Introduction

Marketing is an art as much as it is a science – it takes creativity to sell and it takes math to ensure you remain profitable. It’s the difference between coming up with ”Just Do It” and using that brand recognition to generate sales.

Thanks to the advancement of AdTech, marketers have more ways than ever to get their message across – from Netflix to screens at the gas station. But before you sink your marketing budget into the Next Big Thing, you need to understand how to track and measure the performance of your campaigns. In fact, only 39% of companies are able to attribute all their marketing campaigns, meaning 61% of companies are alarmingly playing the guessing game. 

Throughout this guide, you’ll learn everything you need to know about marketing attribution, why it’s important, the different methodologies, and how to measure your ads effectively.

Chapter 1

What is marketing attribution?

Marketing attribution is the ability to determine which marketing channels and campaigns are driving leads, sales, and conversions, giving you an accurate picture of your ROI. This means you’re able to measure the true impact of all your marketing activity, from out-of-home advertising to your Google Ads campaigns.

Marketing attribution vs marketing measurement: what’s the difference?  

While they’re both essential in evaluating the effectiveness of marketing campaigns, attribution and measurement describe different things.

 

Marketing attribution identifies how much each touchpoint and channel within a customer journey contributes to the conversion. Attribution can assign a weight to each touchpoint, which helps marketers identify which channels are the most effective.

Marketing measurement assesses the effectiveness of marketing campaigns by quantifying their impact with numbers like impressions, click-through rates (CTR), conversions, return on investment (ROI), and return on ad spend (ROAS). 

In short, marketing attribution determines how each touchpoint contributes to the customer journey, while marketing measurement quantifies the performance of marketing campaigns with metrics.

More specifically for mobile marketers, it’s essential to understand which marketing activities and touchpoints are driving app installs by measuring user engagement across multiple devices and platforms. 

Why is marketing attribution important?

If attribution isn’t part of your marketing toolkit, you’re missing out on vital information — and you could be wasting your budget. Here’s why it matters:

• Marketing attribution helps paint a whole picture of how every marketing campaign contributes to the customer journey – from the first time they hear about your brand all the way to buying your product or service. That journey in between the first and last touch is often referred to as “the messy middle,” where many marketers struggle to effectively measure how impactful their campaigns are from start to finish.

• Marketing attribution provides a clear understanding of where your ad dollars are going. While it may be tempting to throw all your money at a SuperBowl ad, the likelihood that someone will purchase your product on the spot is close to zero. With proper attribution, you can identify what campaigns you need to run building up to it and after, so you can generate sales over time through various touchpoints. For example, attribution can show you that the SuperBowl ad was successful at introducing your brand to a large audience, but your Instagram ad might be what drives the most conversions.

• Marketing attribution helps with budget allocation when configuring your marketing mix. As mentioned above, attribution gives weight to certain campaigns or channels, depending on their effectiveness throughout the buyer’s journey. If more customers are converting via Instagram ads, it doesn’t mean you should shut down every other campaign. Proper attribution shows you how each touchpoint leading up to the Instagram ad contributes to driving that sale. Alternatively, you might see that your expensive ads on Google aren’t contributing to the journey, so you can re-allocate those resources elsewhere.

Chapter 2

Marketing attribution benefits vs. challenges

Like most things in marketing, there’s no one-size-fits-all approach to marketing attribution. While this approach has many benefits, there are also some drawbacks to consider.

Benefits 

Let’s start by diving into the various ways marketing attribution can be beneficial to your marketing function.

1. Budget allocation

As mentioned above, marketing attribution is the key to measuring the contribution of your marketing campaigns throughout a customer’s buying journey. It enables you to allocate your resources to not only the channels and campaigns that drive the eventual conversion, but also those that contribute to making the purchase decision elsewhere in the funnel. With this bird’s-eye view, you can allocate budget more strategically, rather than aggressively thinking about the short term.

2. Alignment between marketing and sales

Marketing and sales teams are increasingly overlapping – to the point where the two are sometimes known as smarketing. Because attribution is able to provide a balanced and data-driven approach to the entire buying process, marketing and sales teams have a clearer understanding of their contributions to revenue. 

