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Product Management. Hands On Consulting.

Coupons and auto renewals

A product sense study


Coupon conversion flow
Coupon conversion flow

This cute little exercise explores the possibilities of offering coupons into the auto renewal of a mobile (iOS) app.

 

The task:

task definition
Your mission, should you accept it
 

Coupons and auto renewals - Lay of the land:

Core assumption: The Compass app offers two main types of auto-renewable subscriptions

Subscription models

Features

Goals

Feature-based

  • Starter

  • Premium

  • Free tier


encourage users to upgrade their subscription plans for enhanced functionality

Time-based

Includes options for a trial period with full functionality, and monthly or annual subscriptions.

encourage users to extend their commitment to the service, increasing engagement over time, reducing churn.

 

North Star Metric

  • Customer Lifetime Value (CLV). This metric is influenced by several KPIs including:

  • Average Annual Recurring Revenue (ARR)

  • Churn

  • Customer Acquisition Cost (CAC).

These indicators help us focus on maximizing the value derived from each user over their lifetime with the app.

 

Feature and business Goals

1. Reducing Churn

  • Encourage transitions from monthly ➔ annual subscriptions

  • Re-engaging with lapsed users.


Inverse ratio: Churn and future value
Inverse ratio: Churn and future value

2. Increasing ARPU

  • Encourage transitions from Starter to Premium subscriptions

  • Encourage transition from trial and free ➔ paid tiers


ARPU - Average Revenue Per User - implication
ARPU - Average Revenue Per User - implication

3. Reducing CAC

  • Allow users to invite friends to expand the user base

  • Lower cost of acquisition


reducing CAC - Customer Acquisition Cost
reducing CAC - Customer Acquisition Cost

4. Increasing stickiness

  • Allow users to invite friends to expand the user base

  • Increase network effect



Increase network effect and stickiness
Increase network effect and stickiness
 

Target Personas by Plan types

  • All personas have the app installed on their iPhone, which enables in-app notifications.


Plan type

Plan

Renewal cycle

Payment cycle

Feature based

Premium

Annual

Monthly

Starter plan

Annual

Monthly


Time based

Annual subscribers

Annual

Annually

Monthly subscribers

Annual

Monthly


Free and trial

Trial users

Downgrades

-

Free users

Monthly

-


 

Coupon Types

The coupon mechanism works towards increase of the CLV north star metric of auto-renewals, and the trailing metrics mentioned above. It is designed to offer:

  • Upgrade coupons Aimed at existing subscribers, these coupons induce plan upgrade or extended duration, offering discounts pricing over and above listed pricing. These coupons will be shown before and during renewal

  • Re-engagement Discount Coupons: Aimed at churning subscribers, these coupons offer a discount for renewal. These coupon will be sent via email once renewal stops (not shown here).

  • Referral Coupons: These offer existing users various perks when they successfully refer new customers to the app. These coupons will be shown periodically, irrespective of renewal.

 

Coupon Timing and Flow

Timing rationale

  • Auto-renewal notice is communicated to all subscribers, monthly or annual plans, two weeks prior to renewal date.

  • Currently, this messages does not contain a call to action, leaving default behavior to “do nothing”.

  • It is, however, our primary opportunity to induce users to increase their involvement with our app - upgrade their plans, sign to longer subscription period.

  • We might also send users seasonal promotional messages via eMail and over social networks (omitted from this analysis for simplicity).

  • Finally, we may introduce a call to invite friends to the app, which will be triggered by preset actions, within the context of the app (for example: “Find friends around you”)


Coupon notification


  • Standard flow, StoreKit1 Once a coupon is activated, users are directed to the pricing page, where purchase options are displayed. On activation, they are directed to the payment page.

  • Shortened StoreKit2 flow Combined plan selection and payment reduce friction and presumably increases conversion, building on the trust in Apple’s payment mechanism.

 

Upgrade: In-app Coupon


The flow for in-app upgrade coupon pops up two weeks prior to renewal date (annual) or when the application opens the first time after renewal (monthly).

Presented: 3 types of upgrades possible, with different wording to the urgency section:



In-app Upgrade coupon
In-app Upgrade coupon
 

Re-engagement Discount in-app coupon

This coupon pops when users open the app past their subscription lapse.

(eMail scenario not shown):




Re-engagement Discount in-app coupon
Re-engagement Discount in-app coupon

 

Plans and pricing page (for time-based plans)

  • The ‘Plans and Pricing’ page is where the coupon leads

  • Most relevant plan shown on top

  • For Free user, show Monthly subscription

  • For Monthly subscriber, show Annual plan

  • For Annual subscriber, show bi-annual plan

  • Free plan is shown below the fold

 

Plans and pricing page (for feature-based plans)

  • The ‘Plans and Pricing’ page is where the coupon leads

  • Most actionable plan shown on top

  • For Starter plan user, suggest premium subscription

  • Show (expired) trial and free plans below the fold


 

Thanks and Expand - Post purchase flow

Referral Coupon sequence is shown, from left to right:

  • Existing user CTA (start)

  • Existing user invitee list (2nd)

  • Receiving user accept and invite



Thanks page and expansion flow
Thanks page and expansion flow
 

Invite acceptance confirmation (In-app Coupon flow - confirmation)

  • Appears on inviters’ screen when invite accepts and successfully installs app.

  • Offer to initiate communication





Invite accepted notification
Invite accepted notification
 

Coupon Mechanism - Metrics

Paid (upgrade and re-engagement) coupon funnel

  • Impression (app screen / email)

  • 1st engagement: Moving to the plans and pricing page

  • 2nd engagement: Starting redeeming flow

  • 3rd engagement: Payment success


Paid and re-engagement funnel
Paid and re-engagement funnel

Referral coupon analytics funnel

  • Impression (app screen / email)

  • 1st engagement: Invitee detail form

  • 2nd engagement: Invite acceptance

  • 3rd engagement: Confirmation message



 

Impact of Apple's StoreKit2: Shortened flow increases conversion

  • This is the expected result, due to the friction every step in the funnel adds

  • Do the switch to enjoy

  • Shorter development ✅

  • Increased conversion 🤔 But… by how much? Shown here are expected, speculative numbers. Need to experiment...


StoreKit1 and StoreKit2 funnels
StoreKit1 and StoreKit2 funnels

 

Thanks for reading!


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