For this episode of Rough Draft, we’re thrilled to welcome of Mostly Metrics. I’m also joined by my co-host of . Jaryd was my partner in crime in creating Rough Draft and hope he’ll be a frequent co-host.

CJ is a self-proclaimed micro-media mogul, running a newsletter and podcast beloved by finance professionals and operators. We dive into CJ’s journey from his early writing experiments to building a newsletter that now has over 55,000 subscribers and is a go-to resource for CFOs and operators across industries.

We cover topics like:

• How CJ battled through the early slog of building an audience.

• How he thinks about the different reasons why readers will share his work while writing a post.

• A deep dive into how he’s turned sponsorships into a meaningful revenue stream.

• Stacking your talents in writing and other entrepreneurial pursuits.

Check out the full episode on Apple Podcasts, Spotify, and YouTube.

Let's dive into a few highlights from our conversation.

Overnight success

It took CJ a year and a half to reach 500 subscribers. Then, in the following year, his newsletter skyrocketed from 500 to 27,000 subscribers. In the early years, CJ felt like he was ‘writing into the void,’ a common struggle for many writers. But instead of giving up, he used that time to hone his skills and form a habit of writing consistently.

At the start, I was getting single-digit views on some of my posts — like, literally, my dog and maybe my mother-in-law were the only ones reading it.

To grow his readership during those early days, CJ became relentless. He hopped into conversations across Indie Hackers, Reddit (where he was consistently kicked out), social platforms, and anywhere he thought his audience would be. He had a list of 15 finance-related terms (e.g., “net dollar retention”) that he wanted to absolutely own. By responding to comments and questions, and linking back to his writing, he gradually built an SEO flywheel that steadily drove traffic to his newsletter.

CJ wasn’t just driven by the desire to build an audience or business — he wanted to capture the lessons and ideas from his startup experience. Writing became a tool for self-reflection and clarity, allowing him to capture and retain those insights. By committing to this process, while also steadily growing his audience, CJ pushed through the difficult early years.

In the early days, it was pretty much just 10 people reading my blog, and I had no real audience. I wasn’t sure where it was going, but I kept writing because I needed to get those ideas out of my head.

Why do readers share your posts?

CJ described a virtuous cycle of sharing loops by his readers, each contributing to subscriber growth. What stood out was the specificity of each example and their motivation for sharing:

• Venture capitalists and investors share CJ’s posts with their portfolio companies to feel as though they’re adding value.

• Analysts and operators will forward his writing to their bosses to signal their intelligence and ambition.

• CFO’s and leaders will pass CJ’s posts along to their teams to incorporate into their decision-making and workflows.

The key is that CJ writes with these specific sharing scenarios in mind, understanding why and how his audience would pass along his writing. He even uses it as a barometer to gauge the quality of his posts.

We also discussed how many of today’s biggest newsletters built their audiences through social platforms — a strategy that’s become more challenging. This shift has increased the importance of other growth channels, especially encouraging readers to share posts.

Metrics that matter

These days, CJ doesn’t pay as much attention to email list growth, choosing to keeping a closer eye on readership and people interacting with his posts. He can tell within 20 minutes how a post will perform based on early interactions (e.g., likes, comments, and shares).

What truly matters to CJ, though, is hearing how his writing has impacted readers’ lives. Whether it’s helping someone improve at their job, negotiate a raise, or make better business decisions, those stories resonate the most with CJ.

When people message me saying my newsletter helped them solve a problem at work, that’s what blows me away — that you took my thoughts and made it real.

A huge thank you to CJ for joining and a huge thank you to Jaryd for co-hosting and being instrumental in creating Rough Draft.

We hope you enjoy the conversation — let us know what you think!

We’ll be back with you in a couple weeks.

As always, thank you for your support,
Reid

For our third episode of Rough Draft, we had the pleasure of speaking with , founder and author of , a leading political newsletter known for its focus on holding those in power accountable for their actions.

Judd has been writing on the internet for a long time and was one of the first political newsletters on Substack. We discuss how Judd built a large paid newsletter without a paywall, the importance of experimenting and constant improvement, and why the business side is essential to get right.

The most important thing I’ve learned is that the connection you form with your readers is the key to everything.

To me, not too dissimilar from Doomberg, Judd always struck me as someone who enjoyed the business side of the newsletter. But as you’ll see, it’s more that he understands the importance of building a durable business around his research, writing, and the impact of his newsletter — the things he truly enjoys.

Check out the full episode on Substack, Apple Podcasts, Spotify, or YouTube.

Let's dive into a few highlights from our conversation.

Growing a paid newsletter without a paywall

I first met Judd while working on Yem, a product that helped paid newsletters grow revenue through automated emails. Judd was the first writer to trust us. I was thrilled to work with him — until I realized he didn’t have a paywall. I wasn’t sure how we’d help him grow his revenue.

Judd then shared a Google doc filled with pages of pitches he’d tested to convert free readers into paid subscribers. Over time, he discovered something surprising: people weren’t paying for access. They wanted the opposite: to spread Judd’s reporting as far as possible and maximize its impact.

I realized early on that people weren’t just paying for more content; they were paying to support accountability journalism.

At Substack, we often pointed to Popular Information as proof that you don’t always need a paywall to build a paid newsletter. Don’t get me wrong — paywalls are very effective, especially in certain categories (e.g., Finance, Business, Technology, etc.). The point is that it’s important to deeply understand what your readers are paying for and to mold paid benefits around that value.

Taking care of business

In my discussions with Judd, he always seemed to enjoy the business side more than other writers. When I asked him about it, he clarified that he most enjoys writing and researching, but also understands that’s all predicated on the business doing well. For those trying to do this for a living, Judd stressed that no matter how passionate you are about writing, understanding how to run a newsletter as a business is essential.

You need to constantly be improving both the business side and the content side. Standing still means you’re falling behind.

It seems this view was informed by his experience at ThinkProgress, where he learned that if you start to backtrack, that can accumulate its own type of momentum. ThinkProgress also helped Judd experience the perverse incentives and the rollercoaster ride of depending on advertising revenue. He also learned about the risks of over-hiring and taking on higher fixed costs.

I think this is why Judd is so proactive in monitoring email list growth, free-to-paid conversion, and churn, and why he’s constantly experimenting and searching for ways to improve. Carving out a little time each week to focus on the business side allows Judd to continue focusing on what he loves — writing and reporting — without having to constantly worry about the business collapsing.

You can't wait until you've dropped 25% to start paying attention to your finances.

