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How to Build a UA strategy for High-LTV Subscribers

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App Masters16:24Open on YouTube
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The bottom line

Acquire high-LTV subscribers by matching ad messages to the users who will stay, then converting them with a firm paywall and a yearly plan. Wrong targeting breaks the whole funnel, so teams must watch metrics beyond CPI.

Key takeaways

  • Paid ads can convert to subscribers better than organic traffic. 1:06
    • Ad viewers already clicked on a message that resonated, while organic users may know nothing about the app.
    • Some campaigns beat organic and some fall below it, so organic works as a benchmark for whether a message lands.
  • The message you pick lifts or hurts the whole conversion funnel. 7:56
    • In a four-message test, "feel healthier" won and "improve shape" came second. Weight loss was on par.
    • The "feel healthier" ad gets more engagement but has a shorter shelf life than "lose weight".
  • Attracting the wrong people drags down the user-to-subscriber rate. 8:44
    • A test pushing people from free trial to upfront payment lost to the control. Re-releasing the control did even worse, which pointed to targeting.
    • Performance teams that only watch CPI and the first-step metrics miss this. Sharing data with product fixed it.
  • A hard paywall lifts conversion far more than a soft one. 11:52
    • A soft paywall with free browsing had a very low conversion rate. Requiring email and a paywall with an X that fades after 3 or 4 seconds made it skyrocket.
    • Month 1 to month 2 saw a big drop-off, then the monthly plan stabilized.
  • A yearly plan brings in more cash without lowering conversion. 13:42
    • Conversion stayed at about 8% after launching a yearly plan priced at half of 12 months of the monthly plan.
    • A 45 to 50 percent yearly retention rate is like about 85% monthly retention, which only Netflix or Spotify-level products reach.

Most subscription apps have a big drop-off in the first three months, so you're better off leveraging your entire year and fighting for that renewal once a year instead of every single month.

Saulo Marti

Chapter summaries

0:00 Why paid ads can beat organic

Organic traffic is a mixed pool of unknown sources, so paid ads with a clear message can convert better.

  • Organic users arrive from many unknown sources. 1:23
    • Sources include referrals, spillover from campaigns and plain store search.
    • Some of them found the app by search and had never heard of it.
    • Splitting out referrals and social followers should show those users convert better.
  • Beating organic means the targeting or the creative works. 2:20
    • It shows the ads bring in people likely to convert.
    • The cause is either correct targeting or an ad that shows something that interests them.
    • The ad also tells users what they will get before they reach the app store.
  • Ads that show the app can lift retention. 3:00
    • Matt from Calm found this for ads that showed off the app.
    • He saw them outperform other ads on retention.
    • The point is that the first impression shapes what users do later.

3:15 Testing messages without selling a fantasy

Honest, health-first messages win on resonance but burn out faster, and aggressive shame ads are a choice the brand refuses.

  • The four test messages differed in tone and focus. 3:19
    • They were "improve your health", "improve your shape", "feel healthier" and "feel leaner".
    • The test compared feel versus improve, and body versus health.
    • "Feel leaner" performed worse.
    • Retention data was not in yet, so only engagement was known.
  • Aggressive ads convert but clash with the brand. 5:44
    • Some competitors run harsh ads, and the team refuses to copy them.
    • One example is a sad, overweight drawn woman whose fat drops off as she smiles.
    • People may be ashamed to admit they clicked, but in private they respond to "cut your fat".
  • The messaging says fitness is a journey. 6:54
    • You cannot outwork a terrible diet.
    • Twenty minutes every day beats one or two maximum sessions a week.
    • Changing behavior is the core idea, and message tests lift user-to-subscriber rate and trial engagement.

8:12 Disconnected teams miss targeting problems

When marketing and product work apart, bad targeting looks like a product problem and nobody fixes it.

  • Teams that don't share data can't see where the funnel breaks. 9:12
    • Performance marketing watches CPI and a few key metrics, not the steps further down.
    • Product and pricing sit upstairs and marketing sits downstairs, so they rarely talk.
    • The upfront-payment test was meant to cut trials because iOS 13 could hurt trial-to-paid numbers.
    • The cause is obvious when you say it out loud, but hard to spot across separate teams.
    • Once the whole team shared information, focus improved a lot.

