When you’ve got a passionate community of readers like Tricycle does, you have to tread carefully when it comes to changing your revenue model. We spoke with editor and publisher James Shaheen recently about Tricycle’s decision in 2008 to switch to an online membership model and how it not only slashed the nonprofit’s fundraising burden, but also led to a $200,000 revenue surplus last year. Read on to discover how the site is getting a 10% free-to-paid conversion rate, an 80% retention rate, using focus groups for price testing, and upselling subscribers on events and retreats. This is a great Case Study for any mission-oriented or nonprofit publication that thinks financial sustainability is outside its grasp!
Company Profile
Founded: 1991
Parent company: The Tricycle Foundation, established in 1990 as a 501(c)(3).
No. of Publications: 1
Employees: 6 full-time, 4 part-time
Business Model: Hybrid — subscriptions, advertising, events, retreats, donations
Subscribers: About 24,000 paying members and 40,000 free members
Location: New York, NY
Website: http://www.tricycle.com
Target Audience
Tricycle’s readers tend to be college-educated — nearly half of them have an advanced degree — and middle- to high-income urban dwellers. A particularly large proportion of them reside in the Northeast and the Western US; their median age is between 40 and 50 years old.
As a not-for-profit organization dedicated to presenting Buddhist perspectives to a Western readership, Tricycle’s mission is educational but not partial to any one sect or school of thought. About half of its readers are Buddhist; the other half are “people interested in Buddhist teaching, philosophies or practices — usually meditation,” Shaheen explains. “A lot of people who are Christian or Jewish, for example, find that meditative practices help them reconnect with their religion.”
Content
Tricycle: The Buddhist Review was the first magazine launched in the US with a goal of presenting Buddhist perspectives to a Western readership, and it soon became the leading independent journal of Buddhism in the West. Tricycle has been recognized with the prestigious Folio Award for Best Spiritual Magazine three times and has earned the Utne Media Award twice, most recently in 2013.
Though it began as a subscription-based print magazine and launched its first website in 1995, the Tricycle Foundation decided in 2008 to become an online membership-based organization. That, in turn, meant it “could present a suite of offerings online, and the magazine would be one of many,” Shaheen notes.
Paid content offerings online include the digital edition of Tricycle magazine, Tricycle’s archives and a free-to-download iOS app, through which paying members can download each issue for free. There’s a film club with one feature-length film each month and an assortment of themed eBooks, downloadable to mobile devices or in PDF format.
Tricycle also has “monthly retreats,” which comprise four weekly video talks. The first video is free to view, but the subsequent three require a subscription.
Additional free content includes a series of video profiles of key Buddhist figures, podcasts, and a daily blog.
Tricycle also hosts special events, such as BuddhaFest — an annual festival featuring films, talks, meditation and music, with discounted tickets for paying members — and the annual Buddhist Geeks conference. Paying members can also get live streams and filmed and edited versions of the talks online.
Shaheen attributes subscribers’ willingness to pay to the high quality of the magazine’s content as well as the fact that Tricycle’s monthly video retreats offer contact with Dharma teachers, which can be hard to find in some areas. In addition, the Buddhism-focused monthly film club allows viewers to discover films they might not otherwise encounter.
Video retreats are updated weekly, films and eBooks monthly, and magazine content (i.e., written articles) on a quarterly basis.
A mix of in-house staff and outside contributing writers and editors produces Tricycle’s magazine content. Its blog, similarly, is handled in-house but with invited guests contributing content. Video is made in-house. “We found it is far cheaper than it used to be to have someone in-house producing audio and video rather than someone outside,” Shaheen explained. “More can be done with rich resources in-house than just five years ago — you can do a lot with a little.”
As a result of the growth in its use of rich media, Tricycle is now planning an upgrade to its website so as to better support and organize video content.
In addition to Tricycle’s six full-time staffers, a part-time designer, a freelance photo editor and a part-time production person all contribute to its content. The videographer also heads up Tricycle’s retreats.
Revenue Streams
For the fiscal year ending Sept. 30, 2013, Tricycle’s revenue was $1.6 million. A full 43% of that came from subscriptions ($688,000) while advertising accounted for 22% ($352,000), newsstand sales for 15% ($240,000), and donations 20% ($320,000).