Start growing your audience with non-scalable ideas

While Judd benefited from having a large Twitter audience when he launched Popular Information, he also did a lot of tedious, time-consuming things to grow his newsletter. Right after his first post, Judd sent nearly 7,000 personalized emails to everyone in his contacts, generating nearly 1,000 subscribers — a solid foundation.

He also stressed the importance of collaboration: reaching out to writers with a similar target audience and exploring ways to work together. That could include:

• Co-writing posts (as Judd has often done with )

• Guest writing a post for another publication (e.g., this post from )

• Simply cross-promoting each other’s newsletters

• Taking advantage of Substack’s recommendation feature

• Interviewing people who have a profile or audience in the space you’re in

Judd also talked about how each new topic represents an opportunity to create awareness with a new group of readers. For example, if Judd were to cover a local topic for a certain town in Oklahoma, he would reach out to reporters in the area that have written about the topic he’s covering, asking for insight and creating awareness.

If you’re just getting started, don’t discount how impactful non-scalable ideas can be, especially in building an important foundation. No matter what stage you’re at, finding ways to collaborate with fellow writers and creators can go a long way, as can a more editorial-centric approach to growth.

Thank you to Judd

A huge thank you to Judd for joining us and sharing an avalanche of wisdom.

We’d love to hear from you! What did you learn from our discussion with Judd?

We’ll be back in two weeks with another episode of Rough Draft — see you soon!

Thanks for reading & listening,
Reid

For our second episode of Rough Draft, we’re thrilled to welcome of Not Boring.

We discuss Packy's unique writing style, his rather frenetic approach to writing 10,000+ word essays each week, the business behind Not Boring, and why Packy focuses on great writing over any intentional growth efforts.

Optimism actually shapes reality… If you have to choose optimism or pessimism, you’re more right if you’re optimistic about how things are going to go.

I love talking to Packy because I always learn something, but also because of his infectious optimism and enthusiasm. Whether you're an aspiring or experienced writer, you'll enjoy this conversation with Packy.

Check out the full episode on Apple Podcasts, Spotify, and YouTube.

Let's dive into a few highlights from our conversation.

Monopoly of you

A pivotal moment in the origin story of Not Boring came when Packy signed up for ’s Write of Passage course. The key idea Packy learned during the course was nailing the “monopoly of you”.

The idea is to bring together a few things that make you unique — your distinctive passions, areas of expertise, or personality quirks — and then write at the center of those things.

For Packy, he wanted to write about a business strategy. The problem was Ben Thompson’s Stratechery was already one of the best newsletters on the internet.

Packy felt there was an opportunity to write about tech and business strategy but in a fun, less serious way. He drew inspiration from being a fan of Bill Simmons, who mixed sports journalism with pop culture references in a novel way. Packy’s optimism and enthusiasm would also become distinctive characteristics of Not Boring.

Most importantly, none of this was manufactured — this is who Packy is: optimistic, enthusiastic, and humorous with a deep appreciation and interest in tech, building the future, and business strategy. Packy talks about how hard it would be to “fake it” because he’s always online, writing the newsletter, tweeting, and talking to founders. It would be exhausting if he were playing a character.

It’s really hard to do this every single week if you’re not being yourself.

If you’re early in your journey, or maybe even experienced but in a reflective state, think about what makes you unique and how to form your own monopoly of you.

Growth

In the early days of Not Boring, Packy had a list of 100 ideas for how to grow the newsletter. One early experiment was posting to a Kardashian subreddit about a relevant post, after which he was effectively shadow-banned.

Any time that I would be spending on growth, I really want to spend on writing.

There were other experiments, but ultimately Packy ended up focusing all his energy on writing great posts, and then hoping readers would share it. There may be a cost to this approach: Packy mentioned falling behind other writers who are more intentional about growth, especially writers with backgrounds in product, engineering, or marketing that think about growth systematically.

But Packy didn’t seem to care as much about growing his email list these days, echoing a similar theme from our discussion with Doomberg — no doubt, a luxury for writers that already have a large, owned audience.

While Twitter was massively helpful in building Not Boring, it doesn't drive much value anymore, and Packy expressed little interest in developing a presence on TikTok or Instagram. He seems to care more about delivering value to a small group of readers he respects than, say, reaching a million subscribers.

I would much rather write something that in group chats, smart people in a particular category are sharing with each other because it helps them think about something in a different way.

We discussed how writers starting from scratch today can’t follow the same playbook as Packy and other writers with large audiences. Platforms like Twitter and Instagram were once powerful tools for building an audience, but changes like limited external linking, in-feed link throttling, whimsical moderation, and other restrictions have turned these platforms into more closed-off, siloed environments.

For new writers, rather than spend a ton of time on general audience growth, Packy suggested focusing on developing your personal monopoly and getting a small group of the right people to read in a narrow niche. Looking forward, Packy suggested more opportunities to build reliable income around smaller, niche publications (i.e., < 25k deeply engaged readers vs. >1M subscribers).

The sponsored deep dive

In the early days, despite nearly all his peers launching paid newsletters, Packy kept Not Boring free. He did this in part to focus on growing his reach and readership, choosing to avoid paywalling any of his writing, and kicking the can down the road on how to generate income.

Eventually, Packy would start to dabble with sponsorships and would come to redefine the sponsored post. Before Packy’s spin on it, “sponsored content” mostly meant brands paying Buzzfeed for listicles. Packy flipped that on its head, writing 15,000-word deep dives on startups that he found fascinating.

Like other aspects of Not Boring, the sponsored deep dives came about organically without super sophisticated thinking. One example: pricing. The cost of the sponsored deep dives came about naturally by having conversations with readers who wanted Packy to write about their company. From there, Packy set a minimum price in his mind for a 15,000-word deep dive, and then normal supply/demand mechanics helped shape the pricing over time.

Packy has had incredible success with the sponsored deep dive model. Today, for every 1 sponsored post, 20 more companies are asking Packy to do one of them. This allows Packy to choose the companies he's most excited about and to ensure he’s threading the needle in delivering value to his readers and sponsors.

A huge thank you to Packy for joining.

We hope you enjoy the conversation — let us know what you think!

We’ll be back with you next Thursday. :)

As always, thank you for your support,
Reid

I recorded a handful of conversations with some of my favorite writers earlier this year and excited to share them with you.

We’re calling this little experiment Rough Draft and our goal is to provide listeners with a mix of inspiration, motivation, and guidance.

Our first episode is with the one and only , the #1 Finance publication on Substack.

You should begin with what you love to do that doesn't feel like work and then eliminate everything else from your life and wonderful things just magically happen.

Doomberg stands out for its intentional approach to their newsletter, with deep thought given to their audience, branding, marketing, editorial, pricing, paywalling, and every other aspect of building a successful paid newsletter.

