A product sense study
This cute little exercise explores the possibilities of offering coupons into the auto renewal of a mobile (iOS) app.
The task:
Coupons and auto renewals - Lay of the land:
Core assumption: The Compass app offers two main types of auto-renewable subscriptions
Subscription models | Features | Goals |
Feature-based |
| encourage users to upgrade their subscription plans for enhanced functionality |
Time-based | Includes options for a trial period with full functionality, and monthly or annual subscriptions. | encourage users to extend their commitment to the service, increasing engagement over time, reducing churn. |
North Star Metric
Customer Lifetime Value (CLV). This metric is influenced by several KPIs including:
Average Annual Recurring Revenue (ARR)
Churn
Customer Acquisition Cost (CAC).
These indicators help us focus on maximizing the value derived from each user over their lifetime with the app.
Feature and business Goals
1. Reducing Churn
Encourage transitions from monthly ➔ annual subscriptions
Re-engaging with lapsed users.
2. Increasing ARPU
Encourage transitions from Starter to Premium subscriptions
Encourage transition from trial and free ➔ paid tiers
3. Reducing CAC
Allow users to invite friends to expand the user base
Lower cost of acquisition
4. Increasing stickiness
Allow users to invite friends to expand the user base
Increase network effect
Target Personas by Plan types
All personas have the app installed on their iPhone, which enables in-app notifications.
Plan type | Plan | Renewal cycle | Payment cycle |
Feature based | Premium | Annual | Monthly |
Starter plan | Annual | Monthly | |
Time based | Annual subscribers | Annual | Annually |
Monthly subscribers | Annual | Monthly | |
Free and trial | Trial users | Downgrades | - |
Free users | Monthly | - |
Coupon Types
The coupon mechanism works towards increase of the CLV north star metric of auto-renewals, and the trailing metrics mentioned above. It is designed to offer:
Upgrade coupons Aimed at existing subscribers, these coupons induce plan upgrade or extended duration, offering discounts pricing over and above listed pricing. These coupons will be shown before and during renewal
Re-engagement Discount Coupons: Aimed at churning subscribers, these coupons offer a discount for renewal. These coupon will be sent via email once renewal stops (not shown here).
Referral Coupons: These offer existing users various perks when they successfully refer new customers to the app. These coupons will be shown periodically, irrespective of renewal.
Coupon Timing and Flow
Timing rationale
Auto-renewal notice is communicated to all subscribers, monthly or annual plans, two weeks prior to renewal date.
Currently, this messages does not contain a call to action, leaving default behavior to “do nothing”.
It is, however, our primary opportunity to induce users to increase their involvement with our app - upgrade their plans, sign to longer subscription period.
We might also send users seasonal promotional messages via eMail and over social networks (omitted from this analysis for simplicity).
Finally, we may introduce a call to invite friends to the app, which will be triggered by preset actions, within the context of the app (for example: “Find friends around you”)
Coupon notification
Standard flow, StoreKit1 Once a coupon is activated, users are directed to the pricing page, where purchase options are displayed. On activation, they are directed to the payment page.
Shortened StoreKit2 flow Combined plan selection and payment reduce friction and presumably increases conversion, building on the trust in Apple’s payment mechanism.
Upgrade: In-app Coupon
The flow for in-app upgrade coupon pops up two weeks prior to renewal date (annual) or when the application opens the first time after renewal (monthly).
Presented: 3 types of upgrades possible, with different wording to the urgency section:
Re-engagement Discount in-app coupon
This coupon pops when users open the app past their subscription lapse.
(eMail scenario not shown):
Plans and pricing page (for time-based plans)
The ‘Plans and Pricing’ page is where the coupon leads
Most relevant plan shown on top
For Free user, show Monthly subscription
For Monthly subscriber, show Annual plan
For Annual subscriber, show bi-annual plan
Free plan is shown below the fold
Plans and pricing page (for feature-based plans)
The ‘Plans and Pricing’ page is where the coupon leads
Most actionable plan shown on top
For Starter plan user, suggest premium subscription
Show (expired) trial and free plans below the fold
Thanks and Expand - Post purchase flow
Referral Coupon sequence is shown, from left to right:
Existing user CTA (start)
Existing user invitee list (2nd)
Receiving user accept and invite
Invite acceptance confirmation (In-app Coupon flow - confirmation)
Appears on inviters’ screen when invite accepts and successfully installs app.
Offer to initiate communication
Coupon Mechanism - Metrics
Paid (upgrade and re-engagement) coupon funnel
Impression (app screen / email)
1st engagement: Moving to the plans and pricing page
2nd engagement: Starting redeeming flow
3rd engagement: Payment success
Referral coupon analytics funnel
Impression (app screen / email)
1st engagement: Invitee detail form
2nd engagement: Invite acceptance
3rd engagement: Confirmation message
Impact of Apple's StoreKit2: Shortened flow increases conversion
This is the expected result, due to the friction every step in the funnel adds
Do the switch to enjoy
Shorter development ✅
Increased conversion 🤔 But… by how much? Shown here are expected, speculative numbers. Need to experiment...
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