An annual print+digital subscription is $40, discounted to $35 with auto-renewal. Digital-only subscriptions are $35, or $30 with auto-renewal. Subscriptions are offered only on an annual basis so as to keep things as simple as possible, Shaheen says. (Individual print issues are $10 on the newsstand.)
Tricycle has about 24,000 paying members. A full 85% percent choose the print+digital bundle, while 15% are digital-only. About 3,000 print+digital subscribers don’t access any content online, Shaheen says. “In a few weeks we’re going to send those 3,000 a letter asking if they know what they’re missing and telling them how to get it,” he noted.
Prior to switching to its online membership model, an annual Tricycle subscription cost $24. Tricycle also recently cut the discount for auto-renewal from $10 to $5 and increased its per-issue newsstand price from $8 to $10, yet it met with virtually no resistance, Shaheen said.
The publications used focus groups instead of testing to determine consumer readiness for the pricing increase. About 200 people volunteered, and Tricycle asked them questions such as how much they were willing to pay, how often they’d prefer to be billed, etc. “They were surprisingly accurate when it came to how it all played out,” he says. As a result, when the price increase took effect, “nobody seemed to blink.”
Editor’s Note: Focus groups, when conducted well, can be an excellent way to test out consumer attitudes about your product and pricing, especially if you don’t have the traffic or ability to conduct A/B testing. However, information garnered from focus groups should be considered data with its own biases, just like A/B testing results.
As for advertising, Tricycle only accepts ads only from teachers, programs, centers, and businesses whose offerings it believes will support its aims. Donationa help offset this limited advertising pool, previously accounting for 25% of operating revenue. However, with the introduction of online memberships, donations have fell to 7% of organizational support.
Last year, Tricycle actually ended the year with a revenue surplus of close to $200,000.
Marketing Tactics
Tricycle uses a variety of marketing tactics to acquire new subscribers, but focuses heavily on email newsletters and its mobile app for converting subscribers.
Email marketing
Tricycle’s newsletters are one of its most effective marketing tactic (see Conversion Tactics below).
In order to broaden their newsletter’s reach, Tricyle plans to partner with other large organizations, including a large Buddhist publisher, and do a name-for-name exchange whereby Tricycle will send its list of almost 70,000 an email on its partner’s behalf, while the partner will do the same thing with its own, even larger list for Tricycle.
Mobile App
Tricycle’s free-to-dowload mobile app is perhaps its best vehicle for upselling memberships, Shaheen says. While paying Tricycle members can download each issue via the app for free, those who aren’t already paying members can purchase a subscription or pay to download an individual issue via the app.
When the iOS app was first released (an Android version is in the works), about 16,000 people downloaded it in the first six weeks or so. Those new to the community can now also get it through iTunes, and “if they opt in with their email address, we can upsell them,” Shaheen noted.
SEO
As judged by its placement in search results, Tricycle is doing a good job at SEO, ranking first for key terms in Google like “practices for daily life.”
Social Media
Tricycle has growing audiences on Facebook (roughly 50K likes) and Twitter (29.4K followers). The site also engages audiences through Tumblr.
Like most subscription sites, Tricycle has no real sense of how social media helps with acquisitions, although it does help with general brand awareness.
Direct Mail
As a print publication, Tricycle depended heavily on postal direct mail for acquiring new subscribers. When it was selling $24 annual subscriptions with a $17.95 special offer through direct mail, it yielded a net return of 3%, which is impressive.
Since the launch of online memberships, however, the site has moved away from direct mail in favor of the tactics listed above.
Conversion Tactics
Tricycle’s content is free to view, but the site requires email registration to comment. After registration, registered users can opt-in to receive the Daily Dharma newsletter.
Tricycle’s free-to-paid conversion rate is about 10% per year. Their most popular conversion tactic is through their newsletter, which has a mix of free and paid content.
As part of the newsletter, a section called Daily Dharma links to an article that’s free for 48 hours but then goes behind the site’s paywall. That capability is enabled manually on the back end of the site.