The conversation is full of valuable insights and lessons from Doomberg’s journey. Below are a few of the major topics and takeaways I’ve continued to chew on after our conversation.

Check out the full episode on Apple Podcasts, Spotify, and YouTube.

Ideal customer profile

Before launch, the Doomberg team invested a lot of energy into nailing their ideal customer profile (“ICP”) — the types of people that would ultimately pay for Doomberg. They wrote a handful of character sketches, which were detailed descriptions of fictional people answering questions like:

• Where do they work?

• How much are they worth?

• How many cars do they have?

• What’s a hypothetical day they go through?

Equipped with a better understanding of their specific target customers, they were able to make important decisions including:

• Charging a premium price for Doomberg and avoiding discounts.

• Focusing on paid subscriptions and avoiding sponsorships. 

• Keeping a high-quality bar for each newsletter post.

A pattern we’ve seen with many writers is that it can be helpful to have worked in the space that you’re going to cover. Doomberg’s experience working with writers that targeted Wall St. and high-net-worth individuals gave them a strong intuition for their ICP.

Usually, there’s an interplay between what you publish and your ICP, both evolving relative to each other over time (within reason). But in Doomberg’s case, aided by their previous experience, their ICPs have remained mostly unchanged.

The bin of great writing never read

Like other large publications, Doomberg took a systematic approach to building its audience. Starting from scratch, they developed a large following on Twitter and were able to build a large email list. 

Since the team worked on growth for other writers before launching Doomberg, they knew the importance of marketing and being self-promotional. They also knew a lot of people were uncomfortable promoting their work, and how that often condemns their writing to the “bin of great writing never read.”

Often, the people who are the most successful on YouTube, social networks, or Substack are the best marketers, not necessarily the best writers, artists, or creative talent. Marketing and selling is a crucial skill (or function if you want to outsource it) for anyone pursuing this type of professional pathway. 

The concept of “enough”

We love when the numbers go up and we celebrate it, but it doesn't consume us.

When things are going well, there can be a temptation to push for more: more followers, more subscribers, more revenue. There’s a delicate line between pushing for growth and staying true to your worldview, your moral compass, or what initially motivated you to pursue your craft.

I have yet to speak to a writer that doesn’t enjoy “watching the numbers go up”. The writers and creators we see with a healthy relationship to growth seem to view it with some level of detachment: a puzzle they enjoy working on, or a game they enjoy playing. 

One of the big questions Doomberg is exploring this year is whether they can find ways to profitably invest in paid marketing. But they will only grow their audience within self-imposed limitations — ways that don’t harm the brand or come off as inauthentic. If they can’t find ways to invest in growth within those limitations, that’s totally okay.

The team behind Doomberg has found “the work of our lives” and feels as though they’ve “caught lightning in a bottle”. They have a deep appreciation for being in that position and won’t put it at risk for the pursuit of growth.

A huge thank you to Doomberg for being gracious enough to spend a few hours with us. We hope you enjoy the conversation — let us know what you think!

And if you’re one of those angels walking on earth, please leave us a review on your favorite podcast player.

As always, thank you for your support,
Reid

Chapters

Below are timestamps for each topic we discussed:

00:00 Introduction and Background
00:42 Doomberg's Origin Story
08:33 Consulting for Finance Writers and Newsletters
11:25 Launching Doomberg
16:48 Character Sketch of Ideal Customer
21:10 Pricing Strategy
24:25 Never Want To Succumb to the Disease of More
28:58 The Doomberg Brand and Defensive Pessimism
36:38 Launching Paid Subscriptions
44:36 Throw-up Moment After Turning on Paid
52:15 Systematic Approach to Building a Media Business (The 5 Pillars)
55:50 Diving into Demand Generation
01:03:57 Guest Appearances on Podcasts to Grow Audience
01:05:12 Exploring Other Social Platforms
01:06:57 Using Social Platforms to Grow Audience
01:09:42 Searching for Profitable Growth Investments
01:18:18 Barrier to Entry is Zero, Barrier to Success is High
01:22:06 Surfing the Sea of Abundance

Earlier this year, I interviewed some of my favorite writers as part of a new project we’re calling Rough Draft.

In each conversation, we go behind the scenes with leading writers and creators on the internet to discuss their origin story, how they do what they do, and what they’re plans are for the future.

Whether you’re an aspiring writer or experienced writer, each episode will have something for you. Our goal with each episode is for you to:

• Learn how to create a sustainable writing system.

• Get ideas for how to grow your audience and monetize your writing.

• (Most importantly) feel inspired by hearing the stories and challenges others are working through, and to feel that you’re not alone on the journey.

We hope you’ll check out these conversations and enjoy what we’ve put together.

The first episodes will be dropping next Thursday — keep an eye out for it & let us know what you think.

Talk soon,
Reid

PS — an enormous shoutout to my partner in crime , who helped tremendously in creating Rough Draft & will be a frequent guest. Thank you, my friend! 🙏

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew some of the most well-known consumer subscription products: Hulu, Crunchyroll, HBO Max, and Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

In our last post, we covered how directly-sold, tailored sponsorship products can be much more lucrative than platform-sold programmatic ads. But there’s a catch: these types of sponsorships require a lot more effort, including pre-deal negotiations, sponsorship fulfillment, reporting, and getting paid.

To an increasing degree, directly-sold sponsorship products are becoming a meaningful revenue stream for lean, niche media businesses. At Caddie, we’ve been exploring ways to help scale directly-sold sponsorships, some of which is peppered in the post below.

Let’s dive into how to turn directly-sold sponsorship products into a meaningful revenue stream for your business.

Three layers of finding new sponsors

An obvious starting point is how to find new sponsors and create a steady inflow of sponsorship demand. , founder of The Rebooting, informed us of how his approach to finding sponsors has evolved over time — a sequence we’ve noticed for other publications:

1. Personal relationships

2. Audience members

3. Outbound sales

If you’re focused on an industry you’ve been operating in for a while, you probably know some folks who might like to work with you. Personal relationships can be a great starting point for helping determine how you work with sponsors, how you showcase sponsors to your audience, and pricing.

After you’ve exhausted personal relationships, your audience can be a great source of prospective sponsors. We’ve heard many cases where readers will notice a sponsorship in a post and then reach out asking how they can become a sponsor.

At some point, the well runs dry — to continue generating the same level of sponsorship revenue, you’ll likely have to turn to some form of outbound sales. A lot of folks avoid outbound sales given the substantial lift in effort (and for some, discomfort) associated with reaching out to potential sponsors.

We’ll come back to outbound sales — let’s dive into the basics of directly-sold sponsorships.