10:19 Testing the subscription model

Plan structure moves revenue more than most people expect, and the fear of losing conversions is often unfounded.

  • Removing the monthly option can lift results. 10:25
    • A friend's popular design app offered only a yearly plan and saw double the conversions.
    • 8fit wants users to choose the plan that feels right, though that isn't always best for the company.
    • Saulo calls conversion optimization one of the most fun things to work on.
    • 8fit has live plan tests but no clear results yet.
  • Fear of a conversion drop delayed the yearly plan. 13:01
    • CAC was fine and payback took three months, yet the company expected a drop of about 3%.
    • Saulo pushed for it because he expected higher LTV.
    • Netflix retains about 96% monthly and Spotify about 96 to 97%, so monthly plans are hard for most apps.

13:58 Who should use yearly plans

Most subscription apps should lead with yearly plans, even though subscribers themselves often prefer monthly.

  • Only products with excellent monthly engagement should stay monthly. 14:07
    • In that case, lower the price and keep the monthly option.
    • As a user, Saulo only takes monthly plans because he knows he will cancel.
    • He was lazy about using these apps properly.
    • A pop-up with 40% off Calm left him no other choice, so promotions work, discounts work.

In the growth library

Saulo Marti, VP of Marketing at 8fit. Shows how to build user acquisition around high-LTV subscribers by testing ad messaging against the full funnel, aligning performance and product teams, and moving subscription apps to yearly plans. The payoff: at a previous company a yearly plan kept user to customer conversion flat at about 8% while bringing in much more upfront cash.

More from App Masters · The whole library, and ask it anything

Transcript406 lines
0:00

what is up app nation it is Steve P Jung founder of at masters dot-com the place the podcasting YouTube channel that you go when you want action-packed content in the app business and today super excited we got to connect on LinkedIn I was like dude you have to come on please I'm super excited that we're able to make it happen so quickly because he runs marketing for one of the biggest apps out there it fit and so when I saw it I was like dude I gotta talk to this guy so we're talking all about user acquisition what's working what's not subscriptions and all that other jazz in his personal history cuz it's very interesting to me that we got to talk before we hit record but let me introduce a guest his name is Salim RT he is the VP of Marketing at 8:00 fit go check him out ain't fit calm or in the app stores as well so look welcome to the show pleasure thank you very much for having me hey I want to now

0:50

reference the article that you wrote on mobile masterminds as well and I won't go into all the details of it so I'm gonna link that up to the show notes but definitely worth a read mobile masterminds calm but solo the the first point that you talked about was first engagement is so key there were first encounter so key and you said that your paid ads were actually outperforming from a subscription conversion rate they're all more organics yes yeah so to me it's kind of like janek's we don't know exactly where they're coming from right like they can be coming from referrals from a friend as well that's why they're organic it can be coming from referrals from a friend they can be coming from uplift from our campaigns they can be like spillover effect they can be coming from just general search and they found our app and never heard of it never seen anything so their point of reference for a lot of times might be a complete

1:47

unknown whereas in the ads they have a first point of reference they clicked on it because it immediately whatever was I was on the ad already resonated with them so I know that we'll have campaigns that depend on the message will outperform our organic and we'll have campaigns depending on the message underperforming your addict so we use the organic as a benchmark almost as like does this resonate with users is this help them understand what we do and what they're gonna get before they even get to the app store and I think it's it's it's a good thing that we outperform our organic in the sense that it means that we're already bringing in people who are likely to convert and then because we're either targeting them correctly or because we are showcasing in our ads something that really interests them so it's if you can if you if you have the capabilities in your data to break up the organic between for example like

2:50

referrals or something like that are already your social followers etc then I would assume that those should perform better but when we look at like all of our organic then yeah I know Matt from calm he kind of talked about this he said you know he used ads and kind of like what you're referencing that would improve retention he found that ads that showed off a little bit about the app would for outperform from a retention perspective any other ads what have you guys found for me they fit so one thing that was really interesting was we did this test I don't remember exactly when I was but recently that we were testing like four different types of messages that essentially they're very similar so they're not that different but for example like improve your health improve your shape feel healthier and feel leaner so essentially it was feel versus improve so kind of trying to understand like does the person want to feel do

