New data shows how contract length drives retention and subscriber lifetime value

By Greg Piechota

INMA

Oxford, United Kingdom

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Subscribers on annual plans retain at double the rates of subscribers on monthly plans, and the gap widens over time, found Piano.

By the third year, an average annual subscription is 60% more valuable than an average monthly subscription. 

Katelyn Belyus, vice president/strategy and analytics at Piano, presented the results of five years of observations involving 400+ clients in February at the recent INMA Media Subscription Summit in New York.

The findings highlight the significant impact of contract length on retention and lifetime value in the news media industry. 

Executives can leverage the insights to optimise their strategy — focus on acquiring and retaining annual subscribers by making annual offers more prominent and attractive (e.g., discounted vs. monthly offers).

Executives might also use the figures mentioned in this article for benchmarking, revenue forecasting, and budgeting.

Annual vs. monthly retention rates

Out of newly acquired subscribers, after the first year a median client of Piano retains 70% of those on annual contracts and 34% of those on monthly contracts.

After the second year, the gap grows — a median publisher retains 52% of annual customers and 22% of monthly customers. 

After the third year, the gap almost triples — a median site retains 40% of annual subscribers and only 15% of monthly subscribers.

As a result, an average three-year lifetime value for an annual subscriber is 60% higher than for a monthly subscriber: US$154 vs. US$96.

Comparison to the INMA benchmarks

Piano clients’ benchmarks ring true, as the values are similar to the INMA Subscription Benchmarks, which are based on data volunteered by 234 news brands worldwide.

The median survival rate after the first three years of a digital-only subscription stands at 18.5% industry-wide. This is a retention rate modelled based on average monthly churn rates in 4Q 2023. 

The best 25% brands retain at least 42% subscribers after three years.

The median three-year average digital-only subscription lifetime value was US$162, and that was modelled based on average monthly revenue per subscription and adjusted for the differences in purchasing power between countries. 

The best 25% saw a lifetime value of at least US$224.

Previous research by Northwestern University in the United States found regularity of consumption is the best predictor for retention.

Several factors may contribute to the differences in retention rates between annual and monthly subscribers, including pre-purchase awareness and commitment, individual price sensitivity, and onboarding activities.

Interested in benchmarking with INMA? Watch my presentation and e-mail me to schedule a private demonstration.

Greg’s Readers First newsletter is a public face of a revenue and media subscriptions initiative by INMA, outlined here. INMA members can subscribe here.

About Greg Piechota

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