3. Highlighting growth opportunities

Attribution not only highlights which elements of a campaign are most (or least) effective, but also provides insights into user segments based on their interaction history and behaviors. Data from attribution can reveal how certain segments interact with a mobile app after being exposed to a particular ad campaign, or how that campaign affects user retention.

Challenges

Let’s now examine some of the difficulties and drawbacks of marketing attribution.

1. Privacy changes are making attribution more difficult

Visions of a cookie-less future, increased use of ad blockers, and Apple’s App Tracking Transparency (ATT) privacy policy all pose challenges for campaign measurement. As advertising rules become increasingly convoluted and restrictive, marketers must find creative ways to navigate them, including working with a mobile measurement partner (MMP).

2. Some channels are difficult to track accurately

While digital campaigns are much easier to track, data can be fragmented when trying to bake in the impact of campaigns like out–of-home billboards. Cross-device behavior can pose a challenge for longer and more complicated customer journeys. And with so many platforms to measure your campaigns, there’s no uniform naming or data structure, which may complicate aggregation and reporting.

3. There’s no one-size-fits-all approach

There’s no one approach to attribution that works for everyone. We’ll cover the different types of attribution models later, but each approach comes with its own benefits and drawbacks as well. For example, while single-touch models are undoubtedly more straightforward, they may overvalue the impact of first and last touchpoints.

Common mistakes with attribution

Marketing attribution requires meticulous planning and a strong strategic direction. Here are some of the most common mistakes to avoid. 

1. Measuring marketing success based only on the first or last click

Platforms like Google Ads often measure success based on which ad creative drives the most conversions, which leads marketers to look at their ad campaigns in a very linear way. But attribution is about understanding the holistic picture, and provides a measured response to how each impression contributes to that eventual conversion. While it may be tempting to double down on ad creatives that convert the best, it’s equally important to understand the impact of the ads that lead up to that point. 

2. Nowhere to store the data

Collecting data, aggregating reports, and effectively measuring your campaigns is difficult when dealing with a wide range of marketing channels. Marketers need a safe and secure place to store all that data, but also a structure to effectively organize large attribution data sets. 

3. Short or long measurement windows

Buying cycles differ depending on the customer segment, your product offering, pricing, and timing. That’s why it’s important to set a time frame that makes sense when measuring attribution. A window that’s too short may not paint the whole picture, while a too-long window can give too much credit to ineffectual campaigns.

Chapter 3

Marketing attribution models

Imagine you see an ad on TV, engage with a funny Instagram post from the same brand, then buy the product at a physical store. Which channel would you credit the sale to? It’s not an easy question, which is why there are several marketing attribution models to consider.

What marketing attribution models exist in the mobile ecosystem?

Now that we’ve covered the basics of attribution, let’s talk about the different approaches. There are two schools of thought: single-touch attribution and multi-touch attribution. 

Single-touch attribution

Single-touch attribution assigns full credit to one touchpoint, whether it be the first interaction, last interaction, or where the lead is created.

First-touch attribution model

This model assumes the customer purchases after the first advertisement they’ve seen. Full credit is given to the first touchpoint, regardless of ads encountered afterwards. 

Example:

I see a YouTube pre-roll ad for a mobile game. I then see an Instagram ad a few times. I eventually click on a Facebook ad to download the game. First-touch attribution would give full credit to the YouTube pre-roll ad.

Last-touch attribution model

Full credit is given to the last ad that a customer interacts with before making a purchase. This model gives no credit to any of the previous ads.

Example:

I see a YouTube ad for a mobile game. Then I see a series of ads on blogs. I download the game from a link in a promotional email. With last-touch attribution, the email is given 100% of the credit.

Lead conversion touch attribution model

Full credit is given to the touchpoint that collects a lead, such as entering an email address to sign up for a newsletter.

Example:

I see a series of Instagram ads for a new mobile game. However, I enter my information for a promotional giveaway on the game’s website. With the lead conversion touch attribution model, the website is given 100% of the credit.

