Optimizing Funnels, Pricing, and Retention at Zumba — Nicole Page & Lucy Levy, Zumba

David Barnard:

Welcome to the Sub Club Podcast, a show dedicated to the best practices for building and growing app businesses. We sit down with the entrepreneurs, investors, and builders behind the most successful apps in the world to learn from their successes and failures.

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Hello, I'm your host, David Bernard. My guests today are Lucy Levy, chief consumer officer, and Nicole Page, senior product manager at Zumba, the largest branded fitness company in the world. On the podcast, I talk with Lucy and Nicole about how customer-driven iteration led Zumba from VHS tapes in 2001 to launching an app in 2024, their app to web experiments that boosted LTV by 17%, and how they're able to charge for content when countless Zumba classes are available for free on YouTube.

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

Lucy Levy:

Thank you for inviting us.

David Barnard:

And Nicole, nice to have you as well. Always fun to have two folks from the same company to have different perspectives.

Nicole Page:

Thank you, David. I'm looking forward to the conversation.

David Barnard:

So I wanted to kick things off with the story of Zumba, and we don't always dive into the story of apps, but Zumba is really interesting. It's been around for 24 years and has become synonymous with dance-based fitness. It's the Kleenex of fitness in that a lot of people just say Zumba to refer to any kind of dance-based fitness, and that's a remarkable achievement as a company.

And the app, as we'll get to, is very new to the story of the Zumba brand, but let's go all the way back and talk through the founding of the Zumba app. And I think it'll be especially interesting to folks like a indie developer looking for that next new app to build, or somebody at a bigger app company thinking about secondary product market fit or even somebody at big company building a side project.

I think there's a lot of nuggets in the story of Zumba, of how to think about what kind of product to build, whether or not you're feeling that pull of product market fit and things like that. So, Lucy, take it away. Tell us the story of how Zumba was founded 24 years ago.

Lucy Levy:

Yes, yes. I'm happy to share the story and being a big fan of the podcast, so thank you so much again for inviting us. Funny that you say that Zumba and Kleenex, that example is on point. It happens very often that people just think that we are fitness discipline or a fitness category, not necessarily a private brand.

But I'll tell you a little bit about this story. So, Zumba has been around for 24 years, which in the fitness world is unheard of, and a lot of people had little faith that we're going to survive that many years, but there is a lot to it and a lot of power into the community.

So, Zumba started, and it's a funny, funny story, it's three Albertos. So same name, different backgrounds, but the three of them are Colombians. So big coincidence on that front, and it actually started with Alberto Perman, who is our current CEO and one of the co-founders, who had lost his job.

He had started an internet business 24, 25 years ago that obviously burst with the internet when the internet bubble burst and he was out of a job, out of path. He didn't know what to do. He was having dinner at his mom's house and the mom said, "Why don't you come downstairs to meet my fitness instructor? He teaches an amazing class that everyone wants to attend."

Of course, he was like, "Why the hell am I going to have to meet your fitness instructor? This makes no sense." But as every mom, she was very persistent and he finally came and they went to meet Alberto, which is the other Alberto. He was a successful fitness instructor in Colombia and was just getting started in Miami, but successful meaning that he had a class that had a lot of people, but he hadn't created a brand or a business around it.

So he was teaching at the building and the class was packed. A lot of people were outside waiting to join the class, but the biggest insight is that everyone was laughing and enjoying. So, Alberto Perman, who is super creative and very smart, he saw that situation, he said, "You know what? There is something here. People are actually exercising without suffering." Which is not something that we see very commonly, especially 24 years ago.

So then they invited the other Alberto, who is our COO, the three of them are still super active and involved in the company, and they decided to create a VHS, which eventually went into a DVD to start selling online. They got inspired by Taibo and Billy Blanks.

So they started selling the DVDs through TV, through a license and a few other partners, and they were getting some success with that. But the pivotal moment was when viewers or people that had purchased the product started calling the call center of the infomercial company saying that they wanted to become instructors or they actually wanted to join an in-person class.

So as you know, the infomercial products normally go through a cycle where even if they succeed, at some point they die down and they disappear. So they were already starting to feel that that could happen, and they were already trying to think, okay, what else can we do?

So they decided, let's do a training in Miami to licensed instructors. Let's see how many people show up if more than 60 people show up, we keep going with that idea. If not, we all have to start thinking about what is going to be our career path because these DVDs were not necessarily very sustainable long term.

So it ended up happening that about 120 people showed up to the training in Miami, super passionate, very excited, and so they continued to replicate that situation. So they were training people all around the country, and long story short, a lot of those people wanted to take the training multiple times because they needed support and they decided to create the Zumba instructor network, which is our core business and our biggest asset, it is our community.

