5 Specific Ways Subscription Sites are Leaving Money on the Table

How many subscription sites are there on the Web?

Joe Meth, head of the consumer portal SubscriptionConnection.com,
says, "Right now we list about 500 publishers. Those 500 have
725-730 different membership products and in total there are
1,100-1,200 different pricing options. Plus, I have another 250
publishers in the queue we'll be adding."

In total, he estimates content subscription services online
including niche b-to-b offerings may be as high as 2,500 by the end
of 2004.

In comparison, the print subscription newsletter industry has more
than 5,000 titles and in 1995 was estimated to sell at least $2
billion in subscriptions per year, plus an additional $800 million
in ancillary revenues mainly from list rentals and items such as
special reports sold directly to subscribers. Now, almost a decade
later, it's certainly significantly larger.

If you assume the two industries are fairly similar in terms of
selling targeted high-value content directly to end users, this
means there's plenty of room for the online subscription industry to
grow.

However, from his vantage point as an observer, Meth says that while
there's plenty of evidence that sites are growing their subscriber
bases, the initial surge of new subscription offerings has slowed
dramatically.

"Most sites in our directory were established over 18 months ago.
Most of the ones we find to add are a year to three years old. I
don't really see many new ones starting up. I keep looking for new
ones...."

Meth also doesn't think current sites are using best marketing
practices to truly achieve their growth potential. Here are five
specific weaknesses in today's tactics that could be holding back
the industry from more profits:

#1. A fast-rising tide of consumer mistrust

We've noticed several sites recently promoting "No Credit Card
Required!" as a sales point for their trial offers. Why would they
do that when every past Case Study ContentBiz has run proved
grabbing that card up front is infinitely more profitable than
relying on consumers to pro-actively convert on the back-end?
Meth says it's because there's a rising tide of consumer mistrust
against subscription sites' recurring billing practices.

"Web publishers are underestimating the impact of bad customer
service and misleading recurring billing offers. I get a lot of
letters from consumers related to free trials and autobilling
afterwards. Consumers don't know they signed up for that. When they
try to cancel, the site's contact information is frequently obtuse
and obscure, so they contact me. We'll go to the site, to try to
find out how customers can cancel and email then a URL to it. But,
it's often impossible to find out.

"Sites try to make it difficult to cancel because it's expensive to
lose customers. But you have to balance that off against negative
comments customers have."

And according to the laws of customer service, every time you annoy
a customer enough that they'll actively complain to a third party,
you can bet they are also badmouthing you to at least eight friends.
By hiding terms or cancellation contacts in fine print, subscription
sites are poisoning the well both for themselves and for the
industry.

#2. Don't rely so much on search and email marketing

The biggest lessons of the past six months have been that you can't
rely on either search marketing or email campaigns to third party
lists as your main traffic drivers.

Meth notes that subscription sites were no different from the rest
of the Web when Google launched its now-infamous Florida update last
fall. Rankings and traffic plummeted for many. Plus, the dramatic
increase in paid search marketing has also created a corresponding
increase in search results page clutter, and lowered clicks.

Increased filters and spam overload have also made it harder for
sites relying on email to third party lists.

If you're not constantly testing new tactics, including direct
(postal) mail, radio, ads in trusted email newsletters, and
co-marketing partnerships with other subscription sites, you'll miss
out on revenue streams.

#3. Test pricing changes

"I really haven't seen people experimenting with different price
points," says Meth. "Only a handful of sites have changed prices
this year."

In the print subscription world, this would be a shocking lapse.
It's even more irresponsible online where there's so much less
industry data on what prices and terms the marketplace is willing to
bear.

Without price testing, publishers are leaving money on the table --
guaranteed.

#4. Offer a wider variety of payment options

Meth says he gets a steady stream of emailed notes from consumers
asking if he knows of a way to purchase online subscriptions without
a credit card. Some prefer PayPal, others want to use direct debit
cards, or simply to send a printed check in for their order. (35+
aged women in particular are notorious in the offline direct
response world for preferring a printed check option.)

While multiple offer options such as length of term or type of
service may decrease your conversion rates, many offline publishers
have found offering both multiple response options (web, phone,
postal mail) and payment-type options (card, check, etc.) can
increase incremental sales. Yet, while Meth sees many sites
offering a variety of terms, few offer the more appealing response
and payment-type options.

#5. Use non-subscription "one-off" content to gain new sales

When you sell a subscription to someone, you have to convince them
to make two different decisions at the same time --
o Is this the right information for me?
o Do I want an ongoing relationship/commitment to buy it?
Meth wonders how many sites lose potential sales from consumers who
answer the first question positively but get hung up on the second.

He suggests publishers create a one-off product to take advantage of
this -- perhaps a PDF or printed report that's a collection of some
of the content that's behind the paid subscription barrier.

You can either market this as a premium (free gift with order) for
subscribing, thus making consumers feel that they're getting so much
gratification right away by ordering that it's worth taking the
relationship risk; or, you can sell it as a one-off report to
capture sales and contact info from folks who aren't ready to take
the relationship plunge.

Meth notes that offering content, that's part of your site, in a PDF
or printed format is valuable to customers because it's handy. They
don't have to seek out this information for themselves. Repackaged
content, especially in print format, can have tremendous perceived
value.

You can even offer "best of" reports to current subscribers as an
add-on sale to increase revenues per account. (This is one of the
ways the offline subscription industry makes roughly 40% of revenues
from ancillaries.)

Meth's suggestion -- test this first with a print-on-demand vendor
so you don't have to invest too much in inventory. Luckily the print
on demand industry has been growing over the past couple of years,
so pricing is reasonable.

Plus, offering a printed book or report helps your site gain a level
of trustworthiness. You're not simply virtual anymore - you're
tangible.

Useful links related to this article:
SubscriptionConnection
http://www.subscriptionconnection.com
Print on Demand Initiative - a useful trade association of vendors
http://www.podi.org/
Data on print newsletter industry:
http://www.newsletters.org/page.cfm?name=faqs