Why retention is more important than acquisition.

Madeleine White -

What should the central monetization strategy be for publishers? Focussing on ad-based revenues or on increasing subscriptions? Well, according to researchers at the Spiegel Research Centre at Northwestern University, neither. For them, the best reply to this question would be to focus on increasing the customer lifetime value (CLV).

CLV is an indicator that allows businesses to calculate the total net revenue a subscriber will bring to you throughout their time as a paying customer, taking into account the monthly payments and retention rate. It’s been widely used in the e-commerce industry for years but the benefits of tracking CLV are less well known in the content-producing world. However, CLV is an indicator that publishers should embrace in order to maximize revenues.

“Being able to move a reader to a subscriber, while important, has much less leverage and value than growing the long-term value of that subscriber,” - Tom Collinger, Spiegel’s Executive Director
“Across industry, it is always much easier to retain somebody than to bring in someone new, because they already value and trust you, and they want to engage with your content and your product, versus trying to convince somebody why they should subscribe or join.” - Ainul Huda, VP, audience development and analytics at Condé Nast

Concentrating on retention means improving engagement, increasing the loyalty of your subscribers, personalizing experiences, avoiding churn and building lasting relationships.  

“It means understanding the drivers of retention, and the causes of cancellation for all subscribers...It means calculating Customer Lifetime Value for every subscriber and improving the engagement and subscriber experience to grow it.” - Tom Collinger, Spiegel’s Executive Director

What’s more, increasing retention will have cumulative financial benefits. Ed Malthouse, Spiegel’s Research Director, highlighted that even small improvements in subscriber retention rates can have a significant impact on CLV and monetization, as shown in the image below.


Outbound engine further proves this financial benefit of increasing retention by calling our attention to the fact that...

Whilst “acquiring a new customer can cost five times more than retaining an existing one, increasing customer retention by 5% can increase profits from 25-95%”. - Outbound engine.

The benefits are therefore twofold: retention costs less but monetizes more.

Given this, how do you increase retention and CLV?

  • Prioritize engagement: take a data-driven approach to understand where your subscribers see value, what content engages them and what increases loyalty. This will allow you to continue to provide the type of content that made them subscribe in the first place as well as see gaps in engagement that you can fill.
  • Create habits: integrating your content into the daily lives of your subscribers is the key way to increase retention. Newsletters in particular have been proven to create deeper connections between a publisher and their consumer (be wary not to spam users however).
“Implementing a robust engagement and acquisition email marketing program has been the single largest contributor to our improved subscriber retention.” - Hearst Connecticut Media Group

  • Develop loyalty: creating loyalty at multiple touch points will increase the lifetime of your subscriber base and so lead to increased revenues. This can mainly be done through building a strong relationship with users, increasing engagement and making them feel valued as a customer. Exclusive content or surprise gifts/promotions can help to keep a user loyal to your brand, but producing high quality, engaging content should definitely not be forgotten.
  • Personalization: it’s important that you understand your audience and personalize their experience to make them feel valued as an individual subscriber (rather than as part of a mass). Sending emails with recommended content, adapting their home and account pages to match their interests or even simply allowing users to save content for later - all these personalization features add to increasing retention rates and improving customer loyalty.
  • Reduce churn: if you want to increase retention, you obviously need to reduce churn (the number of users who unsubscribe). To do this, you need to understand what makes a user churn and what actions you can put in place to prevent this from happening. For example:
“When Canada’s Globe and Mail began emailing subscribers with the highest propensity to churn, it reduced churn by 140 percent. Emailing subscribers who hadn’t logged in for 30 days reduced churn by 27 percent.” - Nieman Lab

  • Focus on your value proposition: your subscribers pay to access your content because they see value in it. Put simply, if they no longer feel that they’re getting this value, they’ll likely unsubscribe. Therefore, focussing on your value proposition and ensuring that you’re very thoughtful about what your value is, as well as why someone should pay for your content, is hugely important.