Extra Crunch Anniversary: 9 lessons from building a media subscription product

Last year we embarked on a mission to democratize information for startups, and today we are celebrating the one-year anniversary of our membership program, Extra Crunch. 

Since launching Extra Crunch, we’ve published more than 1,000 articles, onboarded a few new hires, overhauled our technical infrastructure, expanded into five new European countries, made a handful of visual design changes, launched an Extra Crunch stage at Disrupt, performed a lot of price testing, adjusted our editorial strategy based on what the Extra Crunch audience wants and announced nearly a dozen annual community perks from partners like DocSend, AWS, Brex, Typeform, Zendesk, and Aircall.

Beyond what you see on the consumer-facing side of Extra Crunch, there’s a lot that happens behind the scenes. Since our product is focused on helping startups, we wanted to share a few learnings from the business side over the past year. Hopefully our tips will help your team make more informed decisions.  

Here are nine tips from building a media subscription product:

  1. Integrate surveys and other feedback mechanisms into everything
  2. Test a variety of different trial offers
  3. Stop rate is a great metric for measuring the width of your marketing funnel 
  4. Be prepared for parallel changes on the editorial side
  5. Top notch customer support is a must
  6. Make sure there’s a way to sign up for the product above the fold
  7. Optimize for retention over revenue
  8. Newsletters are a killer acquisition and retention channel
  9. The “good, better, best” pricing model works

1) Integrate surveys and other feedback mechanisms into everything

From a traditional audience analytics perspective, you typically look at things like page views, unique visitors, frequency of visits, engagement time, page views per visitor, referral sources and average scroll depth. While these metrics have some value for understanding your audience with a subscription product, you won’t get a deeper level of understanding without surveying and hearing directly from customers.

Make sure you integrate surveying into every aspect of your business. When a user signs up, survey. When a user cancels, survey. When a user writes into customer support, talk to them and find out how to make the product better. If you are sending out a newsletter, give users an opportunity to write back and provide feedback. 

There are several technical issues we identified through our surveys that we would not have found otherwise. We also received a ton of great insight into future product developments and editorial initiatives from our customers. Your customers will tell you what to do, but you have to listen and collect feedback. Surveys are the best way to do this. 

2) Test a variety of different trial offers

It’s no secret that trial offers or discounted rates are a great way to incentivize customers to take action and purchase your product. What’s not always intuitive is how must testing you should be doing to find out the best trial options. 

For some products, a free trial might make the most sense. For others, a paid trial could be more effective. For many, no discount at all might be the best approach. You won’t know until you test, and it’s likely going to be different for every product. Don’t assume that what Netflix does for trials makes the most sense for your product. You have to test. 

What we found was that paid trials were the most effective to retain users. Although paid trials brought in fewer new users compared to a free trial, retention for paid trials was much higher and this led to more value in the long run.

We also found some interesting differences with trial offers on a regional basis, so make sure you are doing geographic testing as well. You might not have as much brand awareness in one region versus another, and this could mean you need more lucrative offers in lesser-known locations to get users to try the product. For example, TechCrunch is much more well known in the U.S. compared to Europe, so we had to entice Europeans with a different price point. Don’t assume users in every region will behave the same way.

We’re still testing and adapting our trial strategy — I encourage anyone building a product to do the same.

3) Stop rate is a great metric for measuring the width of your marketing funnel 

Stop rate or exposure rate attempts to better understand how many of your readers are actually offered an opportunity to purchase the product. Another way to put it is, “what percentage of your monthly users are getting ‘stopped’ with a purchase offer?” You might be getting millions of monthly visitors, but if you aren’t presenting them with an opportunity to buy, how can you expect a purchase to occur?

The formula for calculating stop rate is: 

Stop rate = number of users running into an opportunity to purchase/monthly active users

For example, if your site has 5M monthly active users and you are exposing 500,000 users with an opportunity to buy, your stop rate would be 10%. 

Generally speaking, if your stop rate is below 5%, you are likely missing out on an opportunity to convert more users. If you have a low stop rate, you need to identify more ways to increase exposure. For example, increasing article production or adding more touts or touch points throughout your site and homepage could help improve stop rate. Making your meter less flexible or intercepting users with ad blockers on could also help.

For more information on stop rates, including benchmarks, I recommend reading this research from the Shorenstein Center.

If you want to grow your marketing funnel, focus on improving the stop rate.

4) Be prepared for parallel changes on the editorial side

One of your biggest challenges is going to be editorial motivation. The story you tell about how and why your editorial staff would not only agree to suddenly begin writing behind a paywall is just the base level of achievement. Once you’ve gotten them on board with that idea, you then have to get them energized to another level where they are excited by producing work that is ostensibly harder and more expensive from a time perspective than what they’re used to. This is all set on the early-days backdrop of building new readership from scratch that is a subset of your overall audience.

Especially in this early stage, writers can be discouraged by a subscription model because they are used to the dopamine hit of tens or hundreds of thousands of views on an average post and perhaps much more on outliers. Why would a writer want to go from having millions of readers on free articles to having fewer on paid articles? More readers are better for the business, right?

With a subscription model, it’s not about the aggregate number of readers. Nearly always, the kinds of topics and formats that convince users to pay is different than what gets a lot of traffic. A subscription model allows you to focus on a smaller subset of users that are actually much more valuable to your business, but you have to do two major things first:

  1. Make sure that your goals and incentives are appropriate. TechCrunch moved away from pageviews several years ago as a primary goal metric and then eventually away from raw traffic growth. We substituted raw traffic for engagement metrics like read time, time on site and articles per visit instead. This groundwork was essential to being able to tell an honest story internally about what kind of work we were incentivizing.
  2. Empower your writers. The goal setting mentioned above allowed us to tell that unified story — that raw traffic is not vital to our survival, and that they were able to do truly interesting work and be involved in the ground game of building the audience from scratch. If you’re telling them two different stories about the way the site is supposed to work you’ll just breed frustration.

