How to Maximize Web Subscriptions for Sustainable Growth — Lucas Lovell, Paddle

David Barnard:

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Hello, I'm your host, David Barnard. Today's conversation is shorter than usual, and will be featured in RevenueCat's State of Subscription Apps Report. Each episode this series will explore one crucial metric: ensure actionable insights from top subscription app operators. With me today, Lucas Lovell, VP of product at Paddle. On the podcast I talk with Lucas about maximizing success with web subscriptions, how web payment flexibility enables better user experiences, and why making it hard to cancel can ultimately hurt your business more than it helps.

Hey Lucas, thanks so much for joining me on the podcast today.

Lucas Lovell:

Thanks very much for having me, David. Looking forward to it.

David Barnard:

This is the first year RevenueCat has ever worked with partners to include additional data in this data subscription apps report. I actually have not looked at this data yet, but Paddle has shared some web data that will be in the report. I didn't want to talk through the data today, but I know you personally and the Paddle team work with a ton of apps on web to app and being successful on web payments outside of the app stores. Let's just kick it off with some of the top recommendations and what you see working on the web for subscription apps.

Lucas Lovell:

Yeah, sure. I guess from our vantage point, we're really excited about web to app. Paddle is an end-to-end billing and payments platform on the web and we're working with lots of mobile app companies on their web revenue channels and how to best deploy them. And we've seen, as you pointed out, and some of this data will be shared in the report, a big increase in mobile app companies who are looking at the web as an opportunity to acquire customers.

David Barnard:

Yeah, I feel like that's all I've been hearing about the last two or three years is web, web, web, how do we get web onboard working?

Lucas Lovell:

I think it's really interesting. I think there are some key reasons why that's happening, and I won't bore everyone with that around attribution and perhaps some gross margin efficiency around costs. But I think a lot of people are coming to the web and realizing that there are actually other advantages to the web around expanding your audience types, being able to reach users who are more present on the web and might not be searching for apps in the App Store and also leveraging a lot of the billing flexibility that you get on the web. Web billing has been around for a long time and it can provide a bunch of flexibility and tooling that you can use your advantage on the web, which I think is really interesting.

The way I think about it is very much it's not just a cost-saving opportunity, it's actually a growth opportunity. There's a lot of opportunity on the web in terms of deploying different billing models and deploying different types of pricing experimentation and A/B testing in a way that you're a little bit restricted with on the app stores. I think in terms of how to best think about it, I think the starting point for me would be thinking about why people will visit your website on the web or how are people going to come to you on the web. We see companies who are driving traffic to the web through content marketing and using content marketing as a landing point and then converting users into paid users on the web and then pushing them to the app there. But we're also seeing a lot of companies deploy web funnels and I think especially for mobile apps that have quite a large component of personalization, we're seeing web funnels be a really effective way of driving traffic to the web.

The classic categories there are health and fitness. We're seeing a lot of web funnels and health and fitness education as well, so language learning apps, wellness apps who are all using that effectively and introducing the web funnel off the back of a paid ad on a social media platform for example, and seeing really good conversion rates and then also good renewal rates as well on those subscriptions too. A lot of reasons to consider the web, but I think it's also how you build a really effective web channel is very much dependent on the type of mobile app that you are and the type of customers or the type of users that you're looking to acquire.

David Barnard:

Yeah, it does seem like, and you alluded to it already, is that apps that do have a higher intent user coming in, health and fitness being something we talk about constantly is that somebody looking to get fit or lose weight or these other categories of health and wellness, there's a very strong, deep personal motivation to do those things. And then also, a higher willingness to pay. I mean, people are willing to pay a lot for their health. They may be spending 50, 100 bucks a month on supplements and gym memberships. It can easily add up to hundreds of dollars a month so these health and fitness apps are relatively inexpensive comparatively. And then education and other things, I think there's a lot of categories where you do see the web work better and then maybe some categories where you don't. Any kind of insights of where you've maybe seen apps struggle and then any other categories that you think have worked especially well?