Our mission as a company is to make our Zumba members successful. So how it works is that normally you take an intro training, which is the basic one, Zumba training, and then as you take that training, you have the option to join the Zumba instructor network where we provide a lot of benefits including apps for them to teach, music, choreography, marketing materials, license to teach around the world. So a lot of them end up joining.

And lastly, what happened, so this company was built based on customer feedback or user feedback, if you want to call it that way, just to find parallels with the app. The last thing, what happened is that people were actually tattooing the logo of the company and they were actually creating clothing, so they were using white T-shirts or whatever and they were putting the brand in their clothing.

So the third revenue line is an apparel brand that's pretty successful. It's the uniform of our instructors and we sell through e-commerce and two distributors internationally. So long story short, the instructor license certification is one part of the business. Then the Zumba instructor network is the second part, and then apparel is the third part.

Company has been around for 24 years. We're in 180 countries. We're super global. We have trainings happening and instructors teaching in 180 countries on an ongoing basis, and we have 15 million students taking Zumba classes on a weekly basis. So super proud of the accomplishments.

There's one interesting data point. There are more than 200,000 locations having Zumba. There is less gyms around the world that exist. So there are more classes happening because they happen in schools, in churches, in parks. So, Zumba, it's actually bigger than actually the gym locations, but you're all wondering how do we end up doing an app?

Obviously, pandemic came, a lot of disruption, specifically obviously in the fitness industry. And we were, first of all, our initial reaction is how can we support our instructors? We stayed true to our mission, so we decided let's not do an app to compete with our instructors because it's not what we do, and let's actually create a system for our instructors to teach virtually while the pandemic was happening.

So we did that, but in the meantime, of course, we realized that five years later, people went back to their in-person classes. A lot of gyms where some instructors were teaching had shut down. So we were hearing from people that they wanted to take Zumba again, but they didn't have a class near them. So that's when we decided to do the app.

We launched the app about a year a half ago. It's been fascinating, a lot of learnings. We have a class locator in the app, so the app is mostly especially the subscription part to access high quality content, but we actually have a class locator where we can match you with a local instructor.

So eventually, once you feel comfortable, you can try an in-person class. It's been quite a ride. We're still around. We're strong. People do Zumba around the world every single week, so happy to be part of the company.

David Barnard:

Such a cool story, 24 years later to now be one of the fastest growing fitness apps on the app store 24 years later. And again, launching an app in 2024 as a fitness brand feels late. You should have had an app in 2010 or 2012. You've been around that whole time. But I think it is really fascinating how mission-driven you are and how the instructors and the classes are so core to the brand.

So, Nicole, I wanted to ask you, as Zumba started thinking through what could an app look like, how do we do that and not kill what's been so successful for us? How do we not alienate our instructors? What was the thinking behind all of that and how the product came to be after the pandemic and as you started thinking that you really did need to build an app?

Nicole Page:

Yeah, definitely. So we actually, at Zumba, we have a lot of experience with apps because we have a number of apps that we've built for our instructors. So we have a lot of apps that the instructors use to put together their playlists to teach their classes, to organize their social media.

But during the pandemic, when we realized that we needed a way to bring Zumba to people around the world who weren't able to participate in the classes during the pandemic, we started doing a lot of research and we went through many iterations for the app and we tested a lot of hypotheses during this research.

But the one that we found was that a lot of people wanted to do Zumba, but they were a little shy or they had been out of fitness for a while and they didn't feel comfortable going to the classes. So the niche that we found ourselves in that would also help our instructors was get beginners, get people who are coming back to fitness, get them into the Zumba app, get them comfortable with doing classes, and then eventually, they would go and they would find an in-person class.

So that was really our sweet spot and we continued to interview. We talked to a lot of instructors, we talked to a lot of potential students, and everyone was telling us that they want to get comfortable with the classes first, they want to feel like they're confident so they can eventually go and find a class.

David Barnard:

I'd love to dig a little deeper there. I think myself and so many app developers, especially Indies don't necessarily think they have the resources or whatever are so bad at user research and talking to people.

What did that look like for Zumba? Did you already have a lot of emails? Did you do phone calls? Did you do Zoom? Was a survey? How did you actually do that research and start to uncover the insights that then became the app?

Nicole Page:

We're so fortunate as Zumba because we have so many people that love Zumba, like Lucy mentioned, tattoo getting level of love for Zumba. So we've always had tons and tons of our instructors who have been willing to talk to us, and we talked to them regularly.

When it came time to just finding students, we did go to classes in person and we talked to students in classes, but we also just have a lot of people in our database that were really willing to talk to us. So we talked to hundreds of students and instructors over the course of the app development.

