How The Information is combating involuntary subscriber churn

Mitigating passive churn and recovering revenue from failed payments are growing priorities for publishers as they look for ways to maximize subscription revenue.

As a subscription-first company since its inception, The Information has always been thoughtful about subscriber retention and lifecycle management. But as attracting and converting new subscribers becomes increasingly challenging for publishers across the board, the company has stepped up its focus on retention. That has meant ensuring its existing subscriber base is as happy, healthy, and engaged as possible, but also identifying and addressing any weaknesses in its payment architecture that could result in subscribers churning unintentionally.

“Some of the mechanisms and processes we had in place to help us mitigate involuntary churn just weren’t as effective as we needed them to be,” said The Information’s VP of growth, George DiGuido.

To share more about The Information’s approach, DiGuido joined the latest Toolkits Forum alongside Vijay Menon, CEO of Butter Payments, which is helping publishers including The Information and The Athletic recover revenue lost to failed payments with machine learning technology.

Highlights from the conversation included:

A growing emphasis on retention

Attracting and converting new subscribers is becoming increasingly challenging for publishers across the board, which has prompted The Information to step up its retention efforts.

“Acquisition has always been that bright, shiny object… If you take a look at the size of budgets for acquisition versus the size of budgets for retention, there’s really no comparison. A lot of the focus, energy, and attention gets spent on the top of the funnel and trying to get folks to convert. That’s definitely valid, but I think in the last few years we’ve seen a tightening of the marketplace. We’ve seen the rise of AI, social traffic has diminished, and we don’t know what’s going to happen with search traffic. Those are all the lifeblood of publishers from a top-of-funnel perspective. So with all of the challenges there, there’s been a renewed focus on paying attention to the subscribers you have. I think that’s what you’re seeing in the marketplace overall,” DiGuido said. 

Rebalancing resources

As their emphasis on retention grows, some publishers are shifting resources and budgets away from acquisition to shore up their subscriber retention efforts. For The Information, it’s a case of its retention efforts catching up to its acquisition activity.

“I wouldn’t say we’re shifting away from acquisition. I’d say we are lifting up retention to be almost as equal, which it should have been all along… We’re not changing anything from an acquisition standpoint. We’re still going after new subscribers and growing our top-of-funnel. But I think there’s definitely been a resource alignment to the retention side.”

A meaningful revenue opportunity

Most publishers are aware that a portion of their subscription revenue is lost to involuntary churn, but addressing it thoroughly hasn’t been top of priority lists for many. As their subscription businesses grow and mature, however, it’s becoming clear that failed payments and unintentional cancellations represent a significant and growing revenue opportunity. 

“I think it’s an opportunity across the board. When you hear numbers like 20% to 55% of churn is caused by payment failure, that is a lot of people you are losing. If you can capture 10 or 15 percent of those folks and do it in a way that doesn’t tap your resources, why wouldn’t you go ahead and do that? And the newer technologies on the market are making it easier to address the problem without expending additional resources and bandwidth so you can get more done with less,” DiGuido said.

Benefits beyond revenue

One reason publishers have not invested more time and effort in recovering revenue from failed payments is the assumption that those customers will ultimately churn anyway. But even if that’s the case, streamlining the dunning and cancelation process can ultimately benefit publishers by boosting their reputations with processors and financial institutions.

“You don’t want anybody to ever cancel. You want everybody to be a subscriber as long as they can be. But if we can push forward a cancellation for someone who is going to cancel anyway and limit the number of retries against a card that is not working, that actually improves our acceptance rate by not continually trying to charge a card that we know isn’t going to work… It just makes our whole payment processing ecosystem better. So I think being smarter about that has allowed us to see effects across the business not just in revenue recovery,” DiGuido said.  

Build or buy

Although The Information has opted to build and maintain much of its own technology and tools in-house, it decided the messy challenge of tackling payment failures could be better addressed by a third party.

“Our engineering and product teams wake up thinking about a variety of different items, issues, problems, and challenges, so from my perspective if you can work with an organization and in a model that works from a pricing standpoint why not bring in resources that solely focus on this problem day-in, day-out and are abreast of all of the changes, all of the new technologies. We could build certainly, but it would take engineers weeks or months, and with maintaining and updating it and staying on top of all the different nuances, we decided it was a ‘buy’ situation for us.”