Last non-direct attribution model

This model gives full credit to the last channel that the customer clicked before converting and removes all credit from direct traffic. This assumes that anyone who directly types in your website URL or AppStore page is already converted and far enough along the purchase cycle. 

Example:

I see an ad while watching a show on Hulu. Then I type in the website URL on my phone and make a purchase. The last non-direct attribution model would give full credit to the Hulu ad. 

Multi-touch attribution

Multi-touch attribution assigns different weights and values to multiple touchpoints that a customer engages with during their purchasing journey. In contrast to single-touch attribution, this approach paints a fuller picture of the contribution of all your marketing campaigns, but is also a lot more complicated to measure. Here are the most common types of multi-touch attribution.

Linear attribution model

In this model, every touchpoint a customer encounters is given equal credit. This assumes every ad has the same impact in persuading the customer to convert.

Example:

I see a fitness app while watching a preview at the movie theater. Then I see ads for this app on YouTube, on a mobile game, and in the newspaper. I eventually download the app from an Instagram ad. Linear attribution would give equal credit to each of these touchpoints.

Time-decay attribution model

This model gives more weight to touchpoints closer to the conversion, which assumes older interactions are less impactful than more recent ones. 

Example:

I see a series of 10 YouTube ads for a new mobile game. I download the game after watching the 10th ad. The most weight would be given to the ads closest to the conversion, while the first few ads would be given little to no weight.

U-shaped attribution model (position-based attribution model)

In this model, first and last touchpoints are given the most credit, while interactions in between are given a little credit as well. This is a more balanced approach to first-touch or last-touch attribution.

Example: 

I first notice a brand on a Facebook ad, and eventually convert through a YouTube ad. In between, I’ve seen multiple ads on my streaming services, mobile games, and browsing the web. The Facebook ad and YouTube ad would be given the most credit, while the touchpoints in between are equally weighted. 

W-shaped attribution model

Similar to U-shaped attribution, W-shaped attribution gives most credit to the first and last touchpoints, plus a third one – the opportunity creation. All other remaining touchpoints are split equally.

Full-path attribution model (Z-shaped attribution)

This model gives different weights to different touchpoints across the entire customer journey, depending on the effectiveness of each individual interaction. While this provides a more holistic view, it’s also the most difficult to execute. 

Custom attribution model (mix and match)

This approach involves a combination of multi-touch models depending on business needs or individual campaign goals. For example, you might use a W-shaped attribution approach to your new mobile game, while using a time-decay model for an app that goes viral.

Chapter 4

Marketing attribution strategy: best practices and implementation

Now that you know all the types of attribution models, let’s discuss how to use them efficiently.

How to choose the right attribution model for you

With so many models to choose from, how do you pick the best one for you? A good place to start is by auditing your marketing campaigns. Here are a few things to consider that will help you better determine which models make the most sense.

1. Identify your conversion paths

How complicated is your purchasing journey? Is it a fairly straightforward decision? Or do users need to be engaged across multiple touchpoints before making the final decision? Investing in a complicated attribution process wouldn’t be worthwhile for short purchase journeys, but could be justified for apps with longer consideration cycles.

2. Channel mix

What campaigns are you currently running? Some attribution models work more effectively on certain channels than others. For example, out-of-home billboard ads are much more difficult to measure than Facebook Ads.

3. Available tools

Executing an effective marketing attribution strategy depends on the tools available to you. Some marketing channels provide comprehensive measurement tools, while others are more limited. Depending on your budget and current tech stack, you can determine what’s possible and what’s not. 

4. Data quality 

On top of your tool stack, it’s imperative that you can trust the data available to you. A sophisticated attribution model requires secure data storage and potentially working with a mobile measurement partner to ensure accuracy across multiple touchpoints. 

What factors should you consider when choosing an attattribution provider?

An attribution partner, also known as a mobile measurement partner (MMP),  can help you accurately attribute your marketing campaigns across multiple platforms. With so many providers to choose from, here are a few factors you should consider before choosing the right MMP for you:

1. Platform compatibility

The first and easiest way to narrow down your choices is to see if the MMP supports the tracking and measurement of every platform, channel, ad network, tool, and device you’re planning to use. 

