Top strategies for growing new revenue from existing subscribers
4 Minute Read
The consumption of media has changed significantly in recent years. Where older generations grew up listening to the radio, reading newspapers and magazines, and occasionally watching television, today media is dominated by digital and on-demand. Even print media has had to adapt, making their content available online in order to remain relevant and connected to their subscribers.
Initially, as digital media started to trend, it created a huge growth opportunity for traditional media outlets to grow their reach and subscriber base. But now the challenge is that digital media is becoming saturated. There is only so much capacity for new subscribers globally and competition is fierce. Media outlets are finding it increasingly difficult to grow revenue through traditional subscriber models and are looking to e-commerce as an alternative.
This article explores why this is, why winning in e-commerce isn’t any easier, as well as the role that customer experience and optimization have to play in growing revenue from existing subscribers.
Why media has lost control to subscribers
In this digital space, traditional media brands find themselves competing against bloggers, social media, podcasts and video for the attention of subscribers and they’re finding that their brand and reputation has limited reach and impact. Younger subscribers especially are more interested in what’s new and trending, embracing disruptive technologies, the convenience of mobile viewing and favoring user generated content.
Even market leaders such as Netflix which disrupted the TV industry with video on-demand are experiencing difficulty in attracting and retaining subscribers. While a subscriber base of 220 million in North America may sound impressive, in reality this reflects a loss of almost 1.3 million subscribers in the last quarter of 2022. After years of steady and sometimes exponential growth, the number of subscribers is starting to decline. Recent announcements to charge for password sharing indicate that Netflix is looking for ways to make up for this loss. They’re not the only media outlet facing these and similar challenges.
Consumers are spoilt for choice in terms of the types and variety of content and loyalty isn’t easily won. A growing trend among younger media consumers is to abandon subscriptions if they find the content no longer relevant or price increases unaffordable. Customer retention is proving to be as challenging as customer acquisition. Even established media brands are faced with the need to create compelling reasons for consumers to continue to spend with them.
Is e-commerce media’s best alternative to grow revenue?
At first glance there’s a compelling case to enter the e-commerce game. Today’s consumers are digitally savvy, with even older generations now accustomed to shopping online. By the end of 2021, revenue from e-commerce was estimated at US$4,9 trillion with growth projected to reach more than US$7 trillion by 2025. The number of people shopping online has also increased and is estimated to reach more than 290 million in the USA alone by 2025.
These statistics suggest that the growth potential in e-commerce is far from saturated. It would also explain why e-commerce appears to be an attractive avenue for new revenue streams. Additionally, many major brands started marketing direct to customer (DTC) during the pandemic as traditional retail outlets became constrained in their ability to trade. For most brands it proved to be a highly successful strategy to retain customer loyalty and grow revenue.
This last reason is perhaps the most compelling. A strong brand is perceived to have an advantage over new entrants and startups which should make a successful transition to e-commerce easier. Except that media brands are finding it’s not that simple.
3 Major e-commerce challenges:
High Competition: E-commerce continues to grow but it is also highly competitive. At the end of 2019 there were 3,6 million e-commerce sites in the USA. In 2020, this almost doubled to 6,6 million. Currently, in 2022 there are 10,4 million e-commerce sites. Even established brands are finding it hard to attract and engage consumers because they’re fatigued at being bombarded with marketing messages—most of which they find irrelevant.
High Consumer Expectations: Leaders in e-commerce set the bar high from the start, offering benefits such as same-day delivery, free returns, loyalty program perks and personalized recommendations. Consumers expect e-commerce to be easy and convenient and the smallest point of friction is often enough for them to churn.
Low Conversions: In e-commerce conversion rates are just 1.53% and declining compared to 2021 figures. This indicates that despite an abundance of choice and competitive pricing on e-commerce channels, it’s not enough to convince and convert. Brands and retailers are spending a significant amount on attracting visitors to their e-commerce sites only to lose them at different touchpoints in the customer journey.
According to analysts the key to e-commerce success is a differentiating customer experience (CX). However, CX is a moving target, always evolving according to changing consumer preferences and needs as well as marketplace and competitor influence. To be successful an e-commerce CX strategy needs to be agile, able to respond to changing consumer dynamics with relevant information and offers in real time.
How to compete in e-commerce with experience optimization:
Experience optimization aims to build better connections with visitors at every touchpoint in the customer journey by learning from how they navigate through an e-commerce site. The process is powered by AI-driven experimentation, presenting unique experiences made up of different ideas and variables to see which visitors respond to. Low performing ideas can be paused so that traffic is optimized towards the top performing ideas to generate more lift. Plus new ideas can be added mid-experiment to improve the performance of the top ideas even more.
Optimization starts from when a visitor first clicks on an advert that takes them to a landing page. Depending on the desired outcomes, experience optimization can target a specific element of the customer journey such as the product detail page (PDP) or checkout. This can align to a strategy to improve conversion rates, reduce shopping cart abandonment, increase average order value (AOV), increase subscription sign ups or renewals, or customer lifetime value (CLV).
Experience optimization becomes even more effective when applied to existing subscribers or customers. Pairing data from past engagements with how they’re currently navigating the site creates opportunities to serve more personalized experiences. It’s a way to delight customers and ease them further along the customer journey by making the e-commerce experience relevant and effortless.
As e-commerce continues to grow, serving up relevant and personalized customer experiences is likely to remain a high priority. For media brands AI-driven experience optimization provides a way to experiment with thousands of ideas to discover what consumers find relevant. Even as this changes over time, AI-driven experimentation and personalization can continually serve relevant and engaging experiences which lead to higher conversions and other desired outcomes.
Competing in e-commerce requires a clear customer centric strategy that’s empowered by technologies able to keep pace with change. It makes leveraging existing subscribers to grow new revenue streams a reality.