From a topical perspective, a subscription audience is also by definition narrower in interest and scope. If we only focused on what generated the most traffic for TechCrunch, we’d be writing about Star Wars, Elon Musk, Apple, and nothing else nonstop. If we focus on what gets users to pay, we are able to surface valuable insights in niche areas like where VCs are investing in real estate and prop tech. While we might get a handful of casual readers coming to the site to read about Elon’s latest tweets, there’s no relationship or larger value being built and there’s no reason to think the reader will come back in a habitual way. In the case of the niche insights, it’s not something for everyone but it will get a small subset of readers to return to your site.

Why spend all your effort going after millions of readers and get pennies from an advertising page view, when a single user who deeply cares about a topic is willing to open up the wallet and pay you a few bucks?

I run the business side of things, but there are parallel challenges you will encounter on the editorial side. In particular, how you produce content will be different. If you are interested in learning more about the editorial challenges, I encourage you to read TechCrunch Managing Editor Danny Crichton’s feature about the lessons he learned.

5) Top-notch customer support is a must

We have a talented team of customer support representatives here at TechCrunch. We found that high-quality customer support experiences not only make the customer happier, they also lead to improved retention.

You want readers saying positive things about your product and a great way to do that is emphasizing superior customer support. In the day of social media and lightning-fast message exchanges, you’d be surprised at how much goodwill you can generate by making a customer smile.

6) Make sure there’s a way to sign up for the product above the fold

One of the best ways to get users to sign up for your product is to include a call to action at the top of your website. This might sound like a no-brainer, but it was something we overlooked when we first launched.

We added a “Join Extra Crunch” tout on our homepage over the last few months and it’s been one of the best ways to increase exposure about the product and drive purchases. Sometimes the most obvious tactics are the most effective.  

7) Optimize for retention over revenue

Focusing on retention will lead to longer-term gains and a more sustainable business than simply focusing on what drives the most revenue. Looking at retention will also give you a better idea about the viability of your business model.

If you focus too much on revenue over retention, you’ll fail to see whether or not the product is valuable to your subscribers. You want to know what keeps your subscribers engaged, and revenue doesn’t tell the whole picture. A good product sells itself, so optimizing for retention over revenue will also make your marketing efforts more effective. 

Once your retention starts looking good, you’ll know that the product is a winner and you can start thinking about revenue optimizations and ways to scale. You don’t want to waste your time with marketing efforts that drive subscriptions to a product with low retention.    

The opposite of retention is churn. It’s a difference in how many users you are losing (churn) versus how many users you are retaining (retention).

David Pakman from Venrock wrote an amazing feature about churn a few years ago, and I highly recommend giving it a read. By concentrating on churn you’ll be able to better identify if a subscription model is the right model for you. As Pakman notes:

A churn rate of 10% a month effectively means you lose (the equivalent) of all of your customers every 10 months. Those businesses are not sustainable. This is a hard point for some subscription novices to internalize—if you lose all of your customers each year, you do not have a good business.

Fixating on retention or churn over retention will lead to longer term gains and a better understanding of whether or not a subscription model is right for the product. 

8) Newsletters are a killer acquisition and retention channel

Your own website is likely the best acquisition and retention channel, but newsletters can often be a close second. At least that’s what we found. Newsletters create a loop to bring users back to your site and help users more easily discover the articles they care about most. 

Your email is an intimate place. We think of the inbox as the original news feed. It’s more personal and (for the most part) there aren’t algorithms suppressing what you see. If you can get readers intentionally opening your newsletters a few times per week, they are likely going to have more awareness about the breadth of your coverage and come back to your site more often. Because email isn’t algorithmically driven, it will also be empowering to have more control of your message and distribution.

Be warned that building up a large and valuable newsletter audience can take months to years. It’s a long game and you can’t expect success overnight.

We’re fortunate at TechCrunch that we’ve been building up our newsletter lists for years now, and it’s paid major dividends for driving subscription growth and retaining users. The key to that has been developing a strong voice, creating habits and expectations for readers, and making the newsletter easy to join.

You can sign up for the Extra Crunch newsletter without being a Extra Crunch subscriber here (but you won’t be able to read the full versions of the articles without a subscription). 

Newsletters are a great marketing channel because you have more control and they regularly drive users back to your site in an intimate and predictable way. If you haven’t started building a newsletter, now’s the time. 

9) The “good, better, best” pricing model works

The “good, better, best” or “GBB” pricing model involves presenting a user with three pricing options with varied benefits and it’s used by almost every successful company on the planet. You see it in everything from car purchasing and iPhone pricing to the options for grabbing an Uber. Once you learn about it, it will be difficult to unsee. 

The “good” option has the lowest price point and the fewest number of benefits. The “better” option usually has a few more perks compared to the “good” option but for a slightly higher price point. The “best” option is priced the highest, but it has the most benefits. 

By tiering the pricing, you create a scenario where the product can appeal to a wider variety of users with different needs and different price sensitivity. It’s a highly effective tactic to maximize revenue, retention, and appeal of your product. 

We saw a huge lift after we switched to the GBB pricing model. It’s better for the consumer, and it’s better for your business.       

Final thoughts

Although Extra Crunch has already been live for a year, it feels like we’re just getting started. Our focus has and always will be on building a strong relationship with our readers, and we hope you will continue to support us in the years ahead. If you have any tips or ideas on how we can improve Extra Crunch, please contact me at travis@techcrunch.com.

For a limited time, you can also get an annual Extra Crunch subscription for only $99/year. Head here to claim the offer (expires February 29, 2020).