2. Attribution methodology and reporting

Take a look into how the MMP guarantees accuracy in their reporting. How do they provide insights into user-level data? Do they have flexible attribution windows? How are they navigating the ongoing privacy changes? Also check how they’ll report your results – will you get a user-friendly dashboard for easy viewing and analysis?

3. Scalability 

When running large campaigns across multiple channels at once, you’re working with enormous amounts of data. Identify an MMP that will scale with you – one that will maintain the level of accuracy and privacy as you grow. Look for an MMP that uses data clean rooms, or a vetted pool of first-party data from multiple data sources, which can verify your data without exposing personally identifiable information (PII). 

4. Customer support and reliability

Does the MMP have a dedicated customer success team that provides 24/7 support? Do they have credible testimonials and positive customer feedback? Do they support international businesses across time zones and cultures? Do they have reliable uptime? It’s essential to ask these questions when considering an MMP to ensure they can back up their claims of good customer service.

How to implement your attribution model

Now you might be wondering how you actually implement the right attribution model for you. Here’s a good place to start.

1. Set clear goals

Start by determining your winning KPIs. If user acquisition is your top priority, you might be measuring conversion rates instead of lifetime value. Creating a list of your top KPIs will set you in the right direction.

2. Choose the right attribution model

Whether it’s last click, first touch, time decay, or full path, determine which attribution model makes the most sense for you.

3. Set up your tool stack

Determine which analytics tools, MMPs, and tracking you’ll have to implement to collect and measure your campaigns. 

4. Practice good data hygiene

Audit your data to ensure you have a reliable dataset to work with. Poor data hygiene can lead to catastrophic assumptions and wasted budgets. Ensure you regularly validate your data and check your analytics platforms are working correctly.

Chapter 5

The future of marketing attribution

With more and more channels at our disposal, and marketing budgets increasingly under pressure, the need for high-quality attribution can only grow. But what does the future hold? Let’s look at some key trends. 

A privacy-centric world

It’s no secret that Apple’s ATT policies and Google’s shift towards cookieless browsers are transforming how marketers are approaching attribution. What worked yesterday may not work tomorrow. 

With increasingly limited access to user identifiers, and opt-in requirements, cross-device tracking makes user matching difficult. This will cause a shift to contextual and first-party data, making apps and organizations with large user bases (and more first-party data) more enticing to acquire. As a result, approaches to marketing attribution will always have to adapt to these market forces.

Artificial intelligence

One of the strongest solutions to these market changes is artificial intelligence (AI). Google Ads, like many other ad platforms, has implemented probabilistic modeling to address increasing privacy regulations and concerns. Advanced machine learning algorithms are helping advertisers not only clean up data sets, but also identify behavioral patterns more effectively with less data. 

This allows marketers to be dynamic when measuring the effectiveness of their marketing campaigns, rather than sticking to one, single-touch approach. Machine learning also helps marketers identify effective touchpoints much faster than before, saving time and money in the long run.

Smarter out-of-home solutions

As much as software is improving, so is hardware. While simple solutions like QR codes or unique coupon codes are great ways for brands to measure their out-of-home campaigns, digital out-of-home technology is advancing faster than ever. Some digital products can measure foot traffic and impressions, which is particularly powerful when paired with advanced targeting capabilities integrated with first-party data.

Use of MMPs to mitigate risk

Privacy regulations, changing app store policies, and the ever-evolving landscape of mobile marketing mean tracking data accurately can get complicated. Mobile marketers can find solace in working with an MMP to help future-proof their data and mitigate data loss. MMPs can provide a well-diversified data set so you’re not relying purely on your own data, but industry-level data as well. MMPs also have privacy and security protocols to ensure your data aligns with your business goals while protecting customer privacy. 

