Welcome to the Sub Club Podcast, a show dedicated to the best practices for building and growing app businesses. We sit down with the entrepreneurs, investors, and builders. behind the most successful apps in the world to learn from their successes and failures. SubClub is brought to you by RevenueCat. Thousands of the world's best apps trust RevenueCat to power in-app purchases, manage customers, and grow revenue across iOS, Android, and the web. You can learn more at revenuecat.com.
Let's get into the show. Hello, I'm your host, David Barnard. Today's conversation is shorter than usual and will be featured in RevenueCat's State of Subscription Apps Report. Each episode in this series will explore one crucial metric and share actionable insights from top subscription app operators. With me today, Jason Vandemirva, Director of Product Engineering at Strava.
On the podcast, I talk with Jason about improving first-year renewals, the importance of connecting customers to the primary value your app provides, and when you might need to invest in substitute value props. Hey, Jason. Thanks so much for joining me for this mini episode. Thanks, David, for the invite. It's fun to be back here and to discuss subscription retention and renewals. That's exactly what I wanted to kick things off with. What?
Early engagement tactics are you looking at to get that first renewal? I know it's such a big deal, that year one renewal for any subscription app. What does it take to get that first renewal? In many ways, there's probably so many complex strategies and ways of thinking about this that folks could run down. spend months trying to build or perfect. In some ways, I actually think it's quite simple, frustratingly simple in theory, hard in practice, which is your users have to use your product.
Most of the products I've seen and I've worked with, just general product usage is the most important factor in that first renewal. I don't think users often sit there thinking, oh i'm using these three subscription features and these five free features they're thinking about wow i love this product or you know what this product didn't drive that much value for me and so simply getting users
to love your product is really important and you've got to ask your question and hopefully you have this written down but what is this the main focus of my product what is the main problem we're trying to solve and do we do that well most subscription products probably have some type of free tier to solving that problem for a user and then in a paid tier or you may have completely different value probably you're paid than you're free but
Either way, I would hope that there's kind of a narrative or a hypothesis that blends between the free and the paid that says, you know, this is what we want users doing. This is what utility or what value users get from our product. It's not just about getting them to use the paid portion of it, especially since a lot of the times paid aspect of a subscription is not always the most daily usage offering some features. It's like the really valuable thing.
once a month how do you then connect users with those valuable features seeing measuring over time the kind of features that correlate with retention and then making sure to connect more users to those features that correlate with retention. How does that play out in like day-to-day operation of an app? How do you
Look at that data and then how do you make those kind of decisions that are going to drive that first renewal? One of the things that I love to do is look at the new users who are taking your subscription immediately upon starting your product. And I think... RevenueCat has shown data that that is becoming more and more popular where a lot of subscriptions or at least trials or some type of introductory offer is being accepted by a new user immediately without really knowing.
the free side to the paid side, right? I think traditionally we think of the model as you use the free product for a while and then you get enticed by some promise of some incremental value and then you try the paid. And what I've seen a lot is...
users are much more likely nowadays to actually just say you know what i'm going to try the full paid version straight away because they've heard about it from a friend because maybe the paywall design is very heavy or great a la the blinkist one and so that's a very interesting audience to look at because
Now you have someone who's ideal. They're new, they're curious, but they have access to free and paid. In many cases, showing them the paid features first doesn't make sense because often your paid features are layered on top of free features. So then I think you... result in having to go back to the drawing board what is our main value prop to a user what are the problems we're solving and then how are those problems later on onto one another and so you might find yourself still wanting to
educate the user about the free product experience first and then layer on that value. What is the easiest path, the happy path for a user? And so that's one audience that I would really encourage people to look at. and say you know are you solving the kind of core use case of the of the product and then they some ways eliminate this free versus paid delineation problem of you know which core user journeys do you first prioritize kind of educating your user on
And then it just comes about, like, where's the main value of your product? How much do you think users need to see some kind of improvement in the product? They started their trial, they converted from the trial, and now they're in that, you know, hopefully the one year period. leading up to that first renewal, how important do you think it is that they see that the app is continually improving, that you're listening to feedback, or do you think it's...