Also, way more than that in surveys. So luckily, people are really willing to talk to us. They want us to make Zumba better for them. So it was always really easy for us to find people to talk to and we got them on Zoom, we got them on the phone.

We did a lot of different kinds of interviews where we would do structured interviews, but we also did things like a study where we tried to get them to do more workouts throughout the week and we just treated it like a check-in and we would let them talk to us and not ask them as many questions. So we did a lot of different iterations and got a lot of great feedback that helped us shape the app.

David Barnard:

Very cool. As you were doing that research, especially as you honed in on beginners and people returning to fitness being where you needed to focus, how did you think about not over-indexing on the diehards, not over-indexing on the instructors who've been with you 15 years, not over-indexing on the participants who have Zumba tattooed on their arm.

How did you balance filtering the feedback of, okay, here's a segment of diehard and then, but we really do need to still find those new users to really get that fresh perspective in addition to the diehards?

Nicole Page:

Yeah, that was so important. We spend a lot of time looking at our data and pulling out specifically people that download the app and then churned or took one class and then churned, and we spend a lot of time talking to those people as well because obviously, we want to build the app for the people that love Zumba, but we also want to make sure that we're bringing people in and letting them engage with the product enough to find the love for it.

So we're trying to get people that churn out early and talk to them and figure out what is it that made you leave? What is it that... Did you find another product that works for you or did you just give up fitness altogether? We spend a lot of time talking to them as well.

Lucy Levy:

I would want to add, definitely cohort research so, for sure, we are very mindful of that. But what's interesting is that in the findings, a lot of the people that end up churning is because they rather go to an in-person class, which is also a good situation for us.

So it's interesting the findings that we're getting, obviously not great for the app, but great for the business overall and it really with our mission.

David Barnard:

And one of the big challenges that y'all were sharing with me in preparing for this podcast is that there are so many free Zumba lessons on YouTube at this point, 24 years in. I love that it went all the way back to VHS that the company started by sending out VHS tapes.

So you have 24 years, or I guess at the point where you started working on the app, 21, 22, 23 years of content that's been built up and not just by Zumba the brand, but by instructors, by influencers, maybe even some people who don't even realize Zumba was a brand and they just created a YouTube video that says, "Hey, look at my Zumba dance fitness."

How did you think about not only balancing competing against the instructors in the live classes, but then actually building something that would differentiate the app from just being able to get free and charging for something when you could just go to YouTube and get it for free?

Nicole Page:

We actually, specifically to the YouTube question, we ask ourselves all the time when building our roadmap, how is this better than YouTube? What would make someone want to pay for this when they can go to YouTube and get it for free?

And one thing that we learned as we built the app as we experimented with different features was people were looking for and were willing to pay for a guided experience, not just a content repository. So one thing that we built and tested last year was programs.

So instead of just dropping them into the app and giving them a bunch of content to choose from, we started developing goal-based programs. So as they came in through onboarding, we asked them about their goal, whether it was weight loss, getting started, just having fun or reducing stress, and then we would build them content packages or programs based on their goal, and it gave people a lot less decision paralysis.

They were able to come in, get to a program right away, get guided through the classes that were the perfect fit for them rather than having to sort through content, which is what they have to do on YouTube. So once we built programs, we saw a huge improvement in our numbers. People that joined programs were watching two times as many videos as people that weren't enrolled in the programs.

Our month two retention went up, it about doubled for people that joined programs. So we saw that this was really a differentiator for us, and we continued to build from there, releasing more programs and building more features that reduced this choice that users had to make when they got into the app.

David Barnard:

Yeah, it is such a fascinating thing. I mean, so many apps are competing with other apps, but you're also competing with YouTube. You're also competing with yourself, but also really cool that it's a broader business that you can find success as a business if somebody uses the app a few times and then starts going to the live classes, that still benefits a business, but that differentiation is key.

What is it about that differentiates it from other fitness apps, from free YouTube content, any other key insights or features or things that were aha moments for the Zumba team as you were building this out that really became those core valuable pillars that people were willing to pay for?

Nicole Page:

A lot of it for us was quality and making sure that our content was super high quality. The feedback that we got from users was that when they went to YouTube, there was such a wide, wide range because anybody can post a video and like you mentioned, they don't even have to be doing Zumba, they just call it Zumba and it's so hard to find what you're looking for.

And people would tell us that they would go through five, 10, 15 videos and they just don't have the time or patience to do that. So we really focused on high quality content and we did a lot of research to figure out what content it is that they wanted.

Beginner content, in the beginning, we had a lot of really varied content. We still have a lot of varied content, but we learn from users that a lot of people are looking for beginner content just getting started. They're getting back into fitness. So we started really filming a lot of high quality beginner content that can get them started.