Key Takeaways

• Marketing attribution is the ability to determine which marketing channels and campaigns are driving leads, sales, and conversions, giving you an accurate picture of your ROI. 
• From the first time a customer hears about a brand to the point that they buy a product or service, marketing attribution paints a holistic picture of how each campaign contributes to the customer journey. This helps you allocate budget strategically and identify growth opportunities. 
• Marketing attribution can be single-touch (crediting one touchpoint with the conversion) or multi-touch (spreading the credit across various touchpoints in the customer journey). Popular multi-touch models include linear, time-decay, U-based, W-shaped, and custom attribution.
• There’s no one-size-fits-all solution to attribution, so it’s important to determine what your goals are and how complex your purchase cycle is. You also need to identify your tech stack and ensure high data quality.
• Privacy changes and the rise of walled gardens from ad platforms will continue to challenge marketers, but artificial intelligence and MMPs can offer creative solutions to market forces. If you choose to work with an MMP, ensure they can support your platforms and offer accuracy, scalability, and great customer care. 

Intro

What do popular apps like Netflix, Tinder, and Spotify have in common? 

They’re all subscription-based apps, where users pay a recurring fee for access to the app.

Considering all three apps enjoy global popularity and earn millions in transactions, it’s clear subscription app marketing is taking center stage. Users eagerly take up subscriptions for apps that provide value, and if your app meets this criterion, building and growing subscription-based apps is a no-brainer.

However, implementing this monetization model alone isn’t enough. You need to be prepared for the unique challenges it brings, and apply relevant best practices for maximizing app revenue and driving customer retention.

To guide you through this app monetization approach, we’ll delve deeper into different subscription pricing models. This guide will also cover the benefits, challenges, and best practices to help you establish lasting user engagement.

Chapter 1

What are subscription-based apps?

Subscription-based apps charge users a recurring fee in exchange for access to exclusive content and premium features and services. The fee is often a monthly or yearly subscription, but can also be chargeable weekly or quarterly. 

When a subscription period ends, users can cancel or modify their subscriptions. But in some cases, the subscription may automatically renew.

Top subscription-based app categories

Here’s a quick look at the different types of apps that have found immense success with subscriptions:

Engaging digital content (The New Yorker, The Washington Post)

Subscription-based content apps offer exclusive, regularly updated content tailored to user interests. These apps provide diverse articles, news, features, and analysis, delivering a compelling value proposition. Extra perks such as offline reading, personalized recommendations, and access to archives further enhance the premium information experience.

Immersive gaming (Xbox Game Pass Ultimate, Apple Arcade)

Subscription-based gaming apps give subscribers several appealing benefits, including ad-free gameplay, exclusive in-game items, and early access to new features. Even casino game apps offer a variety of virtual slot machines, poker, and other casino games. Subscribers enjoy bonus credits, rewards, and special in-game features, creating an engaging and rewarding experience. 

Multiplayer features and social interactions also create a sense of community within the subscription ecosystem, keeping gamers engaged and excited.

Streaming and music entertainment (Netflix, Apple Music)

Digital entertainment apps offer users a seemingly never-ending collection of movies, TV shows, and music — all on-demand — making them perfect for in-app subscriptions. Exclusive content and original shows ensure these apps stand out, promising a stellar entertainment experience. Subscription perks, in this case, can include unlimited streaming, ad-free playback, offline downloads, and personalized recommendations. 

Matrimony and dating (Tinder Plus, OkCupid A-List)

Subscription-based dating apps offer premium features to enhance user experiences. Unlimited swipes, advanced search filters, and the ability to see who likes your profile increase the chances of finding compatible matches and fostering meaningful connections. Continuous improvements and new features provide a compelling value proposition beyond free alternatives.

Elevated social networking (LinkedIn Premium, Reddit Gold)

Social networking apps provide users with enhanced features and exclusive content to elevate the social networking experience. These additions often include advanced privacy controls, personalized feeds, and ad-free browsing — all designed to cater to users who desire a more customized and refined social networking experience.

Productivity and efficiency tools (Evernote, LastPass)

Subscription-based service apps provide solutions for digital storage, social scheduling, and productivity management. Subscribers rely on these apps to elevate their productivity, while the consistent updates, new features, and incorporation of user feedback keep them engaged and loyal to the app.