3:49

they want to improve and is it more about their physical right so the shape leaner or is it about health healthier health right you know the winner Salo I dunno the winner okay I guess guess please okay feel Weiner feel leaden no that was actually see you later one your leader was actually worse place yeah you wanna take a second yes no no because then so basically number one was feel healthier oh really okay really for us cuz that's what we want to resonate or that's what we want to push number two though was improved shape which was like these were like when we put him in a scale these were the two polar opposites that we had and then the other two in the middle were a little bit like and then we said okay interesting that these are the two like top performers and then we compared it to weight loss and weight loss is I think it depends in the market but like it's outperforming the underperforming but it's like on par and

4:53

it's interesting that we realize that people want to feel healthier it does resonate more with them it like I don't think we have the retention metrics in yet to know if we've already improved our retention but I know that we have more engagement so it's like it performs whether it's a better campaign we're gonna get more engagement it's interesting but this is a type of fad that burns out faster so asking people to like what I like to call is like the shelf life of the ad the shelf life of this ad is shorter than for example lose weight or for example improve your shape or whatever the reason is I think that there's just a larger number of people that will click on lose weight that will click on like oh I'm a little bit chubby you know some of our competition and without going into names but like some of our competition do some really really really aggressive ads that we never want to do um we from like a brand standpoint

5:56

we make that very very clear we are not going to do this but I am certain that it's converting for them because they push it like crazy but things like where it's like a drawing of a woman like a female who is slightly overweight very very sad then all of a sudden the fat drops off her and she smiles like that's really [ __ ] aggressive and it's really negative if you think about it but I'm certain that there's a ton of people who click on it because we're like most people are are from like a psychological standpoint they are they would probably be ashamed to say that they clicked on it but then like in the confines of like their own space and no one's looking they're like oh yeah I kind of need I need this I don't need the one that's telling me like you're gonna feel better about yourself I need the one that's like cut your fat and then because it sounds like it's gonna be easier when in

6:54

reality it's not like Fitness is a journey like this is a really key part of our messaging Fitness is a journey you're not gonna outwork a terrible diet it's just not gonna happen I know from experience I have a terrible diet I eat too much chocolate and like I'm addicted and I workout and try to do it like some exercise and things like that but I know that if I really want to like get back into my personal optimal shape I need to cut that [ __ ] like it's not gonna be about just working out more so you're not gonna outwork a terrible diet the other thing is consistency is key so if you work out to your max ability once or twice in the week it's probably gonna be worse than working out 20 minutes to a lower capacity but every single day yeah so like see these are some of the things that we talk about a lot like within our app is that changing behavior is key and we know to send inner ads you

7:56

can clearly see like when we're testing this what resonates and then the entire conversion funnel just completely improves like our user to subscriber rate are they engagement in trial like all these things completely improves depending on the messaging that we used so I I we had an analysis recently like our user to subscriber rate had dropped and we had run a test that was trying to get people away from the free trial due to like iOS 13 and the fact that it could like impact trial to convert traffic to customer numbers and things like that we're like okay let's run this test trying to get less people on the trail get more people to pay upfront and we ran this test and it was really interesting the results and and things like that but the our subscriber rate was dropping a little bit not too much but a little bit and then we went back and it dropped more so it's almost like okay so we ran the test it was worse

8:56

than the control so we released the control again and it was worse than before yeah and then we realized it was a little bit of our targeting our targeting was just the messaging we were using their targeting was just attracting the wrong people so it screws up your entire funnel if you're just targeting the wrong people it's obvious when you say it out loud but like it's very hard when you have disconnected teams we're like performance marketing team is just strictly going like oh I need to look at my why and I need to look at my CPI I need to look at like these key metrics and they're not looking further down the funnel and then the product team is in our case it's literally sitting like upstairs like we have a an office that has it's an open office but it's got like two floors despite like it's not like separated I don't even know how it's like a mezzanine floor yeah yeah and most of the product team or some

