned, the retention curve is pretty scary for most apps. A lot of users won't come back in the second session. Actually, if you show them the paywall in the first session and they subscribe, then they almost certainly will come back, because they're paying for it. But secondly, if you don't show them that paywall in the first session and they never come back for a second one, well, guess what? They're not going to subscribe.
[00:21:16.790] - Andy Carvell
And thirdly, just to round it back to the slightly more generic advice around growth testing, is it's fine to have a fear or a hypothesis that if you're going to show this paywall one more time, or you're going to send this push notification, that it's going to upset users and they might leave, you might get churn, you might get bad reviews. All of these things are definitely valid concerns and should be taken into account.
[00:21:40.610] - Andy Carvell
But let's work with data. Let's actually see if showing that paywall and extra time increases subscriptions, first of all, but also look at the negative effects. Does it increase the number of people who abandon the product and never come back. If lapsed users goes up or if negative reviews go up on the app store, people start complaining on the app store or on Twitter that this app is showing me paywalls all the time.
[00:22:01.290] - Andy Carvell
These would be good reasons to like dial it back a little bit. What's not a good reason to dial it back or to not do it at all, is just to be afraid that that might happen. Like, you know, it's possible to measure these things.
[00:22:12.280] - Andy Carvell
So my advice is always to be a little bit more bold than you feel comfortable with as a developer or as a product owner, push it a little bit far, and when you start to see negative effects in terms of your data in whichever metrics you're worried about being negatively affected, when you see that happen in a controlled test environment with a test group of users, then don't scale that version, like dial it back a bit.
[00:22:35.540] - Andy Carvell
But don't start with the assumption that you're going to upset users, because some users will actually be very happy to see that paywall and understand, "Oh, wow, I can actually subscribe here and I can get even more value from this product that I love".
[00:22:46.260] - Olivier Destrebecq
I totally get your point. It's very easy to dial back.
[00:22:48.900] - Andy Carvell
Yeah, you can easily roll the product back.
[00:22:51.290] - Nicolas Tissier
I totally agree with you. And I would add another point, actually. I've conducted many user interviews in my career and related to the paywall part, what was really interesting is that it's like the movie Inception. I don't know if you guys saw it. But when you display a paywall, you're in the first session, somehow you set the expectations of the user, because then they really consider and understand that it's a premium product that they are using, and the expectations that you can have from a free product on one side and on a premium paying product on the other are really different.
[00:23:29.730] - Nicolas Tissier
And somehow, you know, a free product means that it will be infested with advertisements, that the user will actually be the product and so on, whereas when it comes to a premium product, they understand very early on that they need to pay. You can even, if you design your user experience like this, show them that you are making them some gift by offering them to enter the product and start using it without paying. And thus the perception is really different, and I would say that the intent to purchase, there is also the psychological impact to take into consideration.
[00:24:04.750] - Andy Carvell
That's a really good point, Nicolas. And also, you referenced one of my favourite ever movies, Inception. Yeah, but you're absolutely right. It sets a certain expectation on many levels, which I think is definitely good to do early.
[00:24:16.900] - Olivier Destrebecq
Another thing you mentioned in your presentation is trying the lifetime subscription, which I thought was super interesting, but got my head spinning in a circle about how to price it. So how would you go about setting the price for a lifetime subscription?
[00:24:29.460] - Andy Carvell
Expensive. Yeah, that's, I'm joking, but it's actually yes. You know, typically we would see them in the several hundred euros range, you know, which actually might seem like quite good value. If it's like a hundred euros or so a year and then you're charging three or four hundred for a lifetime subscription, then technically that's good value if people expect that they're going to be using this for years to come.
[00:24:54.720] - Andy Carvell
So yeah, I don't have a great pricing framework around this yet, maybe that's something that myself and the Phiture team are working on actually, is to look at some of the historical marketing pricing theory and see if there's stuff from the world of marketing theory that we can apply to these situations and get a bit more scientific around it.
[00:25:13.830] - Andy Carvell
But for now, what I see is that companies are trying to pick this sweet spot where it seems cheap if they're looking at maybe it's costs a little bit more than two and a half to three years of subscription. That's where we see these lifetime subscriptions typically priced. It's around about the two three year mark if you would look at an annual subscription. So it feels like good value if the users just sold on it, but it's not crazy expensive.
[00:25:37.230] - Andy Carvell
It's not thousands of euros, but there's something to be set for, again, coming back to like traditional pricing theory and behavioral psychology, to have a prohibitively expensive item that makes the other items look much more affordable. So there's an argument, which, again, I don't have a lot of data to show that this really is what's happening, but I can well believe it. And I'd love to actually do a study where we can look at this in a bit more detail and get some data behind it.
[00:26:01.490] - Andy Carvell
But to show if you put a lifetime subscription next to maybe a very reasonably priced annual subscription and a fairly prohibitively priced monthly subscription, do people go for the annual subscription then because it looks better value than the other two? There's a lot of theory around this topic, but it would be good to do a study. I would guess Purchasely is in a perfect position to get some data at scale to do this.
[00:26:22.830] - Nicolas Tissier
Yes, I totally agree with you, having once again, you set the expectations of the users because actually you don't really know how much it would cost or how much you would be ready to pay for the particular service. And by putting a very high price for the yearly subscription, you just show that this service provides a certain value, and then it can be a very good strategy, as you said, when you want to entice users to yearly subscriptions to make everything you can so that your yearly subscription looks like a good plan on which you should rush. So the monthly one is very expensive, the lifetime subscription is also very expensive, and there is a highway for users to pick up the yearly one.
[00:27:03.190] - Andy Carvell
Exactly. Yeah. It's all about trying to guide the user to, I guess, the subscription, which also is very helpful for the publisher's cash flow situation. But some people will buy the lifetime subscription. You know, we do see it. It's not a zero number of people. It's not purely a decoy. Some people will go for it. And if they want to spend three hundred, four hundred euros on a subscription, then you should let them.
[00:27:23.020] - Olivier Destrebecq
So we always get to that point where we get to the end of the interview and always feel bad because we're getting some so many great answers from all the guests. But it is again today, this time where we run out of time. And remember that Phiture and Purchasely are actually putting an event together. Did you get some more details about it?
[00:27:39.140] - Andy Carvell
That's right. It's actually going to be an in-person event in Berlin on October the 5th. And that's about all the details I have so far. We don't have a definitive venue yet. So I'd say like stay tuned, check out the Phiture socials or website. And similarly with the Purchasely socials and website, there'll be more details to follow. And I guess you can also roll these out in a subsequent edition of the podcast.
[00:28:01.450] - Olivier Destrebecq
Definitely, and we'll put a link in the notes for people who are listening. Well, thank you so much for answering all those questions. And who knows, maybe we'll get you a third time on later on. We'll see you. But it was really great pleasure to have you on again.
[00:28:12.210] - Andy Carvell
Thank you so much, Olivier. And Nicolas, thank you.
[00:28:14.610] - Nicolas Tissier
Thank you very much.