Chapter 2

Subscription-based app models are on the rise

Thanks to the revolution of the digital landscape, the future looks bright for subscription-based app models.

As technology continues to evolve and integrate into various aspects of our lives, the demand for convenient and value-packed experiences will also continue to grow. Embracing the subscription model enables businesses to unlock new revenue streams. In fact, the revenue of the top 100 subscription apps increased by nearly 41% in 2021 alone, reaching an impressive $18.3 billion.

At this point, you’re likely wondering: why this sudden surge? It’s because:

• Modern consumers seek hassle-free experiences that provide value at their fingertips. Subscription-based apps cater to this need by offering a bundle of services at an affordable price. Instead of purchasing individual products or services, users can access a comprehensive suite of offerings with a single subscription, simplifying their lives and saving valuable time.
• Subscription-based apps also offer companies a predictable revenue stream, empowering them to plan for the long term with confidence. This financial stability enables businesses to invest in innovation, enhancing the overall user experience and driving further growth.
• Subscription-based apps foster a sense of loyalty and engagement among users. Reports indicate a notable improvement in churn rates for Subscription Economy Index (SEI) companies, with a 14% drop in 2021. This is because subscribers feel a sense of ownership and financial commitment, making them more likely to remain loyal. This loyalty translates into recurring revenue for businesses, establishing a solid foundation for long-term success.

Today, subscribers actively seek valuable digital services, presenting a compelling opportunity for app marketers to capitalize on and ensure long-term growth. If done right, this app monetization model will help you cater to user demands, cultivate loyalty, and monetize your apps effectively.

5 top subscription pricing models you can use

Finding the right subscription model is admittedly a tricky task. Here are the most common pricing approaches to consider for your subscription-based app.

1 — Flat-rate subscription pricing 

This model offers a fixed price for all features and services provided by the app. Users are charged the same amount on a recurring basis, simplifying the billing process and offering a straightforward pricing structure. 

Trello, a popular project management app, offers a flat-rate pricing model at $12.50 per user per month, providing access to all features, unlimited boards, and team members.

2 — Tiered subscription pricing  

In the tiered model, apps offer different packages with varying features and price points to cater to diverse customer needs. This pricing strategy suits apps with a wide range of features and a diverse customer base. Going up a tier unlocks additional benefits and functionality, allowing users to choose the level that fits their requirements and budget. 

Graphic design platform Canva popularly uses this subscription approach, offering tiered pricing with plans ranging from free to premium — each unlocking additional features, team collaboration options, and advanced design elements.

3 — Usage-based subscription pricing  

The usage-based model ties the cost of the app directly to its usage level. Customers pay based on the amount they consume or use the app’s services. This model is suitable for apps where usage patterns vary widely among users. 

For instance, the cloud storage app Dropbox charges users based on the amount of storage they use, with different pricing tiers for various storage limits.

4 — Per-added subscription pricing  

In the per-added-module model, the app offers a core product with the option to add extra modules or functionalities for a fee. This gives users the flexibility to customize their experience by selecting the specific features they need. 

A great example of this model is Autodesk Revit, a popular BIM (Building Information Modeling) software. Users can subscribe to the base software, and then add specialized modules like structural engineering or MEP (Mechanical, Electrical, and Plumbing) design according to their specific requirements. This allows users to tailor their app usage to their unique needs and preferences.

5 — Per-user subscription pricing  

The per-user model charges customers based on the number of users accessing the app. Pricing scales with the number of users, making it suitable for apps that facilitate teamwork or collaboration. This approach ensures fair compensation when multiple individuals rely on the app’s services independently. 

The popular team communication and collaboration app, Slack, is a great example of per-user charging, with pricing tiers based on the number of active users within an organization.

Chapter 3

Subscription-based apps’ benefits vs challenges

Like (almost) everything in marketing, subscription-based apps come with some benefits and challenges for marketers. Let’s start by digging deeper into the pros of getting mobile app subscription right, and then look at some potential pitfalls. 

