Profiting from Apple’s new subscription payment model.

Apple's new changes to subscription payment models has opened up world of opportunity for mobile business.

1. Profiting from Apple’s new subscription payment model. Barry Nolan VP Strategy barry@swrve.com @barryno
2. Agenda 1. Review business models for mobile apps. 2. iOS10 changes to auto-renewable subscription models. 3. Profiting from these changes to subscriptions.
3. Agenda 1. Review business models for mobile apps. 2. iOS10 changes to auto-renewable subscription models. 3. Profiting from these changes to subscriptions.
4. FREE PAID FREE WITH IN-APP PURCHASE 3 APP STORE BUSINESS MODELS
5. FREE PAID FREE WITH IN-APP PURCHASE 3 APP STORE BUSINESS MODELS $50BN
6. FREE PAID FREE WITH IN-APP PURCHASE 3 APP STORE BUSINESS MODELS Biggest economy by far
7. FREE PAID FREE WITH IN-APP PURCHASE 3 APP STORE BUSINESS MODELS ADVERTISING TRANSACTIONS
8. ADVERTISING TRANSACTIONS 0 5 10 15 20 25 Facebook Uber Source: comScore Mobile Metrix, Age 18+, UK, June 2015 Hours per month, UK Different business model. Very different usage models.
9. FREE PAID FREE WITH IN-APP PURCHASE 3 APP STORE BUSINESS MODELS pay upfront to use the app
10. 5% Paid 95% Free Free apps make all the money
11. The Top 30 Grossing Apps in the App Store 29 are free. 1 is paid.
12. Three Lessons Here 1. To maximize revenues, go free.
13. Three Lessons Here 1. To maximize revenues, go free. 2. Success relies on converting users into paying customers.
14. Three Lessons Here 1. To maximize revenues, go free. 2. Success relies on converting users into paying customers. 3. The top non-gaming apps all use subscriptions.
15. FREE PAID FREE WITH IN-APP PURCHASE 3 APP STORE BUSINESS MODELS SINGLE PURCHASE Consumable Perpetual
16. FREE PAID FREE WITH IN-APP PURCHASE 3 APP STORE BUSINESS MODELS SINGLE PURCHASE Consumable Perpetual SUBSCRIPTIONS Non-Renewable Auto-Renewable
17. SINGLE PURCHASE Consumable Perpetual SUBSCRIPTIONS Non-Renewable Auto-Renewable Consumable Purchase once per use
18. SINGLE PURCHASE Consumable Perpetual SUBSCRIPTIONS Non-Renewable Auto-Renewable Perpetual (Non-Consumable) Purchase once and use indefinitely
19. SINGLE PURCHASE Consumable Perpetual SUBSCRIPTIONS Non-Renewable Auto-Renewable Non-Renewable Subscription Purchase and available for a limited time
20. SINGLE PURCHASE Consumable Perpetual SUBSCRIPTIONS Non-Renewable Auto-Renewable Auto-Renewable Subscription Automatically renews at regular intervals
21. Agenda 1. Review business models for mobile apps. 2. iOS10 changes to auto-renewable subscription models. 3. Profiting from these changes to subscriptions.
22. 1. Auto-renewable subscriptions now open to all categories of apps. No longer just media. The top 20 grossing media apps all use auto- renewable subscriptions
23. 70% Proceeds Less Than One Year 85% Proceeds One Year or More 2. The publisher gets more proceeds after the first year.
24. 24   The 30%/15% rake is not the problem Conversion is. •  App Store purchases have the least friction and best conversion. •  Some say the downside is not knowing the identity of the user. However, that’s simple to fix.
25. App with $10/month Subscription over 12 months Internal Gross Revenue: 95% or Apple Gross Revenue: 85% Internal Revenue Customer: $114 or Apple Revenue Customer: $102 114 102 0 30 60 90 120 Internal Revenue Apple Revenue Revenue per paying customer Sample Calculation:
26. 1 1 2 3 0 1 2 3 Internal 1% Apple 1% Apple 2% Apple 3% However, we need to factor the conversion rates internal versus using iTunes. Our experience - iTunes/ Apple is the best way to go. Typically using Apple, conversion is 100%-400% better. Revenue per user - Internal v’s Apple Sample Calculation:
27. 27   App Stores give people a familiar and simple way to purchase
28. 28   One touch always beats six pages of account and credit card entry.