In addition, Tricycle does an email campaign at the end of year for gift subscriptions. Basic members also get a monthly email inviting them to upgrade.
Despite an impressive conversion rate, Tricyle’s paywall could use some help. The site would likely see an uptick in conversions if it got rid of all distractions on its conversion page, like its navigation bar and right rail advertising books and other opportunities. Plus they should use a specific paywall reiterating the title of the content the visitor was just trying to view. Also the site tries to make an upsell offer in the middle of the conversion funnel, which is massively distracting, and led us to believe we were done with our order even though we never gave a credit card number.
On the plus side, the site does use a colorful button with engaging copy and a one-column form.
Retention Tactics
Tricycle’s renewal rate is now about 80% thanks to auto-renewal, which is one of the most impressive retention rates we’ve seen for a B2C site. That’s likely because former subscribers who don’t renew get about 11 email invitations to renew over the course of a year — which is a lot, but Shaheen says “there doesn’t seem to be any downside.”
“Often people expire because they’re not paying attention, and one of the nice things about e-renewals is that it’s not expensive to keep changing the reminders — you can tailor them to what’s going on right now, so people get to hear about specifically what they’re missing.”
Tricycle hasn’t yet tested mixing print renewals with e-renewals, but it’s considering reaching out via mail to those whose subscriptions have expired.
Cross-sells and Upsales
Tricycle’s themed eBook anthologies are a particularly popular cross-sell. “We have 20 years of magazine content just sitting there,” he explained. “We found that anthologizing and thematizing it has been very effective.” So popular are the eBooks, Tricycle is considering a $3.99 price tag on top of membership.
Tricycle is also considering trying out direct mail again, albeit in more targeted fashion and focusing on selling the site’s video retreats. “I talk to people who get Tricycle and they’ll say things like, you offer retreats?” Shaheen noted. “We need to be more effective at conveying how much we offer.”
About James Shaheen
Shaheen joined Tricycle in 1996 when “it was a straight print play, like everybody else.” At the time, the general belief at the magazine was that fundraising would always be necessary for its ongoing sustainability, but “the Web has allowed us to cut the fundraising burden to about one-third of what it once was,” he points out.
The biggest surprises for Shaheen have been “that we could become self-sufficient and even run a surplus,” he noted, as well as “the loyalty of our constituents and their willingness to make the transition with us.”
Shaheen advises others in the paid content/online subscription industry to “find a way to connect with a representative group of constituents and ask what they want and what they want you to do. First and foremost, get a sense of what they want, how much they’re willing to pay, and how they like to pay.”
Vendors and Technology
Hosting — Rackspace
http://www.rackspace.com/
Payment processing — Authorize.net and Dharma Merchant Services
http://authorize.net
http://www.dharmamerchantservices.com/
Email management — Amazon Web Services, Constant Contact
http://aws.amazon.com/
http://www.constantcontact.com/index.jsp
Insider Analysis
First, we were really impressed with Tricycle’s 10% conversion rate, 80% retention rate and $1.6 million in revenue. We’ve rarely seen a nonprofit that exceeds so well on the business side of publishing! We attribute their conversion rate to a smart use of newsletters, which have both pithy copy and a mix of free and paid offerings. Their retention rate is impressive not only because of the increase seen after employing auto-renewal, but because of the site’s willingness to email expired subscribers 11 times after lapsing! In addition, we were impressed with the site’s uses of multi-media, breaking out of the text-only mindset most print publications have, and especially its ability to upsell memberships through its mobile app. These are all important marketing lessons that any B2C subscription publication — nonprofit or otherwise — should be looking to copy in some manner.
We would focus most of our recommendations for improvement on the site’s actual paywall. As noted in the Conversion Tactics section, the funnel is rather confusing and there are too many distractions. We would also recommend the site start A/B testing since it seems to have enough volume and traffic; if not with price testing, than with email subject lines, given the popularity of their emails. And finally, we think focusing on video growth, particularly live and streaming video, is a smart move since Tricycle already has brand-recognition in Buddhist enthusiast circles and could easily form its own channel or recurring program to syndicate via other streaming services.
