Katie’s Cards — a subscription eCard company — is the case that proves you can make money from exceptionally high quality content, even in a market flooded with free stuff. The company profits from a mixed business model, selling similar content to consumers through low cost subscriptions and to businesses through high-priced one-off sales. Marketing Manager Racheal Ellis spoke with us about the site’s A/B test results and Facebook integration. Plus, learn why you need to add new online tools — not just new content — to retain subscribers.
Company Profile
Founded: 2005
Employees: 4
Business Model: Hybrid (75% one-off sales, 25% subscriptions)
Paying Subscribers: Undisclosed
Location: Teddington, Middlesex, UK
Websites: http://www.katiescards.com
www.katiescards.com/company
Target Market
KatiesCards.com primarily targets 40- to 60-year-old women in the U.K. Ellis also notes that the eCard market is changing — more young people are becoming interested and postage in the U.K. is increasing by 50%, indicating that the company’s demographic may shift in coming years.
The company’s secondary market is B2B, namely small- to medium-sized businesses looking to buy eCards to send their clients and business contacts around the holidays. Katie’s Cards targets these companies by contacting personal assistants. However, the corporate cards are sold on a one-off basis, not a subscription plan.
Content
Katie’s Cards has more than 200 types of eCards that subscribers can send via email or Facebook (more on that later). The cards celebrate birthdays, anniversaries, and holidays from Christmas to Divali. There are also eCards for engagements, weddings and new baby announcements, as well as recently-added blank notecards. They are also unusually high quality, taking two weeks to a month to complete each card.
The eCards can be static (image and text only) or animated. All the animated eCards are accompanied by music when they are opened. Some of the eCards also include interactive games. All of the cards can be personalized with a custom message.
Unlike most niche publications, Katie’s Cards is able to get paying subscribers because of the diversity and variety in their content, which also allows them to compete against free eCards. Many competitors have a specific style throughout their whole collection. For example, other sites have a humorous/rude style while other styles are artistic but not suitable for grandchildren (like Jacki Lawson). “Our cards are better quality, the animation is high quality, and the range of styles is wide,” says Ellis. “This gives our customers more value for their money.”
The site adds about 20 new eCards a year. Ellis couldn’t reveal the specifics of the company’s design process, but she did say that the company employed a designer who draws out all the backgrounds, characters, design elements, and an animator who uses Flash animation to make everything move and sets it to music. It usually takes two weeks to a month to make each e-card.
B2B eCards have three major content types:
- Existing static and animated eCards available on the consumer side that can be mass emailed to a client’s mailing list.
- Customized eCards using existing art that include a client’s logo, message and URL.
- An entirely new commissioned piece.
(See the revenues section for a more detailed description of B2B offers and pricing.)
For both consumer and business eCards, the site has an number of additional tools:
- The ability to upload multiple contacts to an address book and save them for future use.
- The ability to pre-schedule delivery of an eCard or eCards.
- A Facebook plugin (consumer side only) that lets subscribers send eCards through Facebook to other Facebook friends (i.e., without requiring a friend’s email or posting a link directly on a friend’s page).
Facebook Integration
The site allows visitors to login using their Facebook account. Facebook does not get any cut of profits (the company is not accepting subscriptions through Facebook, which would result in a 30% cut). In addition, Katie’s Cards does receive an email address for each of the visitors who use the Facebook login feature. (Note: This is not a Facebook email, but rather the personal email address the user uses to login to his/her account.)
According to the company’s agreement with Facebook, Katie’s Cards can collect data for marketing (age, interests), but they are not allowed to use anything a customer uploads to Facebook (such as photos or info from posts). Ellis says this allows them to keep in touch with registered users, but it’s been hard to convert the free users to paying subscribers through Facebook.
Revenue Streams
Despite the fact that Katie’s Cards’ primary market is consumers, the company makes 75% of its revenue from one-off B2B sales; B2C subscriptions account for only 25% of revenues.
Ellis explains that this is because the average consumer pays £7 a year for a subscription while the average B2B sale is £400.
The site has various pricing plans (in various currencies) for its B2C subscriptions:
When subscribers sign-up, and auto-renew option is already checked. Subscribers can opt-out of auto-renew by unchecking the box.
Of their various plans, the 3-month and 12-month plans are the most popular, and equally so (i.e., 43% take the 3-month plan, another 43% choose 12-months, and 14% choose 24 months). The company added the 3-month and 24-month plans just before Christmas of last year, and has been surprised how many have taken the 24-month plan.
Across the different locations (implied by the currency in which subscribers pay), 65% of their subscribers are in the U.K., 18% in the U.S., 2% in Canada, 2% in Australia 2%, and 13% from elsewhere.
One-off corporate eCards are priced accordingly:
The animated eCards are the most popular, followed by the customizable ones and then static. The least popular choice is the micro-site option.
Marketing Tactics
Organic search is by far the highest driver of new site traffic. The site competes well on similar terms like birthday e cards, birthday e card, birthday eCards, and birthday eCard. Please note that Google results do vary by geographic location of the user, so people in the U.K. are more likely to come across Katie’s Cards than people searching those terms from the U.S.
The second highest driver of site traffic is direct, mostly caused by people clicking on a link for an eCard they received. This also leads to high conversions.
The third highest traffic driver is PPC, but Ellis says it contributes little in comparison to organic search. The fourth highest is social media, which we discuss in detail below.
Lastly, the company also issues press releases about new tools and social media campaigns via PR Web.