Benefits of subscription-based apps

• More reliable income: Unlike one-time purchases, subscriptions offer a consistent stream of income, allowing you to plan and allocate resources effectively. You can confidently invest in marketing efforts and develop new features without the constant fear of financial instability. What’s more, offering discounts for longer subscription periods further enhances income predictability and entices users to commit to extended plans.
• Seamless promotions: Subscription models provide a fantastic opportunity to promote your app’s popular features and exclusive content. With well-timed and enticing offers, you can encourage users to subscribe and unlock premium benefits. By highlighting the value they’ll gain, you can effectively market your app’s standout features and consumables, driving conversions and increasing revenue.
• Higher engagement and increased user loyalty: When people subscribe, they actively invest in enhancing their app experience, leading to increased loyalty. Add to this regular content updates and feature releases, and you have subscribers hooked and eager to explore new offerings. This strengthens brand loyalty, improves user retention, and increases the likelihood of referrals. And as your user base grows and becomes more engaged, your app’s lifetime value (LTV) improves, resulting in greater exposure and better rankings in app stores — plus, more resources to invest in developing new content and features to keep the engagement going.
• Higher ATT opt-in rate for gaming apps: For gaming app developers, there’s an extra advantage to adopting the subscription-based model: a higher opt-in rate for App Tracking Transparency (ATT). Subscription gaming apps experience a significantly higher rate of user opt-ins for tracking. This is great news for you as it means more users are willing to share their data, giving you valuable insights to personalize experiences and implement targeted strategies to enhance user satisfaction and drive app growth.
• Improved ranking on Apple’s App Store: Apple has incentivized subscription models on its App Store, offering a more favorable revenue split of 85:15, compared to the standard 70:30 split, to app developers who retain customers for longer periods. This means Apple is on your side, rewarding your efforts to retain customers and aligning their interests with yours. Leveraging this opportunity can lead to higher rankings for your app and increased visibility within the Apple ecosystem.

Challenges of subscription-based apps

• Providing regular content and updates: Users have high expectations, and failing to provide ongoing value can result in subscription cancellations. To maintain user engagement and loyalty, you have to consistently deliver new, high-quality content and updates. This way, paying users will be excited about your app and continue their subscriptions with enthusiasm.
• Onboarding and free trial period: Properly onboarding users and showcasing your app’s value convinces them to become paying subscribers. Finding the right trial period can be challenging, as users need enough time to experience the app’s benefits. Striking the right balance is key to demonstrating your app’s value and converting trial users into loyal subscribers.
• Prompt customer support: Subscribers expect dependable and prompt customer support for their investment in your app. And providing excellent support is the only way to meet this demand while enhancing user satisfaction and minimizing churn. Admittedly, building a strong support team comes with expenses, but it’s crucial for retaining engaged users. Plus, you can use the recurring subscription revenue to fund these support services.
• Potential backlash during transition: Switching from a one-time fee to a subscription model may lead to backlash from existing users. But with the right approach, you can navigate this change smoothly and ultimately encourage acceptance. This involves engaging with and actively listening to user concerns while highlighting the long-term benefits of the subscription model. 

Chapter 4

7 subscription-based best practices for app marketers

How do you ensure your subscription-based app is a roaring success? Here are a few tips: 

1 — Offer value-driven pricing

Offer different subscription tiers that cater to the diverse needs and budgets of your users. This way, they can choose the level of access and features that best suits them. Don’t forget to sweeten the deal by providing discounted rates for long-term subscribers: this not only boosts your revenue but also fosters customer loyalty.

Imagine you have a language-learning app with three subscription tiers: Basic, Premium, and Deluxe. The Basic tier provides access to core language lessons, while the Premium tier offers personalized study plans and interactive exercises. For users seeking the ultimate language-learning experience, the Deluxe tier provides unlimited access to all courses, live tutoring sessions, and exclusive content. By offering these three tiers, you cater to diverse user preferences, boosting revenue through higher-tier subscriptions and keeping users engaged.

