6 Tips to Avoid a “Netflix-Style Backlash” From Price Increases

Everyone’s talking about Netflix’s price increase and the backlash around it. If you’re in the same situation as Netflix and facing rising costs, what can you do to either make an effective price increase or find revenue elsewhere? Subscription Site Insider has the following tips:

  • A/B test price increase: An automatic price increase should be the last line of resort for a subscription site, because it may lower acquisition and retention enough to lower overall revenues. ¬†However, according to A/B pricing tests, sometimes a higher price can help increase subscription conversions. So, it may be possible for to raise a price, just as long as you don’t do it “automatically” and without testing first. You should be watching lifetime value metrics. Perhaps many fewer people will convert to a high price, but their retention rate is so fabulous that your ultimate bottom line is enhanced by the result.If you’re even thinking of an increase, start testing now. You will need a minimum of four to six months of data for month to month accounts. (Our A/B testing video will walk your through seven A/B case studies of subscription sites.)
  • Prep your announcement: If you need to make that price increase, run the increase and wording of the announcement by a group of site fans. (Do you have a member advisory board? Good time to start one.) Talk to a PR firm about image management and have them standing by once the announcement is made. If there is a backlash, respond immediately. (See our special report on pricing.)
  • Ancillary revenue streams: Even if you can’t raise prices, you can certainly make more money per account by selling customers additional products such as ebooks, virtual goods, even branded cruises. You can also raise revenue-per-customer by selling their eyeballs, by renting your snail mail list and/or selling advertising.
  • Referral marketing: Are you currently getting your customers to recommend their friends or colleagues? A referral marketing program – especially at at-birth campaign – can generate 15% of new subscribers at a fraction of the cost of your other acquisition campaigns. (See our on-demand training for referral marketing for subscription sites.)
  • Onboarding testing: Have you A/B tested your “welcome” screen that 100% of your new buyers see when they first purchase? How about the very first email they receive from your site as a new subscriber? Many publishers use ‘defaults’ or generic-looking pages and messages rather than working to make these more powerful. Our research shows that an optimized onboarding campaign can add 10-20% of average lifetime value per account – it’s like a 10-20% price increase without the customer pain! (See our on-demand workshop on onboarding fixes.)
  • Payment processing: Chances are you are losing up to 30% of your potential recurring revenues by using non-optimal processes to charge credit and debit cards for ongoing customers.¬† Fixing this may be unpleasantly technical for some publishers, and definitely requires monthly review and possible adjustments but doing so will add to your bottom line. (See our on-demand workshop with Paul Larsen on lowering your credit card decline rates.)

Have you increased prices or done any price testing? What did you discover?