9:47

people in pricing sit upstairs some people in the marketing team sit downstairs and I find it interesting because like sometimes they're not necessarily communicating when then when we realize it somewhere like oh okay we need to fix this and then now finally it's been such an improvement having the entire team focused on like the right things and really sharing information with each other but again like I said some of these things sound obvious but for whatever reason they're not done or they're not communicated properly and then you just go into this loop of like I don't know what's happening you know the last thing I'll now move on to solid is and that the other point it says we find your subscription model one of my friends he told me that when he moved he's got a very popular like design app when he moved to just the yearly option so he stopped giving people the option for monthly year he's like nope just one

10:35

yearly he saw double the conversions obviously way more revenue have you guys done any when you've done this refinement like have you guys done any tests around this yes so I would say that like a lot of my career's based on tests around this or at least in the last like a couple of years personally is my favorite types of tests like conversion optimization to me is one of the most fun things you can spend your time on and we've run a lot of tests for a fit we're still running tests so like from a from a position perspective like from our company perspective we want to give people the choice whatever plan feels right for them right however that doesn't always end up being the best thing for the company right um and at eight fit we have some tests that are live but I can mention so I don't have like clear results for them but for my previous company I remember that we had this really really soft pay wall it was

11:36

basically like the purse comes in and we say like hey here's our app you can pay if you'd like if not you can browse for free and then you browse and then you can listen to a few things you can play around with it and there's really no reason to convert and then our conversion rate was super low and then I was like no let's be bullish like you come in you give us your email you sign up pay wall and then you do like a little fading of the X after like three or four seconds yeah like really like hard-hitting pay wall our conversion rate skyrocketed it went crazy so all the people that didn't convert convert it and it was on a monthly plan obviously we had a big drop-off in mm0 2m1 like there was a drop-off there but then after that it stabilized and we were doing very well with the monthly path plan but I kept pushing like we need to launch a yearly plan because of the fact that I do believe that the LTV

12:32

on the yearly plan will be higher like we need to look at like if you think about it the LTV will be higher if you have a 45 50 percent retention rate on your yearly plan that's almost like having like I think it's like 85% on your monthly plan which is insanely high like Netflix has 96 Spotify has I think like 96 97 so unless your Spotify or Netflix a monthly plan is really really difficult it's difficult to manage so it's it so I kept pushing and I remember the company was kind of like afraid that the conversion numbers were gonna drop because our CAC was fine like everything was fine we're seeing pay back in three months like but I really thought that we would have higher LTV and our purchase converter our conversion rates at that point we're like well I want to say something along the lines of like 8% so like user to customer rate and we did like user to customer it was about like 8% then all of a sudden everyone was

13:33

going into shock I was like we're gonna launch this it's gonna get released and it's gonna drop like 3% and like I don't know I I don't know and then we launched the yearly plan which was like half the price of the monthly plan times 12 so we launched a yearly plan and the conversion rate was completely stable like nothing changed it was still like 8% but like you said we just started seeing a lot more cash up front so I think if you have there's two ways to think about it if you have an amazing product that you truly have amazing monthly engagement and retention yes drop your price get more users in and continue that monthly option most subscription apps have a big drop-off in the first three months so you better off you're better off leveraging your entire year and fighting for that renewal once a year instead of every single month so I would say that most companies need to leverage yearly plans most subscription

14:35

companies need to leverage yearly plans that's my personal favorite type of plan from a marketer perspective from a user perspective I only subscribe to monthly plans it's like that Instagram your whole analogy Google versus what's on Instagram Facebook I literally but here's the thing promotions work discounts work yeah I literally signed up to calm or I didn't sign up yet but I'm going to I am going to send up to calm and like I've been given a bunch of discounts I know people like there and I've been given promotions and other stuff I've had free accounts before and all that stuff and I've never like really used it and then now it's to the point where I was like I want to try it a little bit more like I want to try I was using headspace and then I stopped and I was like I want to try calm again and see how it is and I just thought about it and then I went on the website came back and then

15:30

downloaded the app again etc you know listen I got like this I think it was a pop-up I don't know where I saw it but it was like 40% off immediately like now I have to like I don't have another choice like I have to pay for it now so it's so I'm very much I hope our consumers are not like us because if they are like me because if they are then it's completely like mind-boggling the decisions that are made because my decisions are completely mind-boggling but I think it's I only sent up to monthly stuff because I know that I'm gonna cancel yeah so it's like and I know my behavior I know what I'm too lazy to use these things properly you