Still mostly that like whatever core value prop it is. And maybe that has to do with like the stage of the app. Somewhat dependent on how good of a product market fit you have. in some ways you buy yourself more time i think to show continued improvement if your product market state and the problems you're solving for a user are so amazing if you're doing something that no one else is doing very well and someone finds you and the utility you're offering is just immense
Doesn't matter, but maybe not the first renewal, but down the line, eventually you will start to, that will start to matter. Often this will happen when an app expands from the niche core, you know, core market fit.
problem that they were trying to solve initially you know they did one thing really well and then they start to expand and create you know try to create more appeal for more users other than just their initial co-audience and then those folks who are maybe a little bit more on the fence
That matters a lot because they're looking at your product and saying, it solves my problems. This is good. Maybe I will renew. But if they know that your product's changing, then there's a little bit of a hope. Remember, a user's paying for the next 12 months or whatever your cycle is.
You're paying for the promise of something in the future. And either that promise of what there is today has to be so strong that it doesn't matter if nothing changes in the future. And I can think of some products for me.
that in the past have been like that. We're so good. I'm like, who cares? Then later on, you're like, wait a second. It hasn't really changed that much. And now there's competitor products or my core usage doesn't match as much anymore. And so... I think for most products, probably don't have that strong of product market fit.
you know, it's just really difficult to do. It's so easy to build apps that showing continual improvement is important. From a cultural perspective in your company, continual improvements is really important because you're starting to learn to listen, bring in data, bring in qualitative feedback.
turn that into action, launch it, you learn to kind of keep your product living and breathing and figure out what to do about the signals coming from that, even if it's not super necessary for like subscription first year reels.
That first year renewal is so tough. I was talking to a fitness app that sees only 30% renewal rates on that first year, well below the median benchmark that we've shared in prior reports. If you were dropped into that... fitness app company today what would be your first go-to all right to get it from 30 to building a much better business
Where would you go? What would you do? What data would you look at? My first question is going to be what percentage of those users are active? The people that have taken your subscription, let's assume it's just a completely subscription-only product. What percentage of them are still active? Your product has to...
offer value to a user. And so first look at just usage patterns. Are our users there? Because if your users are still using your product, but they're not renewing, that's a solvable problem because You're delivering some level of value. Maybe I don't agree with you on the price of that value.
around the cost of that value to them. Maybe they don't understand what they're actually getting. So they may not understand the free versus paid experience. So then you can actually talk to those users. When your users have disappeared and they're not using your product at all, they've lost hope in your entire product. Get your users to use.
your product free paid make sure that there's like value there for them on a weekly daily monthly basis and then start to figure out where the mismatch on the value you think you're delivering and the value that is actually being seen If it is a usage drop-off, what would those first tactics be to try and start nudging people toward that more frequent usage and getting more value out of the app? There's value creation and value capture.
If you're in Phil Carter's Reforged course, he talks about this value capture, value creation, value delivery framework. Why I bring that up is it's very important that we think about kind of product-led growth tactics or the growth tactics on getting better people to use your product more. and building a great product. But I believe you do have to tell users about the value you are creating. So let's first talk about value capture. What I mean by that is users just might not.
understand it. If you look at the usage of your product, I bet you that 70 to 80 to 90% of users never leave the first tab. That is the default on load, right? That's just normal. That is why Facebook and Instagram and Snapchat put everything in their home feed. Users go from there and then you push users out. And one of the solutions there is you just put more to your home tab and use algorithms to figure out what the user wants. Another way is nudges. That can be both in product through.
tool tips and coach marks. One of my favorites is the little kind of red dot batch. That's such a great tactic to get users to explore other places. But those are great. Remind people, figure out the UX that says, hey, just wait a second.
