ARTICLE
Retention strategies go into overdrive
Why is retention top of mind for business
leaders in 2023? The answer is simple: a
retained customer is the most valuable of
them all
Every CEO and business leader we are talking with at
the start of this new year has one thing on their mind:
Retention.
ugh the types of questions our clients are coming to
us with, but also in industry wide reports and research.
In the most recent Reuters Institute Journalism, Media,
and Technology Trends Predictions Report (2023), Nic
Newman highlights that of the 303 News/Publishing
leaders from 53 countries and territories surveyed, “The
consensus is that this year will be more focused on the
retention of existing subscribers, rather than adding
new ones.”
We also found this to be true in a report we have
recently conducted in collaboration with Minna
Technologies and Savanta. In a Subscription Economy:
A Transformed World, we conducted exclusive research
and insights into the subscription habits of 2,000 UK
and US consumers, as well as surveyed 50 subscription
business leaders across industries on their strategy.
What we found is that “Almost seven in ten (68%) of
the 50 leading subscription businesses we surveyed
say that retention is their top strategic priority”.
This article will help explain why retention is so
important by using insights from our report and
beyond, as well as highlight some tactics that your
business can think of to help with retention.
Why is retention top of mind? Because
consumers are more aware of what they are
spending their money on
With the pandemic and successive lockdowns,
consumers have been spending more on subscriptions
as they have been forced to new ways of buying goods
and services, with our research finding all group ages
spending net more on subscriptions compared to 2021.
Yet, with the twin realities of inflation and high energy
prices hitting households, the report also found that
one in three (37%) consumers have cancelled a service
in the last six months, and a slightly higher proportion
(42%) saying they are likely to do so in the next six
months. This is driven by almost all respondents
(93%) declaring a higher awareness on the amount
they are spending on subscriptions compared to 12
months ago. In addition, driven by 18-24 year olds, we
found that consumers are using subscriptions more
flexibly, switching them on and off, as needed, and
often returning to brands within months of cancelling
subscriptions.
ARTICLE: Retention strategies go into overdrive

Source: Subscription Economy: A Transformed World (2022)

With consumers being more aware of what they spend, emphasis on optimising customer retention, putting it
businesses will increasingly require placing greater at the forefront rather than acquisition strategies.

Retention strategies are more important

than pure-play acquisition
The illustrative graph below can help prove the point
to why retaining a customer is crucial to profits. The
typical cash flow profile of a B2C subscriber showcases
that the most profitable period is the one after year
1, where acquisition and support costs significantly
lower and cash from sales grows as does the LTV
of the subscriber. A study to help prove this point is
this research paper by Frederick Reichheld of Bain &
Company (the inventor of the net promoter score)
which shows that increasing customer retention rates
by 5% increases profits by somewhere from 25% to 95%.

Source: FT Strategies
ARTICLE: Retention strategies go into overdrive

In fact, reducing your businesses’ churn ever so slightly While keeping ARPU and MAUs constant, an
can have a substantial increase in lifetime value. Online improvement to the conversion rate by 2 points to 6%
calculators such as the one in the Reader Revenue would help grow revenue by $29k within a year, while
GNI playbook on Exercise 1 or the OMNI calculator for decreasing the churn rate by 2 ppts to 8% can help
businesses outside of publishing, are useful tools to see deliver $73k, almost triple the value.
this in numbers. Let’s take an example of a fictitious
publishing company that has:
� 10k Monthly Active Users (MAUs)
� Monthly conversion rate of 4%
� ARPU of 10$
� Monthly Churn rate of 10%

Source: GNI Reader Revenue Playbook, Exercise 1

ARTICLE: Retention strategies go into overdrive

Thinking of the customer lifecycle can help 2. Renewal

you better optimise your retention strategy The renewal stage is a crucial moment, where
reminding the consumer of the use of the product
Now that we’ve explained the importance of retention, through email campaigns and on-site messages can
here are some of the tactics that the FT uses help mitigate churn. If a consumer wants to cancel
throughout a customer’s lifecycle that could be useful however, it is key to have a frictionless and painless
for your business. cancellation process, that nudges users to other
1. Early Life products or payment deals to entice them to stay. In a
Subscription Economy: A Transformed World we noted
Industry research from Piano finds that up to a third
that customers are willing to stay if given the right
of all active churn happens within the first 24 hours of
personalised opportunity, namely: 86% would consider
subscription, meaning new subscribers are particularly
accepting a personalised discount, 80% would move to
at high risk of leaving and are therefore key segments
a higher or lower product plan with different features,
to direct retention focused strategy.
and 72% would rather pause than cancel. At the FT, we
To help mitigate this and showcase immediate value also maintain a “registered” account for ex-subscribers,
to new subscribers, a clear onboarding journey allowing us to continue to see their interactions with
is paramount. At the FT, depending on what the our website and marketing allowing us to maintain the
subscriber has read and what features they used before relationship with the customer and make it easier to
subscribing, our onboarding journey will promote and re-subscribe.
showcase different long-term habit-forming features
A further challenge can be involuntary churn due
such as introducing a niche newsletter vertical, a guide
to payment failures. It is important to keep a close
to how to use the personalised MyFT page, as well as
relationship with payment companies and new fintech
acknowledge the use of new features to promote their
solutions in order to help adjust payment timings
usage (eg: You’ve just saved X topic, you could also be
as well as carefully construct automated customer
interested in Y).
messaging campaigns to avoid customers churning.
2. In life At the FT, we have invested heavily on an involuntary
Throughout the customer lifecycle between two churn team that has been able to increase our recovery
renewal periods, it is key to keep track of how users rate to 66%.
are engaging with your product and stay on top of
their habits to help proactively ‘rightsize’ them. The
FT for example proactively moves subscribers that are
“likely to churn” to a lower price point and a package
that reflects their needs. This acts as a mechanism to
“surprise and delight” subscribers prior to the point of
renewal and also provides an opportunity to transition
them onto higher retention products or tenures.
In his 2023 Journalism Prediction Report, Nic Newman
points to an increasing usage of the ‘Audience Needs’
model developed by Dmitry Shishkin to help focus
product development, by embracing feedback loops
with consumers, and whose ultimate goal is to drill
down into specific problems that products can fulfil for
readers, increasing their willingness to stay (read more
here).
ARTICLE: Retention strategies go into overdrive

Summary:
Retention is top of mind within our industry in news We have worked with hundreds of news organisations
publishing but also beyond into the wider verticals across the world to think more deeply about how to
of subscriptions. Businesses that optimise their retain their customers (see our case studies). If you
retention strategies, with engagement, frictionless user would like to discuss the implications of the challenging
experience, and value-add at the core, will be better economic environment on your business - and get
positioned than competitors to weather the ‘double advice - please contact Lamberto Lambertini or
whammy’ storm of inflation and a lowering of Tony Leung directly, or via our online form.
consumer sentiment.

About the authors

Lamberto Lambertini Tony Leung

Lamberto is an Insights Consultant at FT Strategies and supports
the ongoing building of media and subscriptions expertise. Prior
to joining, Lamberto worked as a Research Analyst at Enders
Analysis, where he focussed on the Publishing Industry and the
need for radical digital transformation towards reader-first models.
He holds an MSc in Media and Communications Governance
from the London School of Economics and a Bsc in Politics and
International Relations from the University of Bath.
Tony is the Commercial Lead at FT Strategies. Previously he has
worked as Commercial Development Manager at CIL Management
Consultants, which provided due diligence and strategic consulting
to private equity funds, and as a Senior Research Analyst at Preqin,
a global B2B information provider to the alternative assets industry.

FT Strategies 2023