CEO at Econsultancy
21 March 2003 18:13pm
For anyone interested in how we went about deciding what to charge for and how much as part of our subscription service, we've written up the following case study which we'll update with real results soon:
e-consultancy was founded in 1999 by twice best-selling internet author Ashley Friedlein, and Matthew O’Riordan, with the aim of becoming the UK’s leading source of high quality e-business information and advice. From the outset, the belief was that if this resource could help provide users with access to just the right information and advice at the point when they really needed it, from the comfort of their own desktop, then this would be something worth paying for.
Firstly, however, it was necessary to build critical mass in registered users, quality content and establish a brand. Without these in place, it would be difficult to make any subscription-based business model work. So for three years e-consultancy was financed by the founders’ consulting work. The site had no revenue streams and was free to use, though access to premium content required registration.
By 2002 e-consultancy had over 8,000 registered users and over 20,000 pages of content, much of it unique, like the directory of e-business white papers and reports, or the “UK New Media Agencies and Consultants Directory”, the largest of its kind with almost 2,500 companies listed. The required critical mass had been achieved but how would e-consultancy convert registered users to paying subscribers? What should the subscription proposition be and how should it be priced?
In order to refine the subscription proposition, e-consultancy took a two-pronged approach:
1. Evaluate the market and competition
2. Get feedback from potential target subscribers as well as from peers who had experience of selling subscriptions to online business information
1. Evaluate the market and competition
The competition ranged from the much bigger information brokers, such as Factiva, to the trade publishers’ online services, principally Centaur’s mad.co.uk and Haymarket’s brandrepublic.com, to content produced by consultancies such as McKinsey, to large portals such as Clickz.com, to analyst organisations like Forrester, Datamonitor and Ovum. Pricing for these various services ranges from free to tens of thousands of pounds.
It was clear from the research that in order to differentiate, e-consultancy needed to focus on the following:
• Keep a UK and e-business focus to stand apart from the US mega-portals or the broader IT agendas of many of the consultancies and analysts
• Find the high value, niche content providers who are too small for the bigger players to deal with
• Concentrate on practical, ‘how to do your job better’ information and advice as opposed to the more news-driven focus of the trade publishers
• Provide an offline component to the offering, be it the ability to create files for download and offline printing and use, or the opportunity to meet people face to face
2. Get feedback from potential target subscribers
e-consultancy created a feedback panel of eight potential subscribers representing a cross-section of the user base in terms of job position, company type and loyalty to the e-consultancy site. Research was then carried out, by phone, by e-mail and face-to-face, to test variations on the subscription proposition. Some of the variables investigated included:
• Should it be ‘subscription’ or ‘membership’?
• Should there be corporate and individual versions?
• How important are offline events for converting subscribers?
• Was the value in a package or in one ‘killer’ piece of content?
• Should there be free trial periods?
• Should there be only annual subscriptions or shorter versions?
As a result of this research, the following was concluded:
• There should be an ‘individual subscription’ option as well as ‘corporate membership’. The ‘membership’ is about an ongoing face-to-face relationship and access to people, so is more ‘touchy feely’, whereas the ‘subscription’ is much more of an information product.
• Both individuals and corporates bought into a package of value but each had different ‘killer’ reasons to pay: for the individuals it was access to free premium reports (e.g. a 140 page report on content management) and cheaper access to aggregated paid-for content whereas for the corporates it was primarily attendance at e-consultancy roundtable events for knowledge sharing and business development purposes.
• Individuals were much more price sensitive and wanted a low ‘trial’ level entry price for 3 months, whereas corporates were much less price sensitive as long as membership was under £1,000 as this kept it within management’s discretionary spend level.
• Pricing was fixed at £49 for 3 months, or £99 for a year, for individual subscribers, and £875 per annum for corporate members.
Further discussions with peers, including Marketingsherpa and netimperative, who had experience of selling subscriptions online, helped refine thinking around payment options, not giving free trials, what should be on the ‘challenge’ page when users are asked to pay, how to manage the transition to paid content and so on.
All the research was fed into a business plan which allowed e-consultancy to raise six-figure private funding to invest in the subscription push. The majority of the money was allocated to licensing content from selected partners, most of it already pay-access, and the marketing budget.
At the time of writing e-consultancy has just launched the paid-for service so watch this space for an update on the success of the subscription push.
Marketing Consultant at Email Marketing Solutions
23 March 2003 20:52pm
I would imagine that the bulk of people that are going to convert, will pay within the first couple of months, with a few "stragglers" each month thereafter.
Although I am a paying subscriber (the subscription fee is definitely worth it), I feel that all the benefits of paid subscription/membership are not clear to potential subscribers.
Have you considered a model where access is only to paying subscribers? Obviously you may lose a significant portion of your user base if this was the case, but at the end of the day, are the freebie-seekers really your target market??
It will be interesting to see how many "free" subscribers convert to a paid subscription over the next couple of months and I look forward to hearing your progress.
Best of luck too! :)
Chief Marketing Officer at Wordtracker.com
24 March 2003 13:02pm
Thanks for sharing your thoughts on a paid subscription model. This open sharing of information is typical of e-consultancy and is what makes it such a useful site. I, like many others, perhaps spent too long as an observer and have only really become active on the site over the last six months.
I had no hesitation in signing up for a subscription because of:
(i) The quality of both speakers and attendees at the roundtable sessions is exceptional - Mike Grehan and Jim Sterne on the same day - very impressive.
(ii) The quality of material on the site forums and the access to really useful reports from Net Imperative and Marketing Sherpa.
(iii) The opportunity to publish my own white paper. e-consultancy.com got Linking Matters off to a terrific start.
But the most important aspects of the site are the forums and the ability to take part in and start discussions - something that not enough people yet do. This facility alone gives people the opportunity - and the responsibility - to gain value from their subscription by putting something in and taking part.
24 March 2003 18:16pm
Thanks for this feedback. That's 2 happy subscribers at least ;)
So far we have found people are subscribing in dribs and drabs - about 3 a day at the moment. Not surprisingly people are not paying just for the sake of it, they are waiting until they really need the information and only then actually paying. Pitches and presentations to the boss are classic points of need.
We're actually making great strides on the Corporate Membership - Orange, BT, Warner Bros, Teletext, MTV etc. These come predominantly out of our roundtables which are very popular.
Some of the things we're looking at to improve the offering and our conversion rates for individual subscribers are:
- Bringing down the subscription barrier much earlier - as Russell suggests we are considering whether to go much more exclusive. This has obvious downsides but the big upside is that it is very clear to the user what is free and what isn't. Basically nothing is except some free samples.
- Having more prominent quotes/testimonials and free samples or previews of our special reports.
- Doing more to create shorter Briefings which summarise the key issues, trends and best resources around particular topics and sectors. User feedback suggests that 'time is money' and that a 3-pager with the best stuff on Web Measurement & Analysis, for example, is more valuable than a 100,000 page archive.
- We need to do better at converting the many people who deep-link via search engines. Currently there is nothing about our subscription offer at these levels. For non-subscribers we're considering having the proposition clearly signposted in the right hand column on ALL pages. This would then disappear for subscribers.
- Need to do work on the homepage and 'barrier page', the 2 most important ones, to make it even clearer and simpler about what you pay and what you get. The value needs to be better explained.
- e-mails. We haven't yet directly e-mailed any of our users to explaing the offering. Hopefully this will help when we do but we want to make sure we've got the site as right as possible first.
Free market research on digital marketing
Daily Pulse: award winning newsletter
It takes 30 seconds to register