So just getting the really high quality content that users want, getting it in front of them and guiding users to the content that they are looking for as soon as possible so we can get them to that aha moment, which we've learned is three classes. So we see that once users get to three classes, they're much more likely to stay with us, so they really have to experience a little bit of it and then they stay and they love it.

Lucy Levy:

I would want to add that of course, we've seen great improvements over the year and a half, a lot of learnings through features and also acquisition and growth strategies. But I think one thing that we're still looking to unlock is how to build a community through the app.

The magic of Zumba, it's really in the power of the community. We really don't think that it can be replaced with a virtual experience. I think the in-person experience is always going to win, but we've tried with some basic feature of community, we didn't succeed so we turned it off.

But this year and hopefully next year, we're going to dedicate time into thinking how can we make and build communities online through the Zumba app so we can actually enable what happens, replicate a little bit what happens into the in-person class.

David Barnard:

And that's such an interesting growth vector too, in that the magic of community in person is incredible. Like you said, you can't replicate that for probably hundreds of millions of people around the world, even though you're in 180 countries, there might not be a local Zumba class that they can join.

So finding ways to replicate some of that magic, get a little hint of the magic inside the app could be a really powerful unlock for that kind of next phase of growth. So yeah, really fascinating that you try. Any lessons from having failed? What do you think didn't work about your first attempt at that?

Nicole Page:

So our first attempt at community was we had done some research and tested a few hypotheses for where we wanted to start, and our hypothesis was that people want to talk about the classes after they take them. So we ended up building a bunch of different chat threads that you could join and talk about the classes or talk about a health journey or talk about just starting out Zumba.

And we were thinking if you build it, they'll come. And we built these communities and what we found was that people really didn't want to engage, not in the context of the class. They weren't looking to take the class and then go into a community and talk about it.

So in the next iteration, we're thinking about how we can do community a lot more contextually. This goes back to being in a live class. You're in the class, you're engaging, you're high-fiving people in the class, you're talking to your instructor, after your instructor's asking you for feedback. I'm smiling at Lucy, Lucy's smiling back at me.

There's all of these different interactions in a class that I think are a lot more powerful than this approach of people wanting to discuss the class before or after. So that was what I believe didn't work for us, and we're going to try again with a more contextual approach.

David Barnard:

Community is so tough, so hopefully people can learn some lessons from that and keep an eye on what Zumba does because I'm sure as you continue iterating, you're going to find something that does work and that a lot of other apps will learn from.

The next section I wanted to talk about is iteration. And I've really appreciated the growth mindset I've heard from both of you in preparing for the podcast is that there does seem to just be a real growth mindset that even though you had a big launch with the initial launch of the app in 2024, there's just been hundreds of iterations and a constant small tweak to this, small tweak to that and a constant growth mindset.

Before we dive into specific experiments and some of the things you've been working on lately, any higher level thoughts about how you approach and how you instill this growth mindset with the team and at a 24-year-old brand, that is unique to have such a growth mindset. So any thoughts there?

Lucy Levy:

Yeah, it's such an interesting point. It was a challenge in the beginning for sure, because Zumba, we have established departments, we have established pricing. We always are looking for our next lever or what else can we do to continue to improve the business and continue to grow, but at a much different pace than what we're doing with the app.

So the app is a small team, it's a very small team, super agile, and we got into this growth iteration like test, fail, move on, test, succeed, move on. And even when we're having good results, we never settle. We're always thinking, okay, what else can we do? Should we do another paywall test to continue to improve the results?

So it's a small team, and I think in this case it helps because they really allow us to move fast and it's just a culture that we've built in the past year and a half, but it hasn't been easy. It's been a process, but I don't know Nicole how you feel, but I'm super proud of the progress that we've been able to make both on the results, but also on the team culture.

Nicole Page:

We do a lot of great research before going into our next feature, building out our roadmap, but we treat every new launch as a experiment and as a hypothesis that we're testing. So when we launch something, we are constantly checking the metrics, we're constantly checking the performance.

When something isn't working, we'll do that analysis and we'll say, hey, it's not working, let's try something else. So we're not married to any of our ideas, no matter where it came from. We all want the app to be better. We all want to see continued growth.

So we treat everything like a continued experiment and even features that we launched last year, we check in on them and say, is this still working for our users? Is this still delivering the results that we need?

David Barnard:

What does your stack look like? Are you using Amplitude or Mixpanel and are you using an A-B testing tool specifically or using that inside a product analytics? What does the stack look like and how do you dive into the data to better understand how those things are performing?

