As one of the leading publishers in Germany, Funke Mediengruppe focuses on local news, digital, and national magazines. It has a dozen local newspapers operating under a digital subscription model.
In the past 12 months, Funke has almost tripled its digital subscribers and is enjoying a consistent flow of over 120 new subscribers per day for its major publications. Stephan Thurm, CDO of Funke Mediengruppe and CEO of Funke Digital, shared with me the company’s digital subscription journey, its relentless focus on customer lifetime value, and how it got close to subscribers to keep them engaged.
Q: Where do subscriptions live in the priority of Funke’s business model?
A: At Funke Mediengruppe, subscriptions are very much our strategic focus as a business. A digital subscriber to one of our newspapers delivers an 11 times higher revenue per year than someone who reads our free content that’s monetised with advertising. That’s why we are doubling down on transitioning the whole organisation to digital subscriptions.
Q: What role does technology plays in your digital subscription strategy?
A: Technology is fundamental to our subscription strategy. We can try and test things easily, adjust our tactics and react quickly to changing user behaviors.
Q: What kind of results have you had?
A: Our results were more than just encouraging. In the past six months alone, digital subscriptions to our newspapers have grown by 180%.
Q: Can you tell me about your price increase?
A: We, like many publishers, started with low subscription prices in the beginning and realised there was a potential to increase. So, we increased monthly prices by 20% but gave every reader the option to change to an annual subscription that locked them in at the old rate. In parallel, we improved our product by decreasing advertising for subscribers by 70%. That way we only had negligible churn while the price increase was easily accepted by our audience. Because of this, we have earned many yearly subscriptions, as well as mitigated churn.
Q: Why did you turn down the ad volume for those subscribers?
A: We discovered our readers perceived too many ads in their subscribed newspaper as a nuisance. So, we decided to turn this into a product improvement project: We dial down on the ads and you [the consumer] pay a bit more per month for access. In the end, it’s a win-win.
Q: How did you combat churn?
A: We put a lot of emphasis on ensuring a great subscriber onboarding experience and constantly analyse data to understand user behaviour that is behind any potential churn. We also work closely and directly with our readers: focus groups, follow-up interviews, and frankly, a relentless focus on customer service to win back subscribers.
Q: What promotions did you deploy to spur subscriptions and/or reduce churn?
A: Well, we don’t believe in free trials. While we do test various promotions on an ongoing basis, we realised that paid trials are a great growth driver when done correctly. For example, charging even €1 is much better for churn prevention than a free trial. And as mentioned before, we would rather incentivise our readers to sign up for annual subscriptions via preferred rates. This has helped us reduce our churn rate by 50% in the last 12 months.
Q: What metrics do you follow to track retention?
A: At the end of the day, CLTV (customer lifetime value) is the most important KPI for us. It’s the key metric that steers our marketing plan, informs how we develop our subscription product, and optimises our pricing strategy. To know what you’re accomplishing within a reader revenue model, you have to know how much value each customer creates — and how to optimise for that.
That’s why CLTV is so important for us. We’re always working to measure each channel, campaign, trial, or Web site change’s impact on CLTV and continuously deploying incremental adjustments.