Phil Carter
speaker
228 appearances
1 recordings
1 series
first heard Sep 2024
last heard Sep 2024
Phil Carter’s voice in public audio — every appearance, attributed to the second.
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Appearances
Like Tender and Bumble are big exceptions in the dating category, where both of them have multiple subscription tiers. And they've also introduced a lot of additional one-off in-app purchases that are like consumables that go beyond the subscription, but they're actually really complementary to the subscription tiers and monetizing their power users.
But the vast majority of consumer subscriptions have a single tier. It's their plus tier or their pro tier, right? Duration is different. I think that more often than not, you see consumer subscriptions trend towards monthly and annual plans. There are categories like EdTech where three months or six months can make sense because of the school calendar.
And maybe there are a couple of other categories like that. But those are pretty unusual. Weekly plans just have such high churn rates that I think they generally don't make sense for companies that have achieved any meaningful scale. So generally, you're going to trend towards monthly and annual over time.
And then you want to nudge as many users as possible into the annual plan because it's just so much better from a cash flow and LTV standpoint.
I think there are a few things. So I'll separate out pricing and packaging. So on pricing, I think the biggest mistake, and it seems so obvious, is it's remarkable how many consumer subscription apps will set a price and then won't revisit it for years and years. And there are some famous examples of this, right? I mean, Quizlet went many years without changing its pricing.
Strava, AllTrails, there are a number of companies that launched their app, found a price that worked well enough, And then several years went by, they went back, they did a pricing study like Conjoin or Van Westendorp and or they AB tested the pricing and the product. And they found that there were significant opportunities to improve pricing.
This is something that should be revisited, in my opinion, at least once a year. That doesn't mean you have to do a whole expensive pricing study, but like at least do some quick analysis to make sure your price is still optimal. Packaging, I actually, in many ways, think is the opposite, where less is more in consumer subscription. Consumers have short attention spans.
The more complexity you introduce in the paywall, the worse your conversion rates are going to be on the margins. And so if you're going to have multiple tiers, you should only be doing that once you have a large and diverse enough pool of subscribers that you're selling them different things.
And I can go into more detail on Tender, but Tender has done a very good job of differentiating what you get from Tender Plus versus Tender Gold versus Tender Platinum.
Yeah, so this is such a great example. And Ravi Mehta, who was chief product officer at Tinder for a little while a few years ago, and who's one of the guest speakers in my course, we teach a case study on this in my Reforge course. And he talks about how the dating category is challenging, right? Because going back to how to build an enduring value promise,
Well, dating is one of these weird categories where if you do a really great job and you help somebody find love, then ideally, they're never coming back to the platform. Now, that doesn't happen with everyone. But it does put extra emphasis on making sure that you're monetizing your users as efficiently as possible.
And so one of the things that Tender has done over time is they've moved from a single subscription tier, Tender Plus, into three subscription tiers, Tender Plus, Tender Gold, Tender Platinum. And this is oversimplifying it a bit, but the value props for each of those tiers, as Ravi describes them, is Tender Plus is making it easier for you to get other users swiping on you.
It's basically elevating the visibility of your profile. Tender Gold is leading to more and higher quality matches, and Tender Platinum actually allows you to communicate with potential matches before you match. And so each of those three things is a bit different, right? You're paying for something different. And then on top of that, they have boosts and superlikes, which sort of fill in the gaps
under the consumer surplus curve in order to make sure that your power users have the opportunities to maximize the value they're getting from the product and to maximize the money that they're paying back to tender. And so that's a good example of a company that's done it really well.
But I think the mistake that too many companies make is they just add more tiers without really thinking about, is this second tier different enough from my original subscription plan to warrant its own subscription tier? And more often than not, the answer is no.
Yeah. Well, I think time to value is... It's becoming more and more important for any business because human attention spans are getting shorter. We're constantly bombarded with advertisements, with notifications, as we talked about earlier.
And so it's just so easy as a consumer to get distracted, which means that the window of time that any product but certainly consumer subscription product has to get a user's attention is getting shorter and shorter. And so what that means is new user onboarding has become one of the most important parts of any consumer subscription app experience.
Now, the old conventional wisdom, and I'll put myself in this category, was shorter onboarding flows are better. The moment the user installs the app, they should understand your core value promise within the first 30 to 60 seconds of using it.
And as quickly as possible, you want to get them to the aha moment and get them to enter a trial so that you're able to continue to send them lifecycle marketing emails and ideally convert them into a I think over the last few years, that's gotten a little bit more nuanced, though.
Perhaps the canonical example of this is Noom, which has more than 100 screens in its onboarding flow, or at least the version of the onboarding flow I've gone through. It's got so much personalization that everybody probably gets a slightly different adventure through their onboarding experience.
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