Take a look at this. We have this new feature or this feature that we've had for a while that you just have ignored. Really important. I don't like pop-ups typically because pop-ups feel like ads and people tend to click or close before even reading. But there's many ways you can do this. There's many great companies. that do different feature education out of app. If users aren't even in your product, comms like push notifications or emails are great. I tend to rely more on push notifications.
just because you don't have to build an email. And so again, you're creating campaigns, you're figuring out who the users that need some more feature education are, whether that's new users, whether that's super engaged users that are then falling off after a few days, etc. You just start to figure out where the value is. And by running a lot of these experiments, you can then start to learn data on which features.
people respond to most and then correlate that what the data says which features are correlated with retention tools like amplitude mix panel have this all built in you can pretty easily figure out which features are correlated so that's all like the value capture side
You're helping users understand that value. The growth team's purpose is to connect users with the value of your product. But that necessitates value to be created. And you might just be wrong there. You might just not have created enough value in your product. And so it's not just about sending push notifications or big banners in the product.
Are you actually solving an interesting problem that users have? Another problem you kind of already alluded to is that in a world where we're seeing more apps go hard paywall or being... really heavily optimizing the onboarding and paywall experience, it does seem like some of those apps are potentially getting cohorts to convert that weren't necessarily that kind of ideal fit.
So I wonder if some of this is maybe to be expected. With a hard paywall, I always say you should expect a lower conversion rate of your trials. But then similarly, it seems as though like really aggressive monetization also. tends to lead to higher churn in that first year. How do you think about balancing those factors? I think this is one of the hardest parts.
of the job nowadays is that the expectation, whether of ourselves or from a board, is that there's a rising tide of improvements. You can increase the amount of money you're getting your LTV of users. You can decrease friction in the onboarding flows. paywalls, everything gets better. And that's really tough to do. In some ways that is possible in many cases, but there's also a balance beam where one thing goes up and the other one goes down.
When I look at just general onboarding flow or registration flow, the holy grail is not 100%. Because 100% completion rate would necessitate every user who's downloading your product has the full intent to use it. and your product fulfills their needs to the greatest extent possible, which is just not the case. It's so easy to download apps. You don't know why people are downloading your app. A good onboarding flow.
kind of gets rid of the bad users that were not going to use your product. Hopefully there's a large enough audience. that is looking for the value that you are trying to create, that's valuable enough that you can make money from that. And so the ROAS question is interesting because you can also hurt yourself by just casting a really wide net on ads, right?
And no amount of in-app optimization or improvement of the paywall or whatever is going to help you recoup the cost of buying a bunch of eyeballs that didn't actually want your product. In many ways, the value prop that we offer in ads. can easily not match the user's expectation, either because we're embellishing or using fancy language or just not saying anything or users just are reading. So it's really hard. There are no silver bullets here.
There's no perfect way. I think one of the benefits of like the trial period is that you get quick signal on how good of a job you are doing at value creation and value capture. And let's say you hard pay all that. You don't offer a trial. That's some free money. Bye. You have now a 12-month cycle of product development and waiting to know whether or not you are doing a better job at all these things.
And so that's one of the problems with the 12-month cycle, you know, Strava where we work now is you don't know what that renewals rate is going to be. And so you're relying on input metrics to figure that out or cancellation rates to understand how different.
actions of things you might do might help with that first year renewal in many ways that 30 days or that week long trial or that monthly subscription which many apps do that can help you kind of get a lot more data quickly to understand the changes you're making what's probably more important than
The specific tactics of how you go about fixing this is having the framework to understand the impact of those tactics. The 12-month cycle of annual is so hard. And like you said, there's proxy metrics you can use. You can look at how people are engaging with the app and stuff like that. But the good news is...
there are things you can do in those 12 months. You already talked about pushing notifications and improving features and finding that better product market fit, engaging with users to ask, what are they finding value? What are they not finding value? Any kind of final tips as we... wrap up what to do in those 12 months to keep turning things around. I would say focus on keeping your users active.
