In this episode of Out of the Box, our host Jess Overton, Sr. Director of Sales and Partnerships at ironSource Aura, sits down with Sviat Hnizdovskyi, Founder at Applica Agency, mobile app growth agency focusing on monetization and activation.
They discuss the schools of thought behind subscription models, steps to optimizing your subscription monetization strategy and insights into what does and doesn’t work.
Comparing testing methodologies between the east and the west
“The fundamental difference in the west compared to Eastern Europe and countries like Ukraine and Belarus is that there is an excess of Venture Capital in the West. That makes a tremendous difference. In Ukraine, for example, in order to have a successful start up, you have to build profitable user economics from the first day. There is no time for branding or too much optimization of some core product functionality.”
Identifying the difference between a product focused app and monetization focused app
“Sometimes, it’s not that obvious. There are some rules of thumb. For example, you can look at the origin of the app and check whether it has raised any venture capital and if it’s not the case then there’s no other way it could get to the top charts if they haven’t optimized the monetization part. The second one is to use some tools that with some level of confidence can predict the average revenue per user or revenue per download and that can indicate whether the app is driving some paid user acquisition. Normally, the more paid user acquisition, the more likely the app had to build strong unit economics and monetization to be able to compete in the auction.”
Steps to begin implementing a subscription
“The easiest thing to do is to look at your top 3 or 5 of your competitors, especially those that rely on this business model of monetization. Quite often, they might have slightly less developed core product functionality which may result in lower app ratings and lower retention. But imagine? They managed to climb to the top of the ladder anyway, which means they’ve most likely built something outstanding in terms of user acquisition marketing and monetization. That’s where you can draw some inspiration.”
Deciding how aggressive your monetization strategy should be
“Let me be blunt here. When you start, if you want to run some paid acquisition and be able to compete in the auction, you have to be a little bit aggressive. If you’re too generous, you give out an excess of features for free, you don’t show paywalls frequently, you’re not able to collect money from the users that would be very happy to pay for your product. A good rule of thumb is to start with, I wouldn’t call it aggressive because it has some negative connotations, but a lot of frequency of interactions with some monetization stuff in your app.
Let’s look at an example. Take a subscription that has a long onboarding, asks some personalized questions and then at some point after that it shows a paywall, which is pretty normal everyone does that. But one thing that I’ve witnessed and tested many times and that worked particularly well is offering one more paywall just after the initial login that briefly states all of the benefits of the product. Some might perceive that as a little shady, asking for money without showing any core product functionality, but there are apps on the market that do that quite successfully.”
Building cross-functional teams
“What I think is missing in a lot of teams is that their marketing teams work separately from their ASO team which works separately from their product team. Of course, they have some sort of formal sync once a week but, ideally, I think there would be great benefit designing cross-functional teams so these people are working together and ensure there is a smooth transition between the acquisition to the app store to the actual product onboarding and activation part of the funnel.”
Best practices for how to design your paywall
“Even with a very optimized onboarding funnel, apps could add 10-15% to their ARPAU by testing the copy on the CTA button. Usually it starts with something simple like “continue” or “purchase” to something more sophisticated like “try this app for free for the next 7 days. There are some best practices for how to approach that. For a new app, the app founder or product manager who would actually like to start testing all of these variables is probably asking, ‘where should I start.’”
