Photo by Rasmus Flindt Pedersen for WAN-IFRA.
“We are a digital subscription-based company,” said Lahav during his presentation at Digital Media Europe 2018. “This is what we do, and this is our business model, and in this, we are more similar to companies such as Netflix, Spotify and YouTube. This is how we see ourselves.”
The FT has been actively involved in the digital subscription business for the past 10 years, and it currently has more than 920,000 paid-for customers. Of those, some 720,000 are digital-only, said Lahav. Just one-third of these subscribers are based in the UK, and the rest are spread around the world, he said.
“We have been a digital-first company both in revenues and usage for quite a long time,” — Gadi Lahav, Head of Product, FT.com
The good news about their decade of experience, he added, is that the FT can share its knowledge and experience. The not-so-good news, he said, is that it’s much harder for them to grow right now. “Even if we grow 60,000, for example, or 70,000, that’s less than 10 percent per year,” he said.
“Our commercial goal is 1 million subscribers,” he said, which he says they hope to reach within the next one to two years.
A strict paywall and a pricey subscription
The FT also has a couple of challenges in bringing in more subscribers. First, there is no free content that might help to entice users to subscribe, Lahav said. The FT has a strict paywall. While they occassionally offer marketing initiatives, for the most part, he said “if you go to the FT website, and try to read a story, you’ll be blocked immediately and asked to take a trial or immediately subscribe.”
Another challenge is that an annual subscription to the FT is expensive.
“It’s 300 to 500 pounds, and most people take the 500-pound one (approximately 580 euros) – that’s 48 pounds per month (about 55.5 euros). We have around 2 million readers, both print and online – subscribers and what we call ‘prospects.’ ”
So how to get there…?
Lahav pointed to four assets that he said the FT believes will help them to reach their goal: Highly valued journalism, high-quality readers, data, user-experience.
“Basically, it’s harvesting the highly valued journalism that we have to increase the readership through data and through user experience,” Lahav said.
“If you want to grow your subscription base, you have two options: growth is coming from acquisition or from retention. But our data, and data from all over the world, show that it is four to five times cheaper to retain an existing user than to acquire a new one. And while we invest quite a lot right now in acquisition, we still invest much more in retention and engagement, and how we do that is we use basically data,” he said.
Recency, Frequency and Volume
Lahav said the FT measures engagement through a formula it calls RFV, based on Recency, Frequency and Volume.
“We don’t use pageviews. We don’t use time-on-site, which may help for other publishers. The most important thing (for us is) if your frequency is increasing, you are coming more times to the site, and if your volume is increasing, the number of articles that you’re reading is increasing, then obviously your RFV is going to be higher. And if your recency is lower, hopefully it’s zero, which means you came today, your RFV is also higher, and it doesn’t matter what the formula is, what matters is this is a very, very good proxy for retention.
“We can benefit only if people stay with us. If your RFV is very low, most likely we’re going to lose you very soon. If your RFV is high, it’s likely you’re going to stay with us for longer, and you’re going to maintain your subscription,” — Gadi Lahav
Essentially, he said this all leads to engagement and, crucially, identifying reader habits, a crucial KPI in the FT’s subscription strategy.
“Subscription is vital to your business,” he added. “Retention is crucial for your subscription. It’s not only about acquisition, and engagement is the best driver of retention, but in order to drive engagement, you have to look for habits.”
“Habits are a recurring use of what you’re doing and it means you have a sense of value of what you are using again and again and again. If you have a sense of value, you either subscribe eventually and retain, or eventually you will stop paying for something that you do not use,” — Gadi Lahav
He said the FT has three questions they ask themselves about every user:
- Do they have a habit? – if they don’t have,
- How can we help them form a habit?
- If they do have a habit, how can we reinforce that and make it even stronger?
During the past couple of years, the FT has intensively examined their readers habits.
“We looked at the day and time. We looked at the device and the channel, the landing page. We put everything in our data scientist department and we came up with a conclusion about how people use the site (and content). We came up with bundles – different groups of people where we saw similar characteristics and we ended up with seven different what we call “user journeys.”
This is how people actually use the FT, he said. “So, for example, if a reader has an email journey – it means that most of his or her visits, or all of them, are coming through email. Maybe a newsletter, maybe something else.”
The key to increase both RFV and engagement, he said, is to enhance and improve readers’ habits and their user journeys. He offered a few examples of how the FT does this: The first thing they can do is to help people to start using a different habit that is better for them. So if a reader is not using the FT’s app, then they will suggest that as the reader’s “next best action,” which they show users on their website.
Likewise, they might suggest that a reader sign up for a newsletter or join “My FT.”
‘My FT,’ the FT’s most engaging feature
Based in large part on discussions and feedback from readers, the FT built a feature called “My FT,” where readers get one daily email with articles from the different topics that they follow.
“My FT” was launched together with the FT’s new website about a year-and-a-half ago, Lahav said.
Since then, he said the FT has used “My FT” as a way of helping them to retain readers because they know that those readers who sign up for “My FT” are much more likely to retain their subscriptions.
He said the FT figured this out by comparing a “My FT” user with a “twin” user who had a similar RFV score during the previous three months, but hadn’t started using “My FT.” And then they looked three months into the future and saw what happened to each one of their engagement scores.
“We used thousands of users, and this is the result: An 86 percent increase in RFV. That’s massive,” he said, adding “And that’s an increase over the increase we had in 2016, which was 35 percent. Altogether, this drove thousands of engaged users who we know we can actually quantify.”