Hey, how do you increase adoption of an already unpopular feature, without overwhelming your already stretched resources?
If you answered “raise the price by 67%, without improving the offer in any way”, you may qualify for Twitter’s product development team.
This week, Twitter started notify Twitter Blue followers that they will soon have to pay a lot more for their monthly subscription.
As you can see in this notification, the monthly fee for Twitter Blue access is going from $2.99 to $4.99 in the US, with all other regions as well. see the same relative increase.
Current Blue subscribers will be spared the additional costs for a few months, but from October everyone will face a 67% increase in costs – with no additional features, no process changes. Nothing.
Which, as noted, seems particularly odd given that Twitter Blue isn’t doing as well.
As part of Twitter’s latest performance update, released last week, the company reported that its revenue from “subscriptions and other” sources was $100 million in the second quarter of 2022, representing actually down 36% for this item, year over year.
This would suggest that Blue Twitter not really gaining traction at all, while Twitter CEO Parag Agrawal also noted in May that the company has not reached the “intermediate stages that allow confidence” with its new revenue and growth projects, including Blue.
Twitter didn’t share any official numbers, but independent information, based on payments made through app stores, also indicated that Twitter really doesn’t get much revenue from subscription payments.
So why raise the price?
This appears to be a negative move, which will result in more users signing up to try it out, which will drive the additional cost. And amid a broader economic downturn, which has seen the cost of living rise overall, will many people really be willing to pay $5 a month for NFT profile pictures and a few custom icons?
I suppose not. But Twitter needs to make money somehow, and as various commentators have noted, the company is also set to see a significant increase in legal costs due to its legal battle in come with Elon Musk.
Maybe that’s why the price is going up, but it looks like Twitter should at least look to sweeten the deal somehow, if they’re asking for more money.
I mean, Snapchat+, which is similar to Twitter Blue, would already overtake Blue subscriptions, just a month after its launch. Snapchat also added new features, like access to a desktop version of the app, exclusively for S+ users.
It looks like there are ways to make subscription deals like this work – though I’m not sure the seemingly random price increase is the growth hack Twitter might think.
More and more retailers are launching initiatives around promotional subscriptions, in order to retain customers and secure their turnover. VERTONE deciphers this trend, often complementary to a loyalty program, and provides the reasons and mechanics for launching a subscription of this type.
How to revitalize loyalty programs and ensure customer engagement?
For many years, retailers have gone to great lengths to engage customers with their brand. Among the essential devices, we obviously find loyalty programs and customer animation plans, but new initiatives have emerged based on a subscription logic :
- A first type of subscription allows holders of a “membership card” have the right to access a point of sale with prices close to those of wholesalers, thanks to a monthly or annual payment. This offer, still little known by the French, is already well developed on the other side of the Atlantic. CostCo, which operates on this principle, is the 3the player in the United States and has already opened 2 warehouse clubs in France.
- L’“subscription on delivered products” allows you to have a percentage reduction on a selection from products, depending on the number of products purchased and/or the chosen delivery frequency. Adopted by Amazon, Leader Price, Casino and even Carrefour, this system aims to build customer frequency and engagement over time.
- Finally, the“promotional subscription” allows the customer to have a discount on a wide range of products. With specialized distributors, this subscription is often combined with the loyalty program (for example, the FNAC paid loyalty card offers 5% on a selection of product universes). Innovative promotional subscription initiatives have recently been developed in large distribution (Casino, Carrefour, Monoprix) in addition to the existing loyalty programs.
The promotional subscription in gsa
Several promotional subscription initiatives have emerged in large distribution, breaking with the usual loyalty mechanisms in the sector:
Launched in July 2019, Casino has developed casinomax, subscription that offers an immediate 10% discount in all Géant Casino stores and Casino Supermarkets*, thanks to a monthly payment of €10, or €90 per year (that is, 3 months free). An offer for students gives access to this subscription, from July 2021, for only €2 per month.
Monoprix has also rolled out its program monopflix in August 2021: members of the loyalty program can thus benefit from -10% on all food, maintenance and hygiene products for €9.90/month or €99.90/year (that is, 2 months free ).
Latest initiative to date, Carrefour has been testing since September 2021 a promotional subscription dedicated exclusively to its private label, in some stores in the Rouen region. For €5.99 per month, cardholders benefit from -15% on the Carrefour brand. In March 2022, Carrefour launches another subscription offer for traditional fresh products: insert customers can thus benefit from -15% on traditional fresh products for €7.99 per month.
The promotional subscriptions of these 3 brands have several common features :
- It is essential to have a loyalty card to subscribe to the subscription
- The discount can be combined with all other promotions and is legally limited to 34% on food.
- No maximum spending limit beyond which the discount no longer applies
In short, today two main subscription modelsin France :
Why launch a promotional subscription?
The brands that have already launched a promotional subscription (Casino, Monoprix, Carrefour) are the ones that have lost the most customers in the last two years, with decreases in the penetration rate between 1 and 4 points:
Versus retention problems With a drop in the penetration rate of -3.6 pts in 2 years, the Casino and Monoprix brands are relying on an expensive system to retain their best customers and revitalize their market share.
As for the Carrefour group, which sees its penetration rate drop by one point between 2019 and 2021, the objective seems to be, therefore, strengthen customer loyalty through their own brands.
For the time being, its promotional subscription offers are therefore focused on a logic of customer retention, rather than on a capture objective.
What subscription mechanism for what type of brand?
We estimate that the food rate (% of food spending of a customer in the brand) is a key element in the definition of the subscription mechanism:
We note that monoprix and Casinohave a relatively low feed rate , which attests to a strong fragmentation of purchases by customers of these brands. The other way, Crossing an high food rateand that has been evolving positively since 2019.
This large gap in food rates between Carrefour and Casino/Monoprix reflects a different customer base structure between these brands:
Thus, in monoprix is a minority of customers which reaches €100 in monthly spending allowing you to make your subscription profitable.
The other way, a large part of Carrefour customersspend €100 a month, given the much higher food fee. If Carrefour had proposed an offer similar to that of Monoprix, the brand would undoubtedly have spread a lot of generositywhich would not have allowed profitability (too large a subsidy effect).
We can assume that Carrefour initially concentrated its offer on its own brand to reduce this subsidy , because few customers spend more than €40 a month on Carrefour-brand products (the white-label share usually represents around 20-30% of total purchases in the sector). The same goes for Carrefour’s subscription offer launched in March 2022 on traditional fresh produce: relatively few of the brand’s customers will make more than €54 in purchases of traditional fresh produce per month.
By offering a promotional subscription offer in line with their fleet structure, Monoprix, Casino and Carrefour can expect generate profitabilityin their promotional subscription offers.
An article written by Elvina Mercier and Matthieu Meurisse