Attracting and fulfilling sponsorships

Sponsorship prompts

Once you start running sponsorships, you may have folks from within your audience reach out asking how to become a sponsor. You can encourage this type of inbound demand by occasionally including prompts to sponsor your work on your site, in newsletters, or mentions in podcasts or videos.

Media kits

Any “Sponsor Us” button could link to your media kit, which emphasizes why you would be a compelling partner for certain sponsors. Media kits are an important part of generating sponsorship revenue, providing details on:

1. Your audience

2. Your distribution

3. Who you’ve worked with in the past

4. Your sponsorship products and how you work with sponsors

Below is an example of what a media kit could look like on your site (a PDF / slide version is also useful). The first few segments highlight why Caddie (hypothetical publication) is a compelling partner for a certain type of sponsor, with the last section showing Caddie’s sponsorship products. (For larger media businesses, check out Vox and BuzzFeed for more dialed-up versions of media kits.)

Managing the sales pipeline

For higher-priced, more-involved sponsorship products, the sponsor will usually want to talk to you. In those cases, the “Sponsor Request Form” button from your media kit could direct to a short survey, allowing sponsors to provide more info on their business and goals. You can also ensure they’re aware of how much your sponsor products cost (and that you don’t work on a cost-per-click basis).

After potential sponsors submit a request, based on their response, you could provide the option to schedule a call with you to discuss the details of working together. If you want to maximize conversations to start, you could skip the survey step and link directly to a calendar booking app (e.g., Cal, Calendly). 

You may work toward a champagne problem of having several clients to manage. It might help to come up with some kind of system to manage your sponsorship pipeline. Google Sheets, Airtable, and other off-the-shelf products can get you very far, but you could also consider a sponsorship product like Passionfroot.

Fulfilling the sponsorship

Once you’ve agreed to work together, the work shifts to making sure the sponsorship is fulfilled. Fulfillment may be as simple as making sure the sponsor provides the appropriate ad copy and that you’re comfortable with it. Fulfillment may be more complex if it’s a longer-term relationship or if there are multiple deliverables (e.g., research reports, events, mentions across different platforms, etc.).

One of the dynamics holding back more money from flowing into these types of sponsorships is that they’re harder to measure than programmatic, cost-per-performance ads. One way to chip away at this problem, and encourage an ongoing relationship with clients, is to provide reporting on how the sponsorship performed, including engagement metrics (views, likes, clicks), but also anecdotes and comments. The latter can provide ideas for how to frame the next sponsorship.

The last part is making sure you get paid. The key here is to make it as easy as possible for the sponsor to pay you, providing options for credit card, ACH, and wire transfer. It’s also better if this can be done on a web page via Stripe or a similar payment platform (vs. attaching wire instructions or some type of convoluted process). 

Outbound sales

The hardest part of turning sponsorships into a meaningful revenue stream is that it usually requires some form of ongoing outbound sales effort.

Reaching out to potential sponsors and negotiating deals can be time-consuming, distracting, and uncomfortable. Understandably so, many publications hire someone or work with an agency to lead outbound sales and other aspects of the sponsorship process.

For outreach, a good starting point is to target businesses that are already sponsoring similar publications, or at least open to working with niche media businesses. It’s hard enough to find the right sponsor for your publication; it’s doubly hard if you have to also educate them on the value of partnering with a newsletter, podcast, etc.

Still, finding the right business to partner with and finding the right person to talk to at those companies is time-consuming.

Product to help find sponsors

We’ve been exploring whether there’s an opportunity to build a product that can make high-quality recommendations for prospective sponsors, tailored to each publication. The recommendations could be sent via email (say, once per week or when a new match is found), and could be displayed in a self-serve dashboard.

The “Send email” button would direct to a pre-filled draft email to that particular sponsor. To draw attention, the message could be customized for each sponsor, including an idea for how to showcase their product to the publication’s audience.

It’s not obvious whether a software solution is better than the current combo of tools and people. Any software solution would need to achieve some mix of the following for publications and sponsors:

• Improved focus: allow the publication to shift focus to creative efforts and allow sponsors to better balance efforts across their broader marketing portfolio.

• More cost-effective: shift more of the sponsor’s money to creative talent and actual marketing activities (vs. platforms, headcount, etc.), allowing creators and publications to make more money.

• Encourage scale: enable sponsors to work with a significantly larger group of publications, and vice versa for publications.

We’re looking for a few more publications to join a pilot for the feature above — let us know if you’re interested!

What do sponsors want?

With paid subscriptions, you have to think deeply about who your ideal subscriber is, and what problem you’re solving for them. Sponsorships are different — you have to think about what business would want to reach your audience, and how you can help that business make more money.

Shifting your mindset from selling paid subscriptions to sponsorships can be difficult. If you’re just getting started, it may be valuable to develop an understanding of what sponsors typically look for in a partnership and their goals.

As a starting point, check out this great interview panel with Danielle Ito, who manages Notion’s budget for partnering with writers, podcasters, YouTube channels, and creators. Here are some of the takeaways from how Notion views sponsorships, some of which are broadly applicable:

• Like to start with a test before developing a longer-term relationship (e.g., 6+ month deal) — manage your expectations with your initial proposals.

• Care more about brand alignment and engagement rates than audience size.

• Prefer the creator lead the “story” and creative aspects of the sponsorship. Notion will also share notable product updates with partners in case they want to incorporate them into their sponsorships.

• Use a portfolio of metrics to evaluate performance:

  • Bottom-funnel / conversions: traffic, link clicks, signups.

  • Top-funnel / reach: mentions and engagement on social, brand awareness.

  • Sentiment: How are people reacting to the sponsorship? What are they saying in the comments?

  • Want to drive a “FOMO effect” — it doesn’t always have to be an immediate action, but we want to support a future stream of new user growth.

• If Notion wants to work with someone and the proposed pricing is reasonable, they’ll negotiate on price and find a way to work together.

• More than happy to work with business managers, agents, etc., but usually like to also have a personal relationship with who they’re working with.

• Will always read cold outreach — here are ways to get attention:

  • Be up-front about all your info (handles, links, followers, engagement)

  • Share a compelling idea for ad creative (e.g., spotlight a new feature)

  • Keep the pitch concise

Summary

Directly-sold, tailored sponsorships are much more lucrative than relying on ad platforms or sponsors looking for cheap cost-per-click ads. BUT, there’s a catch: they require a lot more effort and can be challenging to scale.

As publications push to make this a meaningful revenue stream, deals usually become more complex (e.g., longer agreements, multiple deliverables). As deals become more complex, the sponsor usually needs more attention and has more creative requests, making it harder to stay true to delivering value to your audience.