Lucas Lovell:

Health and fitness is working really well, wellness is working well, education and language learning is working really well. I think some areas that we're yet to see it really take off, and I probably wouldn't position this as these companies are struggling but rather they haven't shown as much intent yet is probably in productivity is a good example. I think the lack of personalization around how you use the tool, for example, a note-taking tool or something like this is not as interesting I think when you're thinking about a web funnel and building buying intent through a web funnel. I think that's an example. Media perhaps is another example.

I don't have a lot of great examples around who it's not working for. I think it's more what are the categories that are leading this trend? I think there are other ways in which those categories that perhaps aren't investing in it as much to start thinking about it in the future, but at the moment it's very much the apps with a high component of personalization that are seeing really, really good results with web funnels.

David Barnard:

What are some of the things that you see working really well? You keep talking about web funnels, and we've talked about this a lot on the podcast in the past, different forms of onboarding, different forms of building up intent. What are you seeing working in that?

Lucas Lovell:

Mobile app companies that are thinking about the journey end to end are seeing a lot of good results. Thinking deeply about the web funnel experience, doing a lot of experimentation on the paywall, and then also taking that through to the checkout as well are seeing great results on conversion. I think companies that are looking at those journeys and really thinking about how we can reduce friction in that journey are seeing a lot of success, and also understanding the routes that people are taking through the web funnels and how they can produce a buying signal and looking at that data really carefully I think is good. We very much think about your success of on the web. If you had to boil it down to two key data points or two key numbers that matter, it's very much your conversion through the funnel and your renewal at the end of the first subscription cycle.

How many users get through the funnel and convert based on a certain amount of ad spend? How many of those converted users actually end up renewing? It's easy to get distracted by the former and not think deeply about the latter, and I think the companies that are seeing a lot of success are thinking really deeply about retention and deploying retention tooling and using things like cancellation flows and downgrade flows to reduce churn and to drive the renewal rate in the right direction to really boost and maximize the ROI of the web revenue channel that they're working on.

David Barnard:

I do want to dive deeper into retention here in a bit, but before we do that, I wanted to talk a little bit about some of what you just mentioned is that there is so much more flexibility on the web with how you charge the business models and the ways you approach monetization. One of the things I hear about constantly and been frustrated with the App Store for years, is that they don't offer per seat licensing. B2B is really hard.

If you have a great B2C company and somebody comes and says, "Hey, we want to buy 20 licenses for all of our employees," there's not really a great way to do that on the App Store.

Even in a B2C sense where a employee wants to use an app for work but they have a personal App Store account, it's like they would have to pay for it with their personal credit card and then have this whole reimbursement process. The web does offer so much more flexibility and business model and monetization and how you do things. What are you seeing be successful there?

Lucas Lovell:

I think it's interesting because to be honest, based on what we're seeing and we're primarily working with B2C, so consumer subscription apps at the moment, and most of them tend to be deploying quite similar models on the web as what they are on the app, but we are starting to see signs of some companies better understanding the billing flexibility that the web provides and starting to tinker and play with some different types of models. To be honest, I think a lot of consumer apps don't know what they don't know, and so there's definitely an education piece on our part to show them what's possible on the web and support them in exploring different pricing and packaging scenarios and how they can think about setting up their billing models.

I also think we're going to go further and further in this direction because if you look at AI and how AI is starting to be embedded into different software products, that's really changing the way that we price as well so a lot more consumption, usage based pricing, tying pricing to the value that you receive from a product as opposed to just the standard price irrespective of how often you use it. I think we will start to see that roll into the consumer side a little bit more as consumers start to use more of these products. I think what we're seeing at least from our vantage point is bringing over the simplicity of the App Store into the web. We are seeing more flexibility on the retention side I think. But I think from the billing model and pricing model perspective, I think we've got a way to go before we see mobile apps really start to challenge some of those norms that have been ingrained in them based on some of the restrictions in App Store billing.

David Barnard:

Yeah, I mean that's part of the whole conversation in the last few years around web is that it is this whole new opportunity that most apps aren't used to working and so there is this exploration phase and I agree. I mean, I think we're just going to see a lot more experimentation over time with this different pricing and packaging and B2B opportunities and company billing and stuff like that so it's an interesting opportunity for folks to be exploring even if you're not seeing a ton of it yet.

