Reduce cancellations by offering a discount to stay subscribed

The Economist The Economist retain


The Economist offers a 30% discount on Espresso, their daily news app, if users choose not to cancel their subscription, incentivizing them to remain subscribed.
a screenshot of the retain flow explaining how to Reduce cancellations by offering a discount to stay subscribed

Business Outcome

Customer Retention Rate

Increase the percentage of customers who continue their subscription rather than canceling.

Behavioral Outcome

Perceived Value

Increase users' perception of the value they receive from their subscription, making them less likely to cancel.

The Behavioral Science

Endowment Effect

The Endowment Effect suggests that people place a higher value on things they already own compared to things they don't own. By offering a discount to existing subscribers, The Economist leverages the Endowment Effect, as users feel they are getting a better deal on something they already have.

Loss Aversion

Loss Aversion states that people are more motivated to avoid losses than to acquire equivalent gains. The discount offer plays on users' aversion to losing the lower price if they choose to cancel.

How It Works

When a user indicates they want to cancel their Espresso subscription, The Economist presents a special offer: "Get 30% off Espresso for the next 1 month." This discount is positioned as a way to keep the subscription at a lower price point.

By offering an instant discount, The Economist makes the user feel like they already have the lower price, tapping into the Endowment Effect. Canceling would mean giving up this "owned" discount.

Additionally, the fear of losing out on the 30% discount if they cancel plays on Loss Aversion, providing a strong incentive to maintain the subscription.

How It Might Backfire

Perceived Manipulation

Some users may feel manipulated by the cancellation discount, seeing it as a ploy to keep them subscribed against their will. It's important to frame the offer positively and provide easy opt-out options to maintain trust.

Devaluing the Service

Offering a steep discount may lead users to question the true value of the subscription. If it can be offered at 30% off, they may wonder if the regular price is inflated. It's crucial to emphasize the unique value Espresso provides to justify the regular subscription cost.

How To Test

To test the effectiveness of this tactic, run an A/B test where a portion of canceling users are shown the 30% discount offer while a control group goes through the standard cancellation flow. Compare retention rates between the two groups to gauge the impact of the discount.

You can also experiment with different discount percentages or durations to find the optimal offer that balances retention and revenue. Monitor key metrics like customer lifetime value and churn rate to ensure the discounts are sustainably improving business outcomes.

Frequently Asked Questions

To enhance a product-led growth (PLG) model using The Economist's retention tactic, implement a discount offer for users who are considering cancellation. This approach can significantly boost customer retention rates, a crucial metric in PLG models.

For example, when a user attempts to cancel their subscription, offer them a 30% discount for a specified period. This leverages the Endowment Effect, making users feel they already own the discounted price, and Loss Aversion, as they'll be reluctant to give up the lower price. By reducing churn and extending customer lifetime value, this tactic can accelerate growth and improve key PLG metrics.

To improve conversion rates using The Economist's retention tactic, apply the discount offer strategy at critical points in the customer journey. While primarily a retention tool, this approach can be adapted for conversion optimization.

For instance, offer a time-limited discount to users who are hesitating during the sign-up process or to those who have abandoned their cart. This taps into the Loss Aversion principle, as potential customers will be motivated to avoid missing out on the special price. By increasing the perceived value of your offering, you can boost conversion rates and reduce abandonment, ultimately optimizing your funnel for higher conversions.

To optimize your website using The Economist's retention tactic, incorporate strategic discount offers throughout the user journey. This can help improve key website metrics such as engagement, conversion rates, and customer lifetime value.

Implement exit-intent popups that offer a discount when users are about to leave the site. Use personalized offers based on user behavior, such as browsing history or cart contents. Additionally, highlight the potential savings prominently on pricing pages and during the checkout process. By leveraging the Endowment Effect and Loss Aversion principles, you can create a more compelling user experience that encourages longer site visits and higher conversion rates.

To A/B test The Economist's retention tactic, create two versions of your cancellation flow: one with the discount offer (version A) and one without (version B). Randomly assign users who initiate the cancellation process to each version.

Measure key metrics such as retention rates, customer lifetime value, and churn rate for both groups. Additionally, you can experiment with different discount percentages or durations to find the optimal offer. Collect both quantitative data on user behavior and qualitative feedback through surveys to understand the full impact of the tactic. Analyze the results to determine which approach leads to better outcomes for your specific product and user base.

The Economist's retention tactic improves user experience by offering additional value to subscribers at a critical decision point. When users are considering cancellation, the discount offer provides them with an attractive alternative that addresses potential concerns about cost.

This approach leverages the Endowment Effect, making users feel they already possess the discounted price, which can increase their perceived value of the subscription. It also taps into Loss Aversion, as users become reluctant to give up the lower price. By providing this option, The Economist demonstrates responsiveness to user needs, potentially increasing satisfaction and loyalty. However, it's crucial to present the offer in a non-manipulative way to maintain a positive user experience.