Nicole Page:

So we use Mixpanel heavily, and we also use an internal tool that we built for A-B testing. So the combination of that with Mixpanel, we're constantly looking at A-B test, data retention, churn, acquisition data, a lot of different performance metrics that we've built into the app, everything, we're looking at it every day. Lucy and I usually by 8:00 AM we're pinging each other about what we're seeing in the data in Mixpanel.

Lucy Levy:

Revenuecat has been a great tool for us to test pricing and Paywalls, so super happy. And also look at the metrics. So we have three sources of data.

David Barnard:

One of the big things I want to dive into because I think a lot of folks are really curious about this right now, is app to web. I don't know who came up with the Web2App, the web number two app, but now it's because that became the standard way to say it, I've started saying app2web, with a number two.

But with the recent injunction against Apple, that does allow linking out. I know a lot of people are starting to experiment with that and seeing mixed results, but y'all seem to be doing pretty well with it. So tell me what you've been experimenting with and how that's gone.

Lucy Levy:

Nicole can explain better what we've been experimenting, the actual product changes, and I can talk about the results. So really high level, we've done two iterations of testing and what we've seen is that there is definitely an initial drop in conversion. So we lose about 35% of the people converting either to a trial or a paid.

So our pricing is we have annual at 99 with a seven-day trial, and we also have the 49.99 monthly price with no trial. So we've seen that that initial conversion we saw drop initially of about 35% with the second iteration, we managed to improve that to about 25% drop instead of 35.

But because conversion from trial to paid on the annuals is much better on web, we recoup some of that loss. And on top of that, obviously through web, we have much better retention and the lifetime value therefore is better, and we avoid the Apple fees. So when we look at everything together, we see a 17% lift on lifetime value that more than offsets the drop in the initial conversion.

Nicole Page:

We used the revenue tools to build this so that initially we tested before the package selection feature was available with RevenueCat, we initially tested just letting people check out, click the app paywall, go to the web, and we compared that against just the in-app paywall.

And then once RevenueCat released the package selection, we developed it so that users could actually choose which one they wanted monthly or annually, which package. And once they chose that, we would send them to the web and we gave them the most stripped down view on the web where we just showed them what they selected.

We tried to replicate how Apple has that view, has that window on the app when you do an in-app purchase so that it looks very familiar and that actually helped us with the conversion a lot as Lucy mentioned.

David Barnard:

So with the paywall, are you showing in-app and web or are you showing only web? And then in these experiments, were you A-B testing specifically one paywall that was only in-app purchase and one paywall that was only web? Or tell me how you've been setting up those paywall tests more specifically.

Nicole Page:

The tests that we've done so far, we were testing just only in-app versus only web. Lucy mentioned we're still continuing to improve on this, so even though we've seen a big jump in our lifetime value, we know that there's still room to improve the conversion that we see drop when we send them to the web.

So in the future we're talking about testing some other approaches, for example, a paywall that allows them to check out, either they can choose between checking out on the web or the app, and we're also thinking about some other experiments to try to improve the conversion.

David Barnard:

Gotcha. So then the way the paywall currently works now with the package selection would be that it looks like a standard in-app paywall. So you have a monthly selector, annual selector, and then you have the call to action button of check out, continue subscribe, whatever that... Actually, I'm curious, what's the call to action on the button that you've landed on?

Nicole Page:

We've landed on start today.

David Barnard:

Start today?

Nicole Page:

We tested a few different ones and start today seems to be motivating for people and also hopefully encourages them to actually go and try their first class. So that's where we are right now.

David Barnard:

Gotcha. Okay. So then package selection, and then a big button that says start today as your call to action. And so when they tap start today, it bounces out to Safari, but then that page on Safari is super stripped down. No more package selection, no other option, just a checkout button.

And then what are you using on the... I guess Zumba having been around 24 years, you already had a payment system and other things that you had built out on the web, but are you offering Apple Pay or what is that web checkout experience like?

Nicole Page:

We use Stripe for the web checkout experience, but they can also pay with Apple Pay or Google Pay. And one of the optimizations that we've made that we've seen help us a little bit with the conversion is we default to what we see that the user has available.

So if they have Apple Pay, we'll default to that one selected first. If they have Google Pay, we'll default to that one first, and if they don't, then they'll just see the credit card option.

David Barnard:

Gotcha. Yeah. One of the feedback we got on RevenueCat's test with our app Dipsy was that when you go to the checkout page, it was a big form. And so even though it said Apple Pay at the bottom, it still looked like you had a lot of work to do.

So I imagine what you're saying is you detect in the web browser that they have Apple Pay available and then you don't even show a credit card form, you just show checkout with Apple Pay.

Nicole Page:

Right. We make it as simple as possible if they have Apple Pay.

