Delving into the latest insights from Adapty’s “State of In-App Subscriptions in the US 2023” report has triggered some intriguing reflections in mobile app marketing, particularly within the sphere of subscription-based apps.
As we explore these insights, it becomes evident that the landscape is evolving in ways that necessitate innovative strategies.
1. Setting the Scene
The Subscription Frontier – the United States emerges as a powerhouse, claiming a 51% share of the mobile app subscription monetization market.
A striking observation lies in the upward trajectory of subscription prices, especially the remarkable 43% YoY surge in subscription costs between January 2022 and June 2023. This surge could be attributed to inflation, escalated user acquisition costs, tech expenditures, and a noteworthy uptick in subscriber churn rates.
2. Churn and Retention Reimagined
Metrics paint a telling tale, with weekly and monthly subscribers experiencing dwindling retention rates. Intriguingly, the relationship between price and churn rate unveils a paradox – the higher the price, the steeper the churn.
Diving deeper, we find weekly subscribers wield a higher lifetime value (LTV) than their monthly counterparts, while annual subscribers reign supreme in LTV after a year.
3. Unraveling the Puzzle
The Trial Conundrum Scrutinizing trial user behavior casts a shadow of concern. Q1-Q2 of 2023 witnessed a troubling spike in trial user churn. A more worrisome trend underscores a dip in trial-to-paid conversion rates across varying price segments.
4. Decoding Trials
Examining trial user behavior uncovers concerns. Q1-Q2 2023 witnessed a worrying surge in trial user churn. Implications for advertisers and developers: these observations unravel a complex web where retention dwindles as subscription costs escalate, striving to match acquisition expenditures.
This dynamic is not sustainable, as it risks escalating churn rates. So, where do we go from here?
5. Strategies for Success
What does this mean for advertisers and app developers? We’re in a vicious cycle where the retention of subscribers is lowering, and the subscription prices are increasing so that the LTV can be aligned with the acquisition cost.
But this can’t go on forever. Otherwise, more and more users will churn. So, in this landscape, where retention falters as subscription costs soar, strategic adaptations are imperative:
- Create an amazing product that a user doesn’t want to leave, a product that solves a problem for the user, or that brings an advantage to their lives. Basically, a product that the user wants to pay for.
- Focus on a fantastic onboarding experience. With this trend of decreasing conversion rates, onboarding is more than ever crucial to increasing the trial start rate. At the same time, try not to overpromise in your trial. Otherwise, the conversion to paid will drop.
- Master your retention activities: mobile CRM can be beneficial in convincing the users to stay. Also, delivering special offers to those who intend to leave can be substantial. The more the CRMs are personalized, the more effective they are.
- Try to push more for the annual subscription. Annual subscribers’ LTV is still the highest and grants app developers an immediate influx of cash that can be re-invested in paid UA activities and product development. Lifetime subscriptions are becoming increasingly popular, but in this case, you need to calculate your users’ LTV.
- Work on “free” subscribers. Referral programs can be a great way to get “free” subscribers and decrease the acquisition cost. Just ask your best users to refer their friends and offer a reward. Don’t forget that happy customers can be the best promoters of your app; they just need a little nudge to do it.
- Work on the free users, the ones that never paid or never started a trial. Ask yourself if they knew they had a free trial (yes, we see this kind of thing, too).
- Keep working on lowering the acquisition costs along the funnel – when the churn is so high down the funnel, the more quality users you bring in, the more chances you have. Every step of the funnel can be optimized, from the CTR to the install rate and, of course, the post-install events conversion rates.
- Interview your paying customers and your non-paying customers. First is to understand what they love about your product so that you can use it in your ads and in-app communication. The second one is to identify possible pitfalls in your product and correct them. Every insight you get can be precious to improve the product and enhance your advertising game. If you understand the users’ point of view and translate it into your ads, chances are that your marketing campaigns will perform much better.
State of In-App Subscriptions 2023 Summarized
The ultimate vision of success pivots on holistic thinking.
Amidst the evolving mobile app marketing and subscription model landscape, meld data-driven insights with user-centric strategies. Through product excellence, enriched user experiences, and sustainable growth, we can break free from the churn cycle and shape a prosperous future.
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Are you interested in improving your overall app marketing strategy? Get in touch with our team of experts and see how we can help.