Social Media
Katie’s Cards has a strong presence on multiple social media sites, including Twitter, Pinterest, Facebook, and StumbleUpon.
Ellis says that the site doesn’t worry too much about copyright infringement since all the images that are shared via social media are small and watermarked so people would have to go to great length to copy them. But the site does take precautions by using a service that scans the whole Internet to see who might be sharing their content.
And in fact, the company did discover one blogger who was copying images. However, instead of issuing a cease and desist, the company reached out to the blogger, who was running a crafting site and had 10,000 Facebook likes. The company in effect expanded their word-of-mouth marketing with this diplomatic tactic.
As for engagement on social media, the company is pretty active and has some creative campaigns — such as hosting an annual contest on Facebook, asking participants to design their own Christmas card.
Conversion Tactics
Katie’s Cards has a conversion rate hovering just under 3% of site visitors become paying subscribers.
The site offers 11 free eCards, but the rest require a subscription. Ellis says there was no specific formula for deciding which eCards would be free and which would be premium, but they did decide on the free cards hoping they would be the most popular and go viral. The free cards require an email registration or a Facebook login.
The site does not have a free trial offer, but the company does promote limited-time free trials through Facebook, in exchange for a like. Trial-takers are required to send an email to offer1(at)katiescards(dot)com, and will then be sent a log in and details with instructions.
Note: Unlike other sites, free trials can actually be detrimental for eCard sites. People often use eCards once a year, so a limited number of sample cards often work better for luring new prospects than free trials.
The company also has a free newsletter that free users can register to receive. Subscribers are automatically opted-in to the free newsletter.
The site recently ran an A/B test to see how a different homepage design may affect conversions (the test samples are available in our Marketing Samples section). The original homepage had a big picture of the site’s founder, Katie Davis. The site tested two versions without her image, each highlighting the brand and benefits of subscription.
The original homepage had a conversion rate of 1.47%. “Homepage 1” had a 0.82% conversion rate, while “Homepage 2” had a 2.75% conversion rate, increasing the site’s overall conversion rate by nearly 50%. The company ran the test for four months to make sure their response rates weren’t due to seasonal factors.
Retention Tactics
The company makes a conscientious effort to extend account lifetimes by adding new features to the site, the most important of which have been described in the Content section. The site also has a box listing upcoming holidays — a great way to get returning users to see the year-long value of the service, even if they can’t remember anyone’s birthday.
Katie’s Cards also sends out two renewal emails — the first, two weeks before a subscriber may lapse, and the second notice two weeks after the lapse. The first notice has a discount offer, but the second doesn’t. The site will then send occasional emails after an account lapses in order to try to recover the account. And every past subscriber continues to get the company’s newsletters, even after the account lapses.
Cross-Sells and Upsells
As we mentioned earlier, the company makes the bulk of its revenue from one-off B2B sales, particularly around the holidays.
The company markets to small and medium sized companies by renting external emails lists of chief executives and directors at a wide range of companies — everything from law firms to car makers. The site is also working on building an internal list with the names and contact information of personal assistants, since these are the individuals at companies who screen and initiate the corporate holiday card purchase and help directors/executives make the final decision.
The company offers early-bird Christmas specials to entice new orders. Most orders are from in-bound Web inquiries or phone calls and handled by in-house staff.
About Racheal Ellis
Ellis got her start in subscription marketing after university when she joined a newsletter publisher. She later worked in book publishing and then for a disability organization. She came to Katie’s Cards because the company was looking for someone who could retain more subscribers.
Ellis says she’s still shocked by counter-intuitive results, like customers choosing the most expensive pricing. And she’s passionate about retention. “Naively, when I first started, I didn’t realize it costs more money to acquire a customer than to retain them. Once I realized that, I realized how important it is to retain customers.”
Vendors & Technology
Hosting, Web development & FB app development — Webigence
http://www.webigence.com/
Payment processing — Paypal and Paypoint
https://www.paypal.com/home
http://www.paypoint.co.uk/
Email management — MaxBulk Mailer
http://maxbulkmailer.com/
Consultants/Freelancers — Fernande Valverde
Analytics — Google Analytics
http://www.google.com/analytics/
Free social profiling –Netvibes
http://www.netvibes.com/en
Press Release Distribution — PRweb
http://www.prweb.com/
Subscription Site Insider Analysis
It’s rare to see a small company succeeding in a market flush with free content and bigger name competitors, but Katie’s Cards seems able to do so by remaining flexible in their business strategy. While the site originally started as a B2C subscription service, we’re impressed with the company’s ability to tap into B2B one-off sales and let a secondary market contribute 75% of their annual revenues. It’s definitely a unique model that allows the creative company to pursue its artistic passion while remaining financially sound. We also love that they’re A/B testing. Other sites like American Greetings saw large gains in their sales when they ran tests, so Katie’s Cards should continue to test as many aspects of the site as it can.
There are a few areas for improvement. One, the site should consider cross-selling their business cards to their consumer list — perhaps a promotion to their B2C subscribers for a free month if their company uses Katie’s Cards for the holidays? And while it’s understandable that such a creative company would want to focus on creating artistic B2C cards that go viral, hiring staff during the holidays to focus on executing B2B sales would give the company money to focus on its passion the rest of the year. They may also want to explore other ecommerce services that can integrate with theirs — like selling flowers, balloons, chocolates and other deliverable items. These sorts of sales have worked well for other eCards sites, and Katie’s Cards could explore partnering with other independent sellers instead of major retailers — sort of like an Etsy model for the occasion gift industry.