29. 70% Proceeds Less Than One Year 85% Proceeds One Year or More 2. The publisher gets more proceeds after the first year. Lesson 2: Retention of paying subscribers is even more important
30. 3. Subscription groups were once limited Subscription Level Gold Service Duration 1 Week 1 Month 1 Year
31. 3. Subscription groups are now greatly expanded Subscription Level Duration Gold Service 1 Week 1 Month 1 Year Silver Service 1 Week 1 Month 1 Year Bronze Service 1 Week 1 Month 1 Year
32. 3. Subscription groups now facilitate upgrades Subscription Level Gold Service Silver Service Bronze Service Duration 1 Week 1 Month 1 Year 1 Week 1 Month 1 Year 1 Week 1 Month 1 Year UPGRADE
33. 3. These new groups open up many opportunities for the marketer. Subscription Prices Gold Service Silver Service Bronze Service 1. Much greater flexibility in pricing strategies. 2. Create upgrade paths. 3. A/B test different variants 4. Facilitates upgrades
34. 4. Previously you offered one price that was automatically converted into different currencies. Today USA $9.99 UK £7.49 Australia $13.49
35. 4. Now you can set prices for individual territories. Today iOS10 USA $9.99 $9.99 UK £7.49 £9.99 Australia $13.49 $9.99
36. 4. Now you can set prices for individual territories. Today iOS10 USA $9.99 $9.99 UK £7.49 £9.99 Australia $13.49 $9.99 Benefits: Optimize pricing based on local market conditions Carve out one country to isolate a/b tests (lots of companies pick New Zealand!)
37. 5. You can preserve pricing for your existing subscribers $9.99 $4.99 LAUNCH PRICE 2015 2016
38. 5. You can preserve pricing for your existing subscribers $9.99 POST LAUNCH PRICE $4.99 LAUNCH PRICE Benefits: •  If you want to increase pricing, you can do so only for new subscribers. •  No risk of churning your current paying subscribers. 2015 2016
39. 6. Better handling of price changes and customer retention $9.99 Price B $4.99 Price A Previously when an app publisher changed prices, all existing subs were cancelled. The user then had to manually log-in to iTunes, find the app and plan, and then re-subscribe.
40. 6. Better handling of price changes and customer retention Apple have also made opt-in for new pricing much more frictionless with: - Push notifications - 1-touch opt-in
41. Agenda 1. Review business models for mobile apps. 2. iOS10 changes to auto-renewable subscription models. 3. Profiting from these changes to subscriptions.
42. Instrument your app to track performance 1
43. 43   Lifecycle Analytics Let you target messages at specific users based on time and behaviours FTUE ONBOARD NURTURE
44. Funnel Reports Graphical and tabular formats represent the linear flow through a sequence of selected app events to enable you to identify drop-offs.
45. Swrve keeps an eye on customers - especially new ones 45   All Users Free-Trial Free (<10 Articles) Peaked (>10 Articles) Print Pack 7 Day Pack 5 Day Digital Pack Churned Free Trial Single Issue Purchase Churned Subscribers Track New Customer Engagement & Retention Track important segments Track the impact of nurturing campaigns
46. Know the job - covert users into subscribers 2
47. The problem is most businesses know very little about their app users.
48. Activated Free Trial New 1st App Open Subscriber Post-Paid LTV €129 Disappearing Not seen in two months Track user events Segment in real-time Know users individually Interact personally - At mobile scale
49. Activated Free Trial New 1st App Open Subscriber Post-Paid LTV €129 Disappearing Not seen in two months Track user events Segment in real-time Know users individually Onboarding Re-engage N u r t u r e Interact personally - At mobile scale
50. Optimize onboarding - Activate and convert new users 3
51. USER PAYING SUBSCRIBER THIS IS THE NO1 JOB OFTEN THE BEST TIME IS ON FIRST APP OPEN
52. Days since App Install Apps that optimise onboarding perform better. % of users still active 1 30 60 90 0 20 40 60 10 0 80 7 14 80%+of new users will abandon in 90 days 25% of new users will open your app just once. Apps that optimize new user onboarding better retain, engage, and convert users.
