NewsBeat

February 2023 NewsBeat 6 Subscription marketing analytics should start small, involve humans By GREG PIECHOTA "As media companies change their business model from mass-distributed goods to services, they need to measure the value of individual customer relationships." M apping the customer journey, tracking lifetime value, personaliz- ing offers, and balancing data and human judgment are the table stakes in subscription marketing analytics, said Pro- fessor Przemyslaw Jeziorski of the Univer- sity of California/Berkeley in an interview with INMA. As data became increasingly important to understand news media subscribers and improve profitability, Jeziorski urged me- dia companies to start small. At a recent quarterly meet-up, he told executives of 160 news brands benchmark- ing with INMA: "Data collection is easy and cheap, so many companies build lakes and fill them with trash. The problem with this is that data retrieval and analysis is costly." He recommended marketers start with the data they already have and plan analy- ses based on the customer lifecycle, which includes an acquisition stage, development stage, and retention stage. While everybody is excited about data lakes, machine learning algorithms, and real-time analytics, you can actually do the key analyses in Excel. Map the customer journey To effectively use data, advised Jezior- ski, it's important to map the customer journey, understand how people make de- cisions at each stage, and start using data to tailor products and offers to individual customers. "I would start with retention analytics and identifying customers at risk of leav- ing," Jeziorski said, explaining his reason- ing: Most likely you already have all the data you need, such as each subscriber's trans- actional history and insight about her Web and app reading. The mathematics of predicting who is at risk of churning is simple because there are only two possible outcomes: a reader retains or does not. The project is cheap because you can run a basic logistic regression algorithm even in Excel. The insight can be easily applied to busi- ness: Send a discounted retention offer to a subset of at-risk subscribers, and measure a difference in retention rate vs. a group that has not received a discount. Track customer lifetime value "As media companies change their busi- ness model from mass-distributed goods to services, they need to measure the value of individual customer relationships," Jezior- ski said. Lifetime value is a simple mathematical model that gives companies one number to summarize the profitability of a customer and compare it to acquisition costs. It takes into account things like churn rate. "Let's say your average customer lifetime value is lower than your acquisition cost. Why is it?" asked Jeziorski as he considered possibilities: "Is it because you are spend- ing too much on promotion, charging too little for the subscription, or people are churning too quickly?" By calculating lifetime value, companies can do back-of-the-envelope scenarios to understand the potential impact of chang- es, such as a decrease in churn rate: "How much would lifetime value increase if we cut our churn rate by half?" Lifetime value can be calculated for any customer, including old and new custom- ers, and can be used to make decisions about investments in marketing, product, or data analytics. Personalize offers In digital subscriptions, there are various paywall models that target potential sub- scribers based on criteria such as Web site usage or content type. However, targeting can also be based on individual motivations and preferences. "Let's take a complex product such as The Wall Street Journal that delivers all sorts of benefits to different people. Some sign up for the latest news. Some others want to support quality journalism. Think of these two benefits as two products," Jeziorski said. Applying predictive modelling, we could not only decide whom to target with our ac- quisition or retention offer but also which benefit to highlight to whom. These offers can convert at higher rates than traditional one-size-fits-all messages. "Another benefit of personalization is reducing waste of customers' attention. Although the monetary cost of sending e-mails is low, the mental cost for the recipients remains high, and people who receive irrelevant offers might ignore them altogether." Personalized prices can also be effec- tive in increasing customer lifetime value. Many publishers differentiate introductory discounts or retention prices depending on customer behavior (e.g., the lower engage- ment, the lower price). Jeziorski warned publishers to consider the potential negative effects on customer trust and perceptions of fairness. For Jeziorski, data analytics is a support system rather than a decision maker. "Data is helpful at making small deci- sions, but human judgment is necessary for strategic decisions and decisions where we face the unknown," he added. This article was first publishing by the In- ternational News Media Association (INMA).

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