The tension between delivering value to your sponsors or audience can be especially tangible if your audience is paying you (e.g., paid subscriptions, courses). Even if it’s not an issue of creative alignment, you may find yourself spread thin trying to manage these different revenue streams.

Newcomer, Payload, The Ankler, and many other publications are showing that it’s possible to nail this balancing act and drive substantial revenue from sponsorships alongside other revenue streams. Directly-sold sponsorships will be a key ingredient for many publications as they look to achieve long-term sustainability.

We’d love to hear from you! What do you think of sponsorships? What’s your experience been like selling sponsorships? How have you thought about pricing and creating sponsor products? How have you found sponsors to work with?

As always, thanks for reading,
Reid

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew some of the most well-known consumer subscription products: Hulu, Crunchyroll, HBO Max, and Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

We’ve been talking to publications and media businesses about how they earn money through sponsorships. We have a two-part series diving into our learnings and exploring ways to scale sponsorship revenue.

We’re exploring how we could help publications find more sponsors, streamline operations, and other ways to help scale sponsor revenue. We’re excited to hear from you as we go through this mini-series on sponsorships.

Reply to the email, drop a comment, or reach out to reid@caddielabs.com with any feedback, ideas, or questions.

Types of sponsorship products

Let’s first start with a few key points from our previous post on sponsorship revenue. 

First, no large media business has a single revenue stream — they all mix some form of advertising and subscription revenue, alongside other revenue streams (e.g., events, merch, courses, etc.). From last year’s post:

Below is a look at 2022 revenue for a grab bag of larger consumer businesses, segmented by advertising vs. subscription and other revenue.

There are different ways to generate sponsorship revenue. In other words, there are different types of sponsorship products, resting along a spectrum from programmatic ads to direct sales. From that same post:

Different types of ads vary widely in the degree to which it detracts from the user experience, how much you get paid, and how much effort is needed. Let's explore the two ends of the advertising spectrum: programmatic ads sold by an external platform, or direct sales where you sell your own ads.

Pros and cons of programmatic ads

Competing against the best ad products in the world

The significant benefit of programmatic ads is that there is usually zero sales effort: you can make more money without much (or any) effort.

The sales effort is usually outsourced to an ad network, which tries to match a publication’s ad inventory (in a newsletter, podcast, on social, etc.) with sponsors. These ad networks might exist within a platform ecosystem (e.g., the ad networks from Beehiiv or ConvertKit) or as independent ad networks (e.g., Paved).

These ads are usually sold on a cost-per-performance basis (e.g., cost-per-click, cost-per-impression) to direct-response buyers. These ad buyers want a trackable impact on a specific metric, like new site visitors, customers, or purchases. 

The challenge of selling to these ad buyers is that they’re comparing the effectiveness of spend against their campaigns on Meta, Google, TikTok, and other leading ad platforms. These ad products are hard to compete against on driving cost-effective clicks, conversions, or impressions. 

It may be possible to grab a temporary share of an experimental budget, but it’s challenging to beat the leading ad products on an ongoing basis.

Race for scale and lower cost of production

Programmatic, cost-per-performance ads tend to encourage a race for scale, something to consider for publications and platforms.

Let’s do some napkin math for a newsletter, assuming a 50% open rate and $5 cost-per-click. The table below shows revenue-per-post for different email list sizes and click-to-open rates (i.e., the share of people opening the email that click on an ad). We need a huge email list to generate enough clicks to drive meaningful revenue.

Beyond the race for scale, programmatic ads can also encourage a lower cost of production. Imagine spending 20+ hours researching, analyzing, writing, and editing a post to only eke out a few hundred bucks in revenue. 

You’ll probably search for other ways to make money, but you might also try to reduce the effort it takes to produce a post, shifting from more labor-intensive, longer-form writing to curation and aggregation.

That shift is perfectly okay, as long as it’s a conscious decision. There are large, sustainable media businesses focused on curation, aggregation, and summarizing news updates, showing that audiences value this type of publishing. For example, Milk Road and Superhuman have built large audiences and generate thousands of dollars per newsletter post.

Stuck in Cost-per-click Land

Perhaps the toughest place to be is doing direct sales, but pricing and shaping sponsorship products based on cost-per-click or other performance metrics. You lose the main benefit of programmatic ads (i.e., not having to do sales) and still have to deal with the low-cost expectations of performance marketers.

For more original, labor-intensive creative efforts, cost-per-performance ads can be underwhelming or frustrating. In many cases, you have a deeper relationship with your audience. Getting paid based on clicks or impressions — especially compared to rates on Meta and the like — can deeply undervalue your endorsement.

Not all publications can sell high-priced, tailored sponsorship packages. But if you feel stuck in cost-per-click land, it might be worth trying to sell custom sponsorship packages.

Tailored sponsorship packages

Compared to programmatic ads, selling custom, tailored sponsorship products require more effort, but can also be more lucrative. Let’s cover a few of the distinct characteristics of tailored sponsorship products.

Multi-platform and multi-media. Higher-priced sponsorships are usually not sold for a specific medium (e.g., “newsletter ad”); they’re sold as a package across multiple platforms and touch points (e.g., mentions across newsletter posts, podcast episodes, events, and research reports). 

Sold for a fixed fee. These sponsorship products are usually more akin to brand marketing (not direct response ads). As a result, these products are often sold at a flat fee, not based on impressions, clicks, or any other performance metric.

Longer relationship. The relationship with the sponsor tends to be longer, stretching beyond a single mention in a newsletter post or podcast episode. These relationships can last for weeks, months, or even years.

Need to make a high-value connection. Most importantly, not all media businesses can do this type of sponsorship — you have to be able to create high value connections between sponsors and your audience. 

Also, that connection has to be made in a way that makes editorial sense. You can’t bend too far from your worldview or coverage area, or you risk breaking your relationship with the audience.

Require more effort, especially for getting new sponsors. These products almost always come with more overhead across the entire sales process: pre-deal negotiations, sponsorship fulfillment, reporting, and payment. Usually, the harder it is to finalize the agreement (e.g., longer terms, more complex packages), the more overhead is created.

Summary

Sponsorships will be a meaningful revenue stream for most modern media businesses. In some cases, programmatic, cost-per-click ads may be the right fit, allowing publications to make more money without additional effort.

But for other publications, exploring a more hands-on approach to selling customized sponsorship packages may be more valuable. That's especially true if you:

• Have the ability to make high-value connections between your audience and sponsors with a higher willingness to pay (without breaking your editorial worldview).

• Focus more on original, long-form, labor-intensive creative efforts (vs. less time-intensive efforts, like curation, aggregation, or bite-size news coverage). 

