W
elcome to the TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by the daily TechCrunch+ column where it gets its name. Want it in your inbox every Saturday? Sign up here.
Retaining mobile app subscribers is harder than it was last year, but paywall optimization and gamified UX can help. Also, cyber insurance providers are pushing companies to up their security game, and that’s mostly a good thing. — Anna
Time to experiment
Average mobile subscription prices have been growing month over month across all subscription tiers since the beginning of 2022, according to a recent report on the state of in-app subscriptions in the U.S. from Adapty, a company that helps developers drive more revenue from their apps.
“We believe there are several reasons for this trend, including escalating inflation and higher cost per acquisition (CPA) prices for paid ads,” Adapty notes in its report, which is based on data from apps whose audiences add up to 6.5 million users.
While pricing trends are a helpful benchmark, the most actionable part of the report has to do with paywalls, one of the key elements that Adapty helps its clients optimize. The takeaway here is that these should be the focus of much A/B testing: According to the report, app revenue is growing exponentially with the number of paywall experiments.
More precisely, here’s what Adapty found out from some 13,000 paywalls: While apps running 10 to 100 paywall experiments make 3.5x more revenue than those that do fewer than 10, apps running more than 100 make 7x more revenue than those that conduct 10 to 100 experiments.
Typically conducted as A/B tests, these experiments can focus on wording, but also on the offering itself. For instance, the report notes that companies can combine different subscription options such as weekly, monthly and annual, but also two months, three months or for a lifetime.
The more complex it gets, the more specific tools can help. But Adapty isn’t the only mobile subscription management platform. The category leader is RevenueCat, whose customers include Buffer, Notion and PhotoRoom. PhotoRoom’s photo-editing app for e-commerce vendors and small businesses has been downloaded more than 80 million times, up from 40 million times last year.
PhotoRoom’s co-founder and CEO Matthieu Rouif highlighted the importance of optimizing paywalls, as well as not misleading customers with a surprise bill at the end of a free trial, for instance. Rouif said:
Shipping speed and experimentation are key indicators of app success. App paywalls are no different, it’s the most critical screen to explain your app value to the user.
Experiments should induce learning and value creation for the users. Blinkist created a more ethical paywall, now recommended by Apple and Google, by talking to users.
At PhotoRoom, we were able to better localize and focus on the specific features that matter for each country using Superwall and RevenueCat. We even run user interviews and surveys about our paywalls to ensure the data is not biased, and higher conversion never comes from a misunderstanding of the users.
Taking advantage of customers is not only wrong, but also shortsighted. If you want to maximize lifetime value, you want to make sure that users don’t churn at the first opportunity. This is tougher this year than in 2022: Subscription retention has decreased by over 5% year on year, Adapty found out.
But while paywall tweaks matter, it is the entire app that developers need to optimize for engagement and retention, and to do that, they can take a page from their mobile gaming peers.
Common ground with games
Reading Adapty’s report, I was also reminded of Boost Capital Partners, a European seed VC firm that wants to help founders who are digitizing real-economy industries create “gaming-level user experiences.”
Boost partner Alvaro Alvarez del Rio, who has backed companies such as Deliveroo and Supercell before raising this fund, sees a lot of common ground between the best apps and the best games.
“Over the past 12 years collaborating with both app and game developers, we have observed a consistent pattern among highly successful companies when it comes to testing and monetization, including how fast they iterate through constant A/B tests; how they use data to better understand their users; and how they choose a few relevant metrics and improve them one by one, starting from the top of the funnel,” he said.
These experiments should be wide and broad. Alvarez del Rio observed that “to achieve effective monetization at scale, tests often focus on enhancing creative style to improve user acquisition; optimizing the onboarding process and early retention; adjusting pricing and offers based on early interactions and user profile; exploring different monetization methods, including subscription models with free trials and advertising for those users who do not want to pay.”
The prospect of gaming-level UX in completely different fields is promising for companies, as well as for users. It reminded me of another team I met with recently: life insurance company YuLife, whose app rewards healthy behavior from end users — like when they go for walks, bike rides or even meditate — to reduce risk on its books.
“To encourage healthy behavior, we’ve taken a leaf out of the books of mobile games and use avatars, leaderboards, badges and quests that challenge the user everyday to care about their wellbeing without having to renounce the engaging aspect of gamification,” the company’s chief technology and product officer Josh Hart told me via e-mail.
Fine-tuning engagement requires thinking — and data. “With YuLife, as in traditional game design, the goal is to keep players in ‘the zone,’ where things aren’t boring, but aren’t too overwhelming, so we’ve designed it to be progressively challenging. . . . As in game design, we’ve found this ‘zone’ through watching user behavior over time,” Hart said.
Helping companies find this zone is clearly a market opportunity for companies like Adapty, RevenueCat and Superwall, and it’s a job opportunity for UX designers and data analysts who may want to apply their skills beyond gaming.
Prove yourself
“Not that long ago,” wrote Ilia Sotnikov, a security strategist and VP of user experience at Netwrix, “few companies even considered purchasing insurance to mitigate their financial exposure from a cyber incident, and for those that did, obtaining a policy was as easy as filling out an application and writing a check.”
Things changed fast: More companies are now seeking cyber insurance coverage, but providers are asking prospective clients to prove that they have implemented enough security measures to be insurable in the first place.
Cumbersome, for sure, but it can also be an opportunity for companies to up their game. After all, enterprise customers, too, expect any of their vendors to have high levels of security and compliance, and that includes startups.
In Sotnikov’s words: “The benefits from working through the process of achieving eligibility for cyber insurance can go far beyond the issuance of a policy. Remember that your organization is being assessed by some of the leading risk and security experts anywhere, so be sure to take advantage of their findings to strengthen your cybersecurity and compliance posture.”
Join 10,000 VCs, startup leaders, and entrepreneurs at this year’s TechCrunch Disrupt, taking place in San Francisco on September 19–21. Join sessions and hear from VC leaders at GGV, Benchmark, YC and more as we unpack the latest startup news. Save up to $600 now through August 11, and save an additional 15% with promo code EXCHANGE. Learn more.