Finding ways to just make sure that they're finding value. Don't worry necessarily about what that value is. Remember that you're competing against a whole lot of other products. Sometimes the value of push notifications isn't even the copy itself. It's just simply reminding the user, hey,
My app is still on your phone and you liked it at one point. And I think that's actually really important. One of the things I like to do is a side note in notification copy experiments is have a dummy control that has nothing to do with the value prop you're trying to sell. Let's say you're trying to be like, hey, check out this. feature. It can help you do X, Y, Z. Have a variant that is just, hey, it's a great day. Go.
Do something, do X, Y, Z. Something that kind of is really nothing because there's no control. There's no true control in notification or comms experiments, right? And so just by sending something versus nothing, there's a bias there. So I like to do that. Make sure your product is used and loved as much as possible.
And you just see this great increase in people like, oh yeah, I still have that product on my phone. Driving people to come back if you're having a big drop-off in your weekly actives or monthly actives. If you're having a problem with retention and focus on the in-app.
value sell or how users can use your features so that they stick around. Step two would be using Amplitude and Mixpanel and all these tools, doing these analyses that say which of our features are most correlated with A, being active.
And then B, subscription renewal. You can go do that. And then figure out, okay, cool. How do we promote those features? How do we make sure users are all connected to those features? Step three is looking for substitute features if your product is seasonal to some degree. So there might be a product where... you have something really valuable once in a while.
So you have a currency app or something with money, right? Okay, great. Very useful when you travel international. But what do you do about the other pieces? So if you have a seasonal product, either behaviorally seasonal or actually literally seasonal, find other ways that you can create more value on the regular.
Even if it's not an amazing amount of value, but how do you create kind of more connection with that user and show that you have something else? And so that'd be the third piece of fill in the gaps. When you've noticed the gaps in the reasons to be active with your product. or the reasons that the top features find other reasons for them to stick around.
that is fantastic advice so if you saw a user heavily engaged with like dollar to euro conversions then a month they're not on vacation anymore but you send a push notification like hey things are cheaper in europe thinking about that next trip, do fun, engaging content around like them dreaming. I mean, there's aspects to value that are not.
tangible value. If you're the app that keeps them dreaming of their next European vacation, like it's a valuable thing, even if they're not directly engaging in the value of converting the currency for their trip today. Maybe it's like, oh, wow, I'm going to go next.
year back to japan and let me see what can i afford in japan it's like there's ways to find those engagement points that aren't the direct value i love i love that substitute value that's fantastic there's so many products out there where
their business became that other feature set. You know, they weren't originally planning for it, but they realized, wow, it's a lot more daily usage of a product or, wow, there's a lot more value there than I realized. So that's really fun is to explore those other avenues.
my advice and i know you have so many different listeners from so many different backgrounds if you're a bigger company like the one i work for you have the ability to do analyses and to have these like big fantasy strategies and to do these big a b tests and really dive into the data if you're small and on your own It's okay to rather just try things without worrying about the perfect success metrics. It's better just to say, you know what? Feature education is important.
We're going to ship some notifications and welcome emails. We're going to focus more, a little bit more on the onboarding flow. Ideally, you would A-B test that and understand scientifically, et cetera, et cetera. But you don't have time. Perfection is enemy of progress. Like, rather just build those things and believe based on what I'm saying, David.
the interviews you've done with so many people believe that those things are important, that how you think about delivering value to users is important. And I think what's really cool about this huge wave of niche apps that we're seeing, niche subscription apps, is that people do that.
You know, more and more of the apps are so well designed on that first time user experience. And I'm like, wow, this is this is like the best onboarding flow I've ever seen. And so it's really cool to see the industry norm being.
the introduction of your product and the value you're trying to create to users. And so, you know, just do that. There's just like so much education, especially done by you and the Revenue Cat on what is good and what is maybe not so good. Take it as inspiration and YOLO. just try stuff. Awesome. Well, thanks so much for having this chat with me today. I think it's going to be super valuable to folks. So thanks for sharing those insights. Yeah, thanks for having me. Thanks so much for listening.
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