2 — Provide a compelling free trial period

Engage potential subscribers by offering a free trial period that lets them experience the full value of your app. Give them temporary access to premium content and features, showcasing the app’s potential and benefits. 

Take Amazon Prime’s generous 30-day free trial, for example. During this trial, users can explore the app’s premium services, user experience, and streaming quality. Providing a sneak peek of these paid features can significantly boost the likelihood of users converting to paid subscriptions.

3 — Nurture engagement and reduce churn

Keep things fresh and exciting by regularly updating your app with new content, features, and improvements. Personalize the user experience with tailored recommendations and notifications that align with their preferences. And don’t forget about providing excellent customer support – address any issues promptly to demonstrate your commitment to subscriber satisfaction.

Subscription-based fitness apps frequently offer each subscriber custom exercise programs and send personalized workout reminders and progress reports. Some even allow users to connect, share achievements, and support one another, creating a sense of community that not only boosts user satisfaction but also encourages long-term subscriptions and reduces churn.

4 — Leverage upselling and cross-selling opportunities

Capitalize on your existing subscriber base to increase revenue by leveraging upselling and cross-selling strategies. Identify opportunities to upsell users to higher subscription tiers with additional features or exclusive content. For cross-selling, try promoting complementary products or services that align with your app’s offerings, creating additional revenue streams.

5 — Nail your onboarding experience

When introducing your app, focus on showcasing its value and engaging users before presenting the subscription option. For apps with a “pay to use” model, it’s important to highlight the app’s worth without pushing subscriptions too soon. For apps with a “pay to upgrade” model, guide users through core features during a free onboarding stage and provide a clear path past the paywall.

Once your users have a solid understanding of the app’s capabilities, educate them about the benefits of a paid subscription and the additional features it offers. Spotify’s approach of offering its premium plans for free in the first month is a masterstroke: it enables users to understand the app’s paid plan benefits before introducing the subscription offer, leading to higher conversion rates.

6 — Be scrupulously honest and transparent

Trust and a strong brand reputation are crucial to success in the world of subscription-based apps. Make cancellation processes clear and accessible, ensuring users can easily find links or buttons to cancel their subscriptions and don’t have to jump through hoops. By being transparent and respectful, and prioritizing user financial well-being, you establish trust and foster a positive user experience. When customers feel valued and appreciated for their commitment, they’re more likely to remain loyal subscribers.

7 — Measure and optimize your subscriptions

Thoughtful measurement analytics is critical for your app’s success. Keep a close watch on key metrics like conversion rates and acquisition costs to gauge the effectiveness of your subscription model. You can also conduct cohort analysis to gain insights into user behavior and fine-tune your free trial period based on how quickly users convert to subscriptions.

For instance, suppose you have a fitness app offering a seven-day free trial. After examining user data, you discover a significant number of users who complete the trial end up subscribing to your premium service. Armed with this knowledge, you can extend the free trial period to 10 days, providing users with more time to experience the app’s benefits — a move that’s likely to improve conversions and boost ROI.

Key takeaways

• Popular subscription-based apps like Netflix, Tinder, and Spotify charge users a recurring fee for exclusive content and features. Users can modify or cancel subscriptions, and some subscriptions renew automatically.
• Successful subscription-based apps span various categories, including digital content, gaming, streaming, dating, social networking, and productivity tools.
• The rise of subscription-based apps is driven by the demand for convenient, value-packed experiences. Subscriptions simplify users’ lives, offer comprehensive packages, and provide businesses with predictable revenue. This fosters user loyalty and recurring revenue and allows long-term planning and innovation.
• Common subscription pricing models include flat-rate, tiered, usage-based, per-added, and per-user. Each model has its advantages and suits different types of apps.
• Subscription-based apps offer reliable income, increased engagement and loyalty, seamless promotions, and benefits like higher ATT opt-in rates and improved rankings. Challenges include content updates, free trials, customer support, and potential backlash.
• To succeed with subscription-based apps, offer value-driven pricing, compelling free trials, personalized experiences, upselling opportunities, smooth onboarding, and transparent cancellation processes — and don’t forget to optimize the experience using key metrics.