• Focus on a niche and have a deep relationship with your audience, evidenced by willingness to pay you (e.g., subscriptions, merch, courses, etc.) or high-engagement rates (e.g., on YouTube, a higher engagement rate / ER30 than peers).

Since custom sponsorship packages generate quite a bit of overhead, many individuals and small teams have a hard time maintaining or growing  revenue. In our next post, we’ll dive into the significant increase in work associated with selling custom sponsorship packages, and ideas for how a lean media business could scale this type of revenue.

In the meantime, we’re excited to hear from you. If you make money through sponsorships, what’s your approach? Do you use an ad network? Do you typically sell sponsorship on one platform(e.g., newsletter ad) or multiple platforms? How do you determine pricing (e.g., cost-per-click, qualified leads, or brand awareness)?

As always, thanks for reading,
Reid

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew some of the most well-known consumer subscription products: Hulu, Crunchyroll, HBO Max, and Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

Apologies for the radio silence! 

Some personal updates from the past few months: I took some time off after leaving Substack and traveled around Japan; then Dee and I eloped at the Santa Barbara Courthouse and celebrated with family over the holidays; and now we’re preparing for a cross-country move to Charleston, SC.

On the work side, I’m working with my friend Chirag on a new way to help individuals and small teams grow their media business.

For those with a solid foundation and momentum, we’re exploring ways to add value through more hands-on, tailored support. You could think of us as your full-time tech (design / product / engineering) and growth (marketing / monetization) team, helping navigate problems and opportunities unique to your business.

If you’re feeling stuck, facing limitations, or focusing too much on non-creative aspects of your business, we’re here to help. We have the capacity to work with a few more folks and are excited to hear from you. To get in touch, send a note to reid@caddielabs.com, reply to this email, or drop a comment below.

The post below shares more of the thinking behind what we’re doing. Let us know what you think or if any of it resonates with you.

The challenges of going solo

Over the past decade, I’ve been fortunate to work with a remarkable group of talented individuals or small teams building their own media businesses, especially during the last few years at Yem and Substack. 

Helping folks earn a living doing something they enjoy has been deeply rewarding. The quote below from sums it up well and serves as a constant source of motivation:

There is no better feeling than the freedom to decide what you work on, how you spend your time, and who you do business with.

But the past few years have also left me with a much deeper appreciation for how hard it is to build a business around a newsletter, podcast, YouTube channel, or any creative pursuit, especially as an individual or super lean team.

Getting to a point where you’re earning a living is very difficult, and there’s no guarantee of getting there. Getting to that point is like wandering through the forest, searching for the other side. There are no growth tactics, tools, or shortcuts — just a lot of hard work, trying stuff out, consistently showing up, and a dash of luck.

For those who find momentum and feel the wind at their back, growing their business brings new challenges and opportunities. My career has revolved around growing media businesses, so I naturally gravitate toward these problems.

Shifting the problem-solving burden

Let’s go through some common challenges folks run into as they look to accelerate growth and take their business to the next level, and how we’re thinking about solving those problems.

Making important decisions in a silo is hard.

I’ve had countless conversations with folks wrestling with the same questions we struggled with at larger media companies. What value to provide paid subscribers? How much to charge? How to find reliable, ongoing growth channels? And how to launch new products and expand monetization?

While there are no universal answers to these questions, there are patterns, allowing us to develop expertise and intuition. One advantage of working with multiple high-growth media businesses would be deepening our insights, allowing us to provide nuanced, tailored guidance.

Solo entrepreneurship is hard.

Launching your own media business in a few minutes is magical. But running any business as an individual is challenging. 

I worked with some extraordinary people building Yem, but I was mostly by myself. The lows were a little lower, the highs weren’t as high, and it was easy to get stuck. It wasn’t nearly as much fun, and I really missed having teammates. 

We want to be a constant source of encouragement, helping folks avoid overthinking things or getting in their own way, and guiding them to realize their full potential.

Managing growth & monetization can be distracting.

Successful media businesses of the future will likely have these characteristics:

• Publish across multiple mediums and platforms — it’s already hard to cleanly categorize a media business as a “YouTube channel”, a “newsletter”, or a “podcast”.

• Make money in many ways, including subscriptions, sponsorships, merch, courses, events, etc.

• Expand audience through various growth channels, including paid marketing, partnerships, social, and other audience development efforts.

But each new platform, revenue stream, or growth channel creates a new list of stuff to do. Often, these new tasks pull time and mindshare from creative efforts — the hard stuff. A writer recently told us that they had 12 things on their to-do list for that day, not one of which was to write the newsletter.

Our goal is to drive audience and revenue growth by building unique features, automating workflows, and providing hands-on services.

Managing tech can be distracting.

From conversations with folks that move from off-the-shelf platforms to a custom set-up, there’s usually at least a hint of regret. 

They’re now required to define their exact product needs (no easy task) and navigate the unavoidable compromises involved in product development. Additionally, they encounter a consistent wave of new challenges in maintaining and improving the product. Often, they’re surprised by how much of their calendar and mindshare are stolen by managing ongoing product and technical issues.

We would own the entire problem-solving burden around product and engineering. 

Hiring, developing, and retaining talent is hard.

Some folks hire part-time or full-time employees to solve tech, growth, or monetization problems. 

Recruiting and retaining people can be time-consuming, strenuous, and expensive for a lean media business, especially for roles that don’t improve your creative output. Being an effective manager is hard, and managing tech and business people can be quite different from managing creative talent.

Our goal is to provide you the superpowers of a world-class growth and tech team without the overhead and cost of full-time employees.

More growth, more problems.

All these challenges become more pronounced the more a business grows. 

Taking on the responsibility of solving these problems pulls time, mindshare, and investment away from focusing on creative efforts, the core value proposition, the thing that makes what you’re doing unique — what people are ultimately paying for. 

By serving as your tech and growth team, we hope to let you focus on what truly matters.

Summary

The future of media will be led by a rising tide of lean, niche media businesses. Creative talent no longer has to work at big media companies — they can pick up their phones and start their own media companies. 

Patreon has 8 million patrons and Substack has over 2 million paid subscriptions. Teachable has paid more than $1 billion and Thinkific over $650 million to course instructors. YouTube and social platforms have produced several media businesses earning more than $1 million per year.

But today, there’s still a massive resource gap between huge media companies and individuals or small teams operating media businesses. This resource gap acts as a forceful headwind for the latter, making it difficult to scale operations beyond the capacity of the individual or team. 

Our goal is to find ways to narrow the resource gap between The New York Times and an individual writer, Netflix and a YouTube channel, or Disney and a modern media business. 

We want to narrow the resource gap by shifting the problem-solving burden from individuals and small teams to us, providing more hands-on support across tech and growth, and solving an expanding set of unique problems above and beyond one-size-fits-all, off-the-shelf solutions.

I hope we earn the opportunity to be a trusted partner, helping individuals and small teams take their media business to the next level.

I’d love to hear what you think. Does any of the above resonate with you? If you’re operating a media business and had a magic wand, what would you wish for? 

Reply to this email, drop a comment below, or send a note to reid@caddielabs.com.

As always, thank you for reading,
Reid

PS — here are some photos from our elopement! Tycho was out of his mind during the photo shoot on the beach, so this is the only reasonable pic we got with him. 😂❤️

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew some of the most well-known consumer subscription products: Hulu, Crunchyroll, HBO Max, and Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

In our last post, we covered how Alex Xu and ByteByteGo have set up a systematic approach to sharing to LinkedIn and Twitter, creating a consistent inflow of new subscribers. But of course, the value of sharing extends beyond LinkedIn and Twitter, with one platform rising quickly in importance: Instagram.

With over 2 billion people using Instagram each month, it’s become arguably the most valuable platform for building an audience. Over time, Instagram has gradually morphed from a way to see photos from your friends, toward seeing videos and images from strangers. A few interdependent factors are driving this shift:

1. Reels (Instagram’s TikTok-style video feature) have become a more pervasive part of the Instagram experience, generating more than 200 billion views per day. 

2. Instagram continues to shift more weight toward algorithmic recommendations to determine what people see when using the app.

3. Sharing within Instagram is integral to the experience, allowing images and videos to spread quickly beyond an account’s followers.

On the last point, sharing within Instagram is the key to unlocking step-function growth in new followers. I saw this first-hand with my partner Dee, who runs an Instagram account for our dog Tycho. Dee has posted over 100 Reels — the one Reel below is responsible for over 80% of Tycho’s followers.

These dynamics are turning Instagram into a compelling platform to expand your audience and add new subscribers, and many Substack writers are already tapping into this opportunity. My colleague has put together the definitive guide on how to build an audience on Instagram and turn followers into subscribers:

On Substack

Bringing your Instagram followers to Substack

“A decade of chasing success on social media left me exhausted by the endless battle for eyeballs,” writes Marko Ayling on his Substack, The Missive. Marko boasts tens of thousands of Instagram followers. He is part of a wave of Instagrammers increasingly “frustrated by living at the whims of fickle algorithms that prevent creators from connecting direc…

Read more

4 years ago · 283 likes · 79 comments

Let’s review a few more examples of writers sharing from Substack to Instagram to see if it sparks ideas for expanding your audience and getting new subscribers. It’s worth following the writers linked in the examples below on Instagram for ongoing inspiration.

Nailing the fundamentals

Let’s start by covering the basic types of posts on Instagram and how those show up on the profile:

• Post / Reel — these are permanent parts of your Instagram. Notably, there are no ways to add a link to these posts. Folks try to get around this limitation by using the caption or comment to direct followers to a “link in bio”, or including a non-clickable URL on the image or video.

• Stories — by default, these disappear after 24 hours unless you add them to a persistent story. Story posts can have a link added to them, making them crucial for sharing posts or noteworthy moments in your publication journey. It’s also easy to share a Feed / Reel as a Story post (though some folks don’t like to show the same thing twice to their followers).

• Link on profile — many writers add a link to their publication on their profile, which is the most effective way to get new new subscribers. Other writers with multiple links will use a link-in-bio service (e.g., Linktree) and include a link to their publication on their link-in-bio page.

Often, people will click through to your profile to follow you on Instagram, presenting an opportunity to let new followers know about your publication and encourage them to subscribe. Below are a few excellent examples of writers — Jessica Reed Kraus, Leandra Medine Cohen, and Andy Adams — who link directly to their publications on their profiles.

These writers also use persistent stories (below the “Follow” button) to describe their publications and make it easy to find recent posts. The persistent stories have links to their publication or posts, making it easy for followers to subscribe. Andy Adams also uses the top row of his pinned posts to spotlight his About page and his Substack post asking photographers to send him their work.

Getting your profile set up is essential to turning followers into subscribers. Now that we know the basics and toured the profile page, let’s explore how writers share from Substack to Instagram.

Sharing your Substack posts

One of the best ways to get new subscribers is to find a way to consistently and effectively share your Substack posts to social platforms. On Instagram, a simple starting point would be to share each post after it’s published. Here are a few recent examples of Stephanie Danler, Jade Fox, and Lauren Clark sharing their posts to Stories using the shareable images Substack generates for each post:

Some writers will share Substack posts to Instagram as posts, allowing them to surface outside Stories and remain in their feed. For example, Heated shares many of their Substack posts to Instagram, using screenshots of the post or even making beautiful custom images.

Sharing comments

Another great way to share posts is by highlighting comments from Substack. In doing so, a lot of writers point followers to Substack to join a more engaging, higher-quality conversation. Below are a few examples from Alisha Ramos, Leslie Stephens, and Jessica Reed Kraus sharing Substack comments to Instagram:

Re-sharing reader sharing

The best way for any post to spread on Instagram is through people sharing it. One loop that may be worth amplifying: when you see a reader sharing your work on Instagram, re-share it to your followers. Re-sharing the reader’s post provides valuable social proof and gets your followers excited about sharing so they can be in the spotlight. Here’s a great example of re-sharing from Diego Perez (aka Yung Pueblo):

Caroline Chambers may be the best at motivating her readers to share to Instagram. After each What To Cook recipe goes out, a wave of people will share their meals to Instagram. Caroline does an excellent job of re-sharing and responding, inspiring readers to share in the future, and nudging her followers to subscribe so they don’t miss the next recipe.

Ongoing value from sharing a post

The benefit of sharing Substack posts to Instagram can extend beyond the moment you publish your post. Let’s go through a recent example from Evan Ross Katz. Evan starts by sharing a Substack post to Stories, though it’s only available to paid subscribers — an unfamiliar concept on Instagram. So Evan wrote a lovely note about the extra value paid subscribers get (spicy takes!) and how their support funds the newsletter.

Over the next week, Evan re-shares some amazing examples of readers sharing his work to Instagram. He also finds out that Sarah Jessica Parker is a reader! Evan then shares a thank you note to the hundreds of new paid subscribers (showing his paid subscriber chart) and thousands of new free subscribers.

To close things out (at least for our example), Evan shares a note he got from a new paid subscriber, again taking the opportunity to welcome and thank all the new subscribers.

There’s value in simply sharing your Substack posts to Instagram. But occasionally, you may have a post that gets a lot of attention and spreads through Instagram, providing ongoing value beyond the moment you publish the post. These lucky moments can be a perfect opportunity to lean in and drive step-function growth in Instagram followers and subscribers.

Maximizing the launch moment

While publishing a post presents a recurring sharing opportunity, the most significant moment to share is when you launch your publication. For writers with an existing audience, some of their biggest days of new subscriber growth happen right after launch. Let’s check out a few examples of writers sharing their launch to Instagram.

The first example comes from Ben Lippett, who shared a beautiful series of images detailing the launch of How I Cook. He included what the newsletter was about, some example topics, how often he plans to publish, the extra value paid subscribers will get, and finished with a chef’s kiss thank you. Ben could easily share this series to Stories with a link to subscribe to the publication.

Since Instagram is a visual-forward platform, custom images are fantastic, but certainly not required. Melissa Abbott did a superb job of launching 5 Things Friday using screenshots from her launch post. The Stories post outlines what the newsletter is about and what to expect as a free subscriber, paid subscriber, or founding member.

If you’re comfortable in front of the camera, there’s no better example of a launch video than the one below from Elizabeth Gilbert. It’s a heart-warming, captivating video, winding through a reflection on the 20th anniversary of Eat, Pray, Love, the launch of Letters From Love, and the mission statement behind the newsletter.

No matter the approach, it’s always important to take advantage of a launch moment and get your friends or followers to subscribe. The launch moment doesn’t have to be right when you launch, and it can also include moments like when you turn on paid subscriptions. In any event, finding a way to share your launch to Instagram may help you get the most out of this critical moment.

Sharing noteworthy moments

Beyond your launch, there are other moments worth sharing along the way. One example is notable subscriber milestones, which show that tons of readers value your work. Below are a few examples from Shira Gill, Shane O'Mara, and Mason Currey calling attention to meaningful subscriber milestones:

Another great sharing moment comes from Farrah Storr, who featured a limited-time discount to Things Worth Knowing. Special offers are usually effective at converting free subscribers to paid, but the same can be true for getting your Instagram followers to go paid.

These are just a few examples of moments to share along the way — keep the idea of shareable moments in mind and follow your intuition on what works best for you.

Summary

At Hulu, Crunchyroll, and HBO Max, we had large teams focused on growing our followers on social platforms. These efforts were essential in growing our brand recognition and "top-of-funnel" audience, which would eventually turn into paid subscriber growth.

The same opportunity exists for Substack writers and other modern media businesses. Finding a way to consistently and effectively share to social can be a valuable growth channel and the best way to bring on new subscribers. Try to find a rhythm of consistent sharing that works for you, leaning on recurring sharing opportunities (e.g., publishing a post), or drawing attention to meaningful moments and milestones.

With its scale and influential product changes, Instagram has become an indispensable platform for building an audience. Even if Instagram isn't the most obvious fit for your particular publication, it's worth trying to find a way to consistently share to Instagram that drives some value (e.g., sharing podcast/video clips or selections from a text post).

That's all we got today — let me know what you think! If you're already sharing to Instagram, what have you learned? What works and what doesn't work? If you haven't shared to Instagram, what's holding you back? Did any of the examples above spark ideas?

As always, thanks for reading,
Reid

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew some of the most well-known consumer subscription products: Hulu, Crunchyroll, HBO Max, and now Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

We’ve spent quite a bit of time discussing how to improve retention — let’s turn our attention toward growing your audience and getting new subscribers.

Most successful consumer products go through a period of growing organically, then start to build out repeatable growth channels, including paid marketing and partnership efforts.1 Most of these products tend to build their initial audiences on social platforms, usually starting with a focused approach on one platform, and then gradually expanding to new platforms. 

Our post on No Laying Up ("NLU") — a leading golf media business — provides a great example. The NLU team has always focused on Twitter (I can’t bring myself to call it “X” yet) as the primary platform for engaging with their audience and reaching new people. NLU has only recently expanded to other social platforms (e.g., Instagram, TikTok), using those channels to highlight compelling clips of videos from their YouTube channel or from their podcast feed.

Many publications on Substack are growing their audience and subscribers by sharing to social. and the team behind the are one of the best examples, having created a systematic approach to sharing to LinkedIn and Twitter. And it seems to be paying off — just recently, Alex announced that ByteByteGo had surpassed an incredible milestone:

Let’s dive into how Alex and the team behind ByteByteGo use LinkedIn and Twitter to build their audience and drive subscriber growth. But first, a few notes.

There are many different ways to build an audience, and there’s no universal right way to go about it. ByteByteGo’s approach to sharing is sophisticated and requires a ton of effort and investment. The goal isn't to copy ByteByteGo's approach, but hopefully these examples inspire a few ideas for how you can share to social and grow your subscribers.

Sharing comes easier to some writers than others. Writing on the internet is already a vulnerable act, so it’s understandable if you feel a little discomfort when sharing and promoting that work to a broader group.2 But if you want to reach a wider audience, or if you’re trying to build a business, finding a way to consistently share to social — that makes sense for you — can open up a valuable growth channel.

Okay, let’s dive in.

Systematic approach to sharing

ByteByteGo (“BBG”) has enjoyed exceptional growth in part because they’ve set up a system for sharing its work to Twitter and LinkedIn (which makes sense for its professional-oriented audience). The team has built sizable followings on both platforms and has done a great job driving that audience back to their newsletter.

An integral part of BBG’s approach is turning various events into sharing moments. They constantly try new things and continuously tweak the details. BBG also invests in maximizing the effectiveness of its social posts, including working with animators and illustrators to create beautiful, eye-catching visuals.

Nailing the basics

From the images of Alex’s profiles below, the first thing to note is that the newsletter is prominently linked and easy to find for new visitors. In virtually every social post below, there’s a link back to a simple landing page focused on the email entry form. Through testing, the BBG team found that a focused landing page usually converts better than linking to a post or a more detailed landing page.

On LinkedIn, Alex does a great job of using the Featured post row, highlighting the in-depth PDF on system design that new subscribers get as part of their welcome email. First-time visitors are able to quickly find BBG’s most valuable writing and are probably more likely to become engaged subscribers.

Sharing a post

If you’re looking to grow your subscribers, a good starting point is to consider how to turn publishing each post into a sharing moment.

For seemingly every one of BBG’s newsletter posts, there’s a corresponding post on LinkedIn and Twitter. ByteByteGo will often share bite-size newsletter topics or ideas to social, leaving the in-depth discussion for the newsletter.

On LinkedIn, there’s usually a short hook that’s fully visible before the “see more…” link. BBG uses compelling images that appear prominently in the LinkedIn feed, drawing people in and leading to more folks clicking to