CellarTracker Converts 8% of Registered Users to ‘Pay-What-You-Want’ Memberships

CellarTracker offers wine enthusiasts an online database to store, track and update their tasting notes and maintain an inventory of home wine cellars. In

CellarTracker offers wine enthusiasts an online database to store, track and update their tasting notes and maintain an inventory of home wine cellars. In this exclusive Case Study, Founder Eric LeVine talks to us about how this B2C site in generating 7-figure revenues with a freemium model and “pay what you want” subscription program. Find out how the site gets 40,000 — 50,000 unique visits a day, and is converting 8% of its user base into paying subscribers. Plus, discover the one tool CellarTracker is using to prevent site scraping.

Company Profile

Founded: 2003
No. of Sites: 1
Employees: 3 full-time, 2 part-time
Business Model: Mainly subscriptions
Paying Subscribers: 20,000 — 25,000
Location: Seattle
Website: http://www.cellartracker.com/

Target Market

CellarTracker targets wine enthusiasts who like to track what wine they’re buying, the value of their collection, along with any notes about the wine itself, when best to drink it, etc. Users can also maintain a database inventory of their home wine cellars.

Content & Services

CellarTrackers has a freemium model that lets anyone register an account for free to track his/her wine inventory.

LeVine originally started the site out of his own interest in tracking his own collection. He then opened it up to a few friends, and their enthusiasm for the site made him realize that he could have a thriving site by simply allowing others to upload and store their information (LeVine likens the site to “Yelp for wine”). For that reason, CellarTracker can be seen as both a database and SaaS.

 The site has a freemium model, but premium features include the ability to know what your wine collection is worth, as well as the ability to access reviews by content partners to the site (https://www.cellartracker.com/getcontent.asp).

Obviously, as with the case with user-generated content and sites, updates are made daily.

Revenues

CellarTracker generates more than $1 million a year from its pay-what-you-want subscriptions. Subscriptions make about 80% of total revenues, with additional revenues from affiliate marketing (see content partners above), advertising and database licensing.

While subscriptions are “pay-what-you-want,” CellarTracker makes strong recommendations:  

    • $40/year to track up to 499 bottles
    • $80/year to track up to 999 bottles
    • $160/year to track 1,000+ bottles

 

We usually recommend against a subscription site having a “voluntary” subscription price as CellarTracker does because it tends to confuse subscribers and lead to poor conversion and retention rates. But, by creating a table listing paid membership features and recommended pricing, CellarTracker seems to make this model work, which LeVine says allows him to focus on growing a community that would lead to incremental monetization.

LeVine says that about 1/6th of his 120,000 active users are paying something, and a total of 45,109 users have made a payment of some kind since the site started. Payments have ranged from $5 to $1000, with most paying the recommended subscription price (only two people have forked over $1,000).

Note: LeVine had to implement a minimum donation of $5 because some people were charging 25 cents on credit cards, which was not cost-effective from a payment processing standpoint.

Marketing Tactics

LeVine says that most subscribers are acquired through search. He and his team have largely focused on Google search rankings, with a focus on micro-format markups and exposing sitemaps.  For example, when you search for a wine on Google, CellarTracker has mark-ups that convert the site’s 100 point ranking into Google’s five-star ranking system in organic search results. However, at the time we went to press, the star ratings were disabled, illustrating how micro formats aren’t fool-proof and require some monitoring and tweaking along the way.

CellarTracker has also installed Fireblade to prevent scraping from other sites looking to grab CellarTracker’s information for their own purposes.

While LeVine says he’d give himself a B- for his search optimization work, the site does yield 55,000 -60,000 unique visits a day.

SEO efforts are augmented with social media postings through Facebook and Twitter. In addition, the site markets a little through PPC.

Finally, LeVine has been active on wine discussion boards — a great marketing channel if you’re looking to target any type of enthusiast.

Conversion Tactics

CellarTracker requires email registration for anyone wanting to add their collection or tasting notes.

Currently, the site has 300,000 registered accounts; 120,000 active users; and 20,000-25,000 paying subscribers, leading to an 8% conversion rate of total registered accounts to paying subscriber.

When signing up, the site asks users to create a “handle,” or screen name, for login, which is made public for others to see. This is understandable since some people may not want to be identified publicly by their name, but the site also asks returning users to login with this handle instead of an email address, which is counter to best practices for user logins.

After creating an account, the site displays a “reminder” on the right rail to make a voluntary payment with the lowest voluntary subscription price marked as the “Amount Due”:

When a prospect clicks on “Make a Payment” they are shown an appeal:

Please consider a voluntary payment of $40.00
Payments are voluntary and help CellarTracker continue to provide you with excellent service. Most features are free, but some features such as automatic cellar valuation require a minimum payment of $20.00 per year to access.

This is followed by suggested voluntary payments:

The site also sends a friendly on-boarding message to new, free users:

In addition, the site allows users to import spreadsheets, which is a huge timesaver. “We have some specialized tools to squeeze [a user’s] data into a bulk import tool, and match wines in their [inventory] with what’s in ours,” says LeVine. “I don’t charge for it, but I do ask they pay for a year.”

Retention Tactics

CellarTracker will send an email one month before a subscriber’s one-year term is up, and ask them to reconsider renewing.  He states that people tend to pay more when renewing.

However, because the payment is voluntary, LeVine won’t discontinue access to anyone who doesn’t pay. In addition, if a subscriber pays in June when their renewal date was in March, the next year’s “term” will run from June to June.

But most of all, CellarTracker’s biggest retention tactic is the fact that it holds users personal notes and inventory. This is a consumer variant on what in B2B is called “workflow integration,” a highly desirable state when the user has effectively become dependent on your service, and discontinuing your service would mean a wrenching change and disruption.

About Eric LeVine

Eric LeVine was working at Microsoft when he started CellarTracker as a personal hobby to track his own wine collection. He then opened up his database software to two friends, and the response led him to believe others would be interested in the software.

He feels his best tech decision was to choose a unified catalog, where every users’ notes on a bottle of wine were viewable to the entire community instead of privately viewable only to the user. This has created a bit more editorial work, as he has to clean up mistakes (e.g., the wrong year, misspellings) on user-generated data, but the unified catalog has made the service more valuable to all users.

 

 

Vendors & Technology

Hosting: Peer1 Hosting
http://www.peer1.com/

Payment processing: Elavon, Strategic Merchant Solutions, and PayPal Payflow Link
http://www.elavon.com/
http://www.strategicmerchant.com/
https://www.paypal.com/webapps/mpp/referral/paypal-payflow-link

Email management: VerticalResponse
http://www.verticalresponse.com/

Web design: Fell Swoop
http://www.fellswoop.com/

Antiscraping: Fireblade (formerly known as SiteBlackBox)
http://www.fireblade.com/

Insider Analysis

First, we have to commend CellarTracker for creating a very well-designed database. While there’s no fancy bells of whistles, the site is easy to use. In addition, while the site is for enthusiasts., it still solves a “pain point” — i.e., how wine enthusiasts can track their wine and tasting notes efficiently.

We’re also impressed with the site’s use of micro-formats in order to convert its rating system to Google’s, thus making their results pop on a results page. And the site’s 8% conversion rate is impressive!

Which leads to our analysis of pay-what-you-want subscription pricing. This is a tricky and confusing tactic for many subscription sites to adopt. What CellarTracker does it well by creating a soft appeal (thereby not losing any of that community “love) but backing it up with recommended prices. A simple “tip jar” approach would likely be more confusing for users, and tip jars can suggest to some that a one-time payment is sufficient

As for lessons learned, we recommend other sites use email addresses for login credentials instead of handles, as your users will be less likely to forget an email address (and therefore, more likely to login and use your site, which affects retention). We also recommend that CellarTracker add more features only for paying subscribers — this will likely increase its conversion rate, but more importantly, also its retention rate. Currently, it gives away probably 85% of its overall value. The site may also want to consider an email marketing program similar to WritersMarket, given their inventory and the varied interest wine enthusiasts can have.  And finally, we suggest the site allow paying subscribers to opt-in to an option for auto-renew. Since the NPR-like appeal is clearly working for CellarTracker, subscribers may also be willing to automatically renew each year, thus lending a bit more stability to the site’s revenues and profits.

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