The other thing I do hear a lot about from a web billing perspective is win backs is that if you're going to offer a discounted subscription to try and win somebody back, a great way to do that is to go ahead and send them to the web, it's a lot higher intent when you say, "Hey, 50% off or 25% off if you go to the web," are you seeing those kinds of things be successful?

Lucas Lovell:

We are, yes. We are seeing quite a number of examples of discounted pricing on the web and using discounted pricing in win-back campaigns as you mentioned. We're even seeing companies choose to offer standard pricing at a lower rate on the web, just accounting for the fact that the fee component is much smaller on the web and choosing to pass on some of those savings to the user. I think there are lots of companies that are starting to dabble in that space, and I think consumers will start to pick up on that.

I've known everyday people pick up on the fact that, "Purchasing X is cheaper on the web than is on the app, so I'm going to go and do that."

Or "Hey, I'm going to cancel my subscription on the app and resubscribe on the web because of a cheaper price." There is some complexity around that around when you can link from the App Store how you build those mechanisms, but it's definitely possible and something we're definitely seeing,

David Barnard:

I don't know that everybody's fully aware of this, I still get questions almost on a monthly basis from people like, "Wait, can I actually send people to the web?"

And the basic answer is that you cannot send people to the web from inside the app, although there's even more flexibility now with both Apple and Google with special entitlements where you can actually in the app send to the web, but then you still have to pay commission. It's all a bit complex, but as of I think about two and a half years ago, there was a ruling, I think it was the Japan Fair Trade Commission and they pushed Apple on this where once you have somebody's contact information.

Even if you collect it with inside the app, Apple tried for a while like, "Hey, if you collect an email inside of the app, you can't then use that email to send people to the web," but that's clearly very anti-competitive and so they backed off on that.

Any contact information that you collect within the app can be used to then push people to the web. I've even seen apps where if during that onboarding flow inside the app, they do collect an email and the user doesn't immediately subscribe, then within minutes they're pushing an email and maybe it even drops down as a notification while they're still in your app saying, "Hey, come to the web and save 30% or 40%," or whatever that is.

I mean, of course Apple doesn't love that that happens, but that is okay now they cannot and have stated in the rules that is okay. It can be a really powerful tactic to nudge those users and using email and text or other ways to do that. I think push notifications are still under the rule of that's technically in their ecosystem, although I do still see apps doing that on occasion using push notifications instead of email or text. But yeah, I think a lot of people aren't aware of just how much they can use even those channels to push people to the web.

Lucas Lovell:

This is why we're seeing, especially in gaming, a lot more account creation. Apps that typically didn't require account creation so you're just in a game and you just play the game are now asking you to create an account, put in your name, put in your email address for the purpose of being able to retarget you in different ways through other channels that aren't directly the app. It makes sense in gaming, right? Because you're purchasing things on the fly.

If you're playing in an app and you're purchasing gems or tokens or swords or whatever, in game economy items, and it's not just a one-off purchase with a renewal at the start, there is a big drive to push them to a web store to make those purchases where they're offering bundled products at discounted prices. But to do that, they need to be able to contact you through other means and so we're seeing a lot of that through the evolution of the web store and gaming. The Epic game store is a great example of a very successful strategy that is really working for Epic games and there are other great examples of that as well. But yeah, it's a brilliant point and you're spot on.

David Barnard:

Yeah, I even saw that I played Pokemon Go with my kids for years now, and I just got an email a few weeks ago of web-exclusive bundles that really highlighted the deals that you can get on the web for Pokemon Go so yeah, I've been seeing it more and more as well.

I did want to transition and start talking a little bit more about retention and churn mitigation on the web. I think it's no secret that some of the reason some apps do see better retention on the web is that it is just harder to cancel. I mean famously, New York Times and others have made you call to cancel if you have a web subscription and it is way easier to cancel on the App Stores. Some of the boosts that you're going to see on the web is just people, it's daunting. I'm going to have to go log in, I'm going to have to dig through settings and find a way to cancel.

But ultimately, you're not going to build a great business on people not being able to cancel them from canceling. Those are the people who are going to be frustrated with your brand. They're going to be telling their friends not to subscribe because they had a hard time unsubscribing, and so to build a great business, you don't want to put huge barriers in the way of canceling. You want users to be engaged with the app and actually getting value. What are some of the ways that you've seen the web work well for retaining users and doing so in a way that actually is consumer-friendly?

Lucas Lovell:

I think this is really important, and I actually agree with you. You can't build a sustainable business on dark UX patterns. We see that on both sides. We don't just see that on the cancellation side. You do see that upfront as well at the paywall around transparency, around pricing, right? Because the web is much more flexible, you're not under the guise of a governance structure like Apple where you can push boundaries around that sort of thing, mislead consumers in certain ways, and there's just no way you're going to build a sustainable business out of that so we would never ever encourage that.

I think the part that is perhaps different on the web is tooling available to you in order to prevent churn. There are a number of examples of this, and I think your point about the FTC's new click to cancel rule is spot on and on the web, companies need to be really aware of that. There are options for you so when someone clicks a cancel button, and it might be a one-click cancel button, but you can present a cancellation flow which can ask some questions about why are they canceling and present some alternative options.

You can build ways to trigger a downgrade flow or a pause flow instead of a cancel flow, which means you might be downgrading them from one plan to another, but you're not losing them entirely. You can also deploy reactivations and win-back campaigns in different ways on the web, which I think is really interesting as well. I think the web just gives you more flexibility around some of the customization you can build into your flows to either mitigate churn in the first place or when churn is happening, perhaps get a better result than you might've been able to get on the App Store.

David Barnard:

To your point, I think there's an opportunity on the web too to create better experiences than you get on the App Store. Yeah, it's super easy to just go cancel on the App Store, and that is a good consumer experience, feeling like you have control over the subscription. But with being able to pause, being able to refund, being able to offer more flexibility to customers on the web, I do think can actually create better customer experiences. One thing I've heard from people that's actually working pretty well is instead of a free trial offering a 30-day money back guarantee, it's like you can't do that on the App Store.

You can't offer a money back guarantee. You can't automatically refund somebody. As an app developer, you can create better experiences on the web through that flexibility where you are driving that retention and helping people stay retained, but then offering these better experiences on the web. And I think it's a huge opportunity and like we were discussing earlier as a, for app developers anyway, a new thing that's really been growing a lot the past few years. I think there's still a ton to explore there.

Lucas Lovell:

Absolutely. It's really exciting. Really exciting, lots of opportunity, as you said. I think on both stages in the funnel, the two most important things, as I said earlier, it's conversion through the paywall and the checkout, and then keeping and holding onto that customer. I think at both of those points in the user journey, the web is giving you opportunity and flexibility and tooling to do things that you are unable to do in the App Store. That's the unlock that people are realizing when they come to the web.

They're coming for the fees and staying for the flexibility in a way. The catalyst is better attribution and lower cost transaction fees, but they get here and they go, "Wow, I have all of this flexibility around me. I can do different things. I can experiment in different ways. I can try and build different customer experiences to support my users on their journey, to keep them, to engage them."

I think we'll continue to see as web to app keeps evolving, we'll continue to see mobile app companies push some of these boundaries, explore what's possible, and yet we're here along for the ride and we're really enjoying it and learning a lot from a lot of these mobile app companies.

David Barnard:

Awesome. Well, it's been really fun chatting through this with you, and I'm similarly excited about what we'll see continue to grow and change on web building for apps. Anything else you wanted to share as we wrap up? We're going to include links to your personal LinkedIn, and to Paddle of course, but anything else you wanted to share as we wrapped up?

Lucas Lovell:

No, I think we're good. Thanks for having me on. As you just mentioned, very happy for people to reach out to me via the typical channels: LinkedIn, X, Twitter, whatever we call it these days. But yeah, thanks very much for having me on, David, it's been a great conversation.

David Barnard:

Thanks so much for listening. If you have a minute, please leave a review in your favorite podcast player. You can also stop by chat.subclub.com to join our private community.