53. 53   THE ONBOARDING TOOLSET Create, deliver and test a range of first-time user experiences that increase the activation of new users. It is the easiest way to grow your app business. Onboard and Activate each new user
54. 54   Welcome Tours •  Create welcome intro to the app •  Change on the fly without having to update on the App Store. •  Video messaging is especially effective. •  Only show what’s mandatory - no long and winding roads. Onboard and Activate each new user
55. 55   Tip-Overlays Tip overlay tutorials delivered to users as they first explore the app. They point out key features right in the context of their use of the app. If international, localise. Onboard and Activate each new user Welcome Tour
56. 56   Ask for Permission Most apps need permissions such as push and location to be effective. Explain to users the value of permissions and lets them make the decision (before calling on the OS). Welcome Tour Tip Tutorials Onboard and Activate each new user
57. 57   Day +1 Messaging In the first days after install, reach out to new users yet to be activated. Welcome Tour Tip Tutorials Permission Requests Onboard and Activate each new user
58. 58   In-App Message If a user hasn’t taken a core action - e.g. account creation - prompt them with in-app messages Welcome Tour Tip Tutorials Permission Requests Push Messaging Onboard and Activate each new user
59. 59   Onboarding Variant 1 Onboarding Variant 2 Iterate, A/B test and rack different onboarding strategies. Funnel Reports track conversion Campaign Reports track outcomes
60. 60   Optimise and prototype native onboarding experiences on- the-fly •  No coding •  No release to the app store •  See impact in real-time •  Exploit time as competitive- advantage Do you have12 months to optimize onboarding?
61. 61   Grew conversions by >49% via one on-boarding message
62. Find upgrade moments - and act in that moment 4
63. NYTimes: countdown, clear buy button
64. Find key upgrade moments: For example, a notes syncing app. The user is on the basic plan, and has just saved their 100th note Behavioural Segmentation
65. In-app messages interacts personally with the user in this moment. One-tap initiates the purchase on iTunes - don’t send the user off to a pricing page to pick their plan. Give them one in-app Interact in the moment
66. Revenue: $78,712 VARIANT A! Revenue: $692,544 VARIANT B! A/B test the right plan
67. Optimize your app’s store. 5
68. It really pays to optimize your in-app store where you present your various plans. iOS10 gives many more options, but displaying less choice usually works out better.
69. A/B testing pricing plans to determine which will generate most revenue
70. Use in-app messaging to target specific users with subscription offers 6
71. PRICE USAGE $1.9 9 $99.99 Mobile -games make most of their profit from ‘whales’ Deliver bespoke plans via in-app message
72. If you have price changes, don’t just rely on Apple to communicate them. 7
73. BEFORE Clearly communicate with affected users before the price change takes effect.
74. Optimal: Sent at the perfect time for each customer based on their unique usage. Personal: Simple things like using peoples name Contextual: Knows what plan Kate is on
75. BEFORE BEFORE Communicating in-app -  deeper explanation -  option to ‘upgrade now’
76. BEFORE BEFORE AFTER
77. If you have a successful international business, it will pay to localize. 8
78. Every time a client localises to the territory of the user, engagement jumps at least 50%.
79. Churn kills subscription businesses. Nurture subscribers, get, and act, on their feedback 8
80. Automate campaigns that increase usage & engagement offline reading increases usage
81. Churn is the No1 enemy of subscription businesses Know why people churn. This one survey saved a publisher $250,000 in churn
82. Message Check in with new subscribers two weeks after first subscription. 60% Happy! 25% Unhappy! 15%!
83. JOURNEY! NEXT BEST ACTION!
84. Review s!
85. survey! sharing! tutorial!
86. The most successful App Store model, auto-renewable subscriptions, is now open to your app. Exploited correctly, it will help build a sustainable and profitable mobile business. Get started now. It hits in two months.
87. BASIC 1Gig. 1 Device. $0.99/mo PLUS 10Gig. 2 Devices $4.99/mo PRO Unlimited storage and devices $9.99/mo PLANS BASIC 1Gig. 1 Device. $0.99/mo PLUS 10Gig. 2 Devices $4.99/mo PRO Unlimited storage and devices $9.99/mo PLANS