David Barnard:

Nice. Yeah, I can see why that's increasing conversion. That's the next test we should probably do with the Dipsy paywall on the web.

Lucy Levy:

One debate that we had internally was whether we give an extra incentive to get people to subscribe through web, but we decided to test it without it because obviously we wanted the help on the lifetime values, we didn't want to give that extra incentive.

And I don't know that people know so much the difference between... With this seamless experience, I don't think there is so much hesitation and we're seeing it in the numbers. We still have room for improvement in that initial conversion, but I think we've done well. This is one of the most successful tests that we've had.

David Barnard:

Yeah, a 17% increase in lifetime value is fantastic. One of my theories about how this is all going to play out in the long run is that apps will eventually start to get a little more sophisticated during onboarding to understand user intent and find those higher intent users and send those to the web to help offset some of that decline in conversion.

It was a big drop, 35% drop in conversion on that first test, and then great to see that trial to pay did help offset that and then further tests have even further reduced that drop in conversion. But how are y'all thinking about potentially adding another layer in there, potentially sending some of those lower intent users and just keeping them in the app to make sure it's ultra seamless? What are you thinking on that front?

Nicole Page:

One thing that we're thinking about doing is optimizing the paywall for where they are in the app. So changing the message, changing the paywall, potentially changing which option we give them based on where they are.

So maybe if they're in one of the places in the app where the paywall doesn't convert as well, potentially some of the ones that they see sooner in the app or one of the ones that they see in the settings, potentially using different messaging or just using the in-app paywall for that versus some of the apps that we see converting really well.

For example, we have a welcome class that we give them now. So when they come in, we give them one class that they don't need to make a lot of decisions and we say, try this one first, and it's a fantastic beginner's class, and we see that paywall doing pretty well because right after it, we give them a paywall.

So those seem to be higher intent users, so maybe those are the ones that we can send to app to web. So we haven't done that yet, but it is one of the things that we're thinking about.

Lucy Levy:

Yeah, it's an interesting point. We are just sending half of the people to one experience versus the other. We're not being very cautious about it, but it's a great point to look at the data, understand which are higher intent users, and based on that maybe present them with the correct option.

David Barnard:

And then just to fully close the loop, you've made the checkout experience as seamless as possible with the Apple Pay button and everything else. And I imagine as soon as they've checked out, does it auto redirect right back to the app or there's a button they press and they get right back into the app and it's almost like a seamless, you bounce to the web, make your payment and bounce right back to the app?

Nicole Page:

Exactly. We tried to, when we were building out the experience, our north star was, let's make this look as much like the in-app purchase as we possibly can. So we auto redirect them right back and we try to make it as close to the in-app purchase as possible.

David Barnard:

Gotcha. Yeah, that makes a lot of sense. Yeah, again, some of the feedback we got from folks on our DIPSY experiment and our experiment didn't do too bad. I mean, we only saw a 6% drop in realized LTV on the initial conversions, which is not that bad.

And then to your point on LTV, what we see in the data is that far fewer people on the web have turned off auto-renew. And so we're not calculating the exact predicted LTV of what that's going to be because they're all annual plans, but is looking like the LTV is going to be higher on the web over the long haul, even though it was a 6% loss in that initial revenue conversion.

So yeah, this app to web is going to be interesting as people start to discover the best practices and iterate their way toward making it work.

Lucy Levy:

And it can be very scary because you can see CPA climb and you're like, oh, let me turn this off, because if you don't focus on the big picture, you always get caught up with the CPA increasing, which is something that we saw. But then when you do the lifetime value calculation, I think that's when you see the value.

David Barnard:

Well, on that topic of retention, I know you have done a lot of experimentation and iteration on better retaining users. So tell me about some of your work there.

Nicole Page:

One of the things we've done with retention is trying to celebrate their wins and make them feel good about taking classes and try to help them come back. So we've done a lot of work here. One thing we did was a post-class experience.

So after they take the class, instead of just letting them drop back into the app, we celebrate them and we them that they did a great job. We built a badge system, a gamification system, and they can reach different milestones, they can earn different badges.

There's a number of classes taken or there's number of steps taken. So we spend a lot of time celebrating them after the class. We also have started to ask them to rate the class after to improve our recommendation algorithm. So now when they take a class, we ask them if they liked it, we ask them if it was too hard, too easy, too intense, not intense enough, and right away, we recommend them the next class that they should take.

And when they sign back into the app, we have it right there when they sign in at the top of the app. So we're really trying to complete that loop for them so that they can come back in and they can take their next class. So we've seen that really improve the amount of people coming back and taking their next class, just trying to get them to the right class for them.

We've also worked a lot on our communication journey, so when is the right time to send them a push notification, when is the right time to send them an email? We're working on a few things right now to try to get their stats from the week sent to them so that they can really celebrate their wins and move on to their next week with confidence. So we've done a lot there.

David Barnard:

When is the right time to send a text message versus a push versus an email? I'm sure people are like, you're breezed over that. What are some of the lessons there?

Nicole Page:

We're definitely still experimenting a lot with that. We're checking the performance of our emails and our push notifications and making changes. When our notifications aren't getting opened or when they're leading to opt-outs, we'll change it.

But one of the things we're doing right now that we're testing is we're testing sending them a notification at the time that they usually go into the app. We say if a user typically works out on Mondays, we know that there are probably higher intent there. Let's send them a notification and remind them that they can take their class.

Or one thing that we're trying is we see that usually going into the weekend, Fridays we see a little bit of an activity dip, people are getting ready for the weekend. So we're trying a notification there on the flip side to see if we can get them excited about, maybe take a shorter class, maybe take a fun class, and trying to suggest some things where they might not otherwise workout.

But timing wise, we're trying to send them the notification at the time that they're usually active also. So if someone is typically active at 9:00 AM we're trying to time it so that we send it at the time that they're active versus if they're never in the app in the middle of the day, maybe they're working, we don't want to send them a notification at 3:00 PM, for example, if they're someone that's not available then, so we're still testing this a lot.

David Barnard:

Yeah, that's great. Some great lessons there though.

Lucy Levy:

Yeah, and just to add to the previous point regarding retention, I think one of the biggest shifts, which Nicole talked a little bit about it in the beginning, was really focused on that audience, the beginner audience. We saw that about 70, even more percent of the people coming through onboarding were saying that they were beginners.

We did research to validate that. So now we're really focusing the product on that beginner experience, the intensity of the classes, the complexity of the classes to try to cater for that audience to make them feel like they can accomplish the workout and that they can feel as winners as they can be.

David Barnard:

And then I know you've experimented on onboarding with longer, onboarding shorter, onboarding and adding friction, removing friction. What are some of the lessons there in onboarding that you've learned and then how have you continued to optimize that towards those down funnel metrics and that longer time horizon?

Nicole Page:

Yeah, definitely. I think this was a lesson in just challenge all of your assumptions that you have because for a while in the beginning we were operating as if it was just best to get the user to the paywall as quickly as possible, get them into the app paywall as quickly as possible.

But we had a hypothesis about longer onboarding and we started experimenting with guiding the users through an onboarding experience that got to know them a little bit, also gave them some interstitials during onboarding to show the value of the app. And we saw that that onboarding experience actually led to a much higher conversion than without having the longer onboarding.

And it also gave us the ability to personalize what they saw right when they got into the app. So we asked them a little bit about what they were interested in, about what their level was, and we were able to recommend them a program before they even saw the app.

And doing this just helped them see that we're listening to them, we know who they are and we have what's right for them in the app. That greatly increased our conversion, and I think it was a surprise to a lot of us that we introduced friction, but it really did help us.

And one thing we did after introducing the long onboarding was we actually introduced a paywall before the users even got into the app, which was another assumption that we challenged was that, oh no, they definitely have to see the product before we show them the paywall.

But we were able to build enough value perception into the onboarding experience where we showed them a paywall right after onboarding before they dropped into the product, and that really helped with overall conversion as well.

David Barnard:

I heard one of you mention that you'd now just give away one free class. Where did that come into the mix and how do you introduce that in the onboarding funnel and whether they start a free trial or not? I guess just to better understand as well, is the app hard paywalled where you really only get that one class unless you start the free trial?

Lucy Levy:

No. So you can have that free class without necessarily having to start the free trial. We do get a lot of feedback still about users, again, because Zumba is so popular saying that they want more free classes. So we always have this internal debate of, should we just keep it to one class or can we give them access?

And I'm always pushing back because obviously I want the LTV-to-cock ratio to always work, and I'm always pushing back saying, let's just keep that one class, focus that class on beginner and try to get them to start their trial because they also have an option to navigate the entire app and access all the classes if they want it with their free trial. So that's why we landed on that one class.

Normally, when they go through onboarding, they see the paywall, a big percentage of them convert, but then the other big percentage that doesn't convert has direct access to that free class. If they choose to take that class, whenever they cut it off, even if they don't go through the entire class, we present a paywall.

So that's a paywall that, as Nicole was explaining before, maybe we can contextualize it a little bit more because we get hundreds of thousands of views in that class and we can do a better job at converting people from that experience.

David Barnard:

Is that one class the same for every user or are you actually using the personalization to personalize that one free class?

Nicole Page:

The one free class right now is the same for every user. The reason we did it like that is because the class is a Zumba 101, so no matter who they are, even if they take Zumba, it's a really good introduction to what you're going to see in the app.

So it shows the basic steps. It gets them familiar with the app format content. So for right now, we're showing everyone the same, but I think it's definitely a possibility in the future that we personalize that welcome class as well.

Lucy Levy:

Yeah, I just wanted to add, as we are trying to prioritize the roadmap and what else do we do next as we're seeing more than 75% of the people coming saying that they're beginners, the Zumba 101 seems like a good fit for the majority, but eventually, I think there could be more room for personalization.

David Barnard:

Or even five different Zumba 101 classes where it is still a Zumba 101 that maybe it's just a little more focused on the different aspects that people are looking for. But I do love that as you were talking about introducing that friction.

So many apps now will do the long onboarding, ask all these questions, but then not actually do any level of personalization. But it sounds like once they do start the free trial, you take into account a lot of that to then recommend those best classes that are going to be more retentive and a better experience based on that personalization.

Nicole Page:

Yeah, absolutely. We start influencing their recommendation algorithm as soon as they start the onboarding, whether they start on the web or the app. So as soon as they drop in, they already have a curated class experience.

David Barnard:

What do you consider your aha moment or what do you optimizing toward one class toward some other experience or what do you optimize toward?

Nicole Page:

We found that three classes seems to be the aha moment. After three classes, they really seem to be much more likely to be a long-term user. So we're trying to get them to the three classes where a lot of our communication early on is focused on getting them to the three classes.

We have a class counter on the homepage encouraging them to get to three. In the onboarding, we actually have them set a goal for how many classes they want to commit to for each week. We default that goal to three, and we also have a little blurb about how just three classes a week can really help you see progress toward your goal.

So we encourage them to choose that three because we've seen that it helps that others in the app have succeeded with the three. And then throughout the app we have some small reminders to get them to the three as well as the communication journey.

David Barnard:

Gotcha. I wanted to talk a little bit about price testing. So, Lucy, you had mentioned early on that at the corporate level you've had prices and iterated on price over a very long 24-year history. How did you approach price testing in the app and what are some of the lessons you learned there?

Lucy Levy:

For the core business, we were super careful with pricing so we hire research companies, pricing study companies, and we take years before we make any change because we already have such a large community. For the app, we started with research on what we thought people were willing to pay.

But as you know, once you're live, it is completely different than the research. You try your best, but things can change and that's when the culture of testing and iterating really matters. So we started with the monthly and the annual plans, but both of them were free trials.

We believe in the beginning, our monthly price was $19.99 and the yearly price was $129. And we were seeing really not great conversion, so we started to iterate. We used RevenueCat to A-B test, different pricing packages, and after a lot of different testing, which I still think that we have room for improvement, we are now at monthly $14.99, no free trial, which led to great results.

So I highly recommend it for anyone that is hesitating, definitely try it. And then contrary to many fitness apps, we just give a seven-day trial on the annual plan. A lot of apps give 30-day free trials or even 14-day trials, but we saw that getting them to a shorter trial led to higher commitment, higher engagement, them rushing into giving it a try.

And we actually didn't see a drop in conversion. We saw a huge improvement in conversion from trial to paid. So when we started with the app, about 30% of our users, even a little bit less were choosing the annual plan and the conversion was in the 30s from trial to paid.

At this point, we're getting about 60% of the users choosing the annual plan and about 56% conversion from conversion from trial to paid on the annual.

David Barnard:

Nice.

Lucy Levy:

And it's a combination. It's not only the pricing or the packages, it's the app to web and it is the first time user experience and the beginner content, and it's exciting to see how everything combined really can lead to good results.

David Barnard:

And then I think there too is without the free trial on the monthly, then you are getting $15 upfront from the users who are choosing that, which I do think is fair in that $15, you'd pay that to go do your first class in person or whatever.

And so 25% of users are paying you up front without even starting that free trial. And then now 75% are doing the free trial and landing on an annual. So it seems like a really great outcome for the business and a fair trade off the users.

Lucy Levy:

Yeah, for sure.

David Barnard:

All right, well I think that's a really great place to wrap up. It is so fun talking through all these iterations, all the learnings and just fun talking to a couple of folks with a real growth mindset at a company that's been around 24 years like we keep talking about.

So thank you for sharing the insights and it sounds like you've got hundreds of more tests to do over the next couple of years and I think we'll be seeing a lot more about Zumba in the app community in the coming years. So thanks for joining me and thanks for sharing so many insights.

Lucy Levy:

Thank you for having us.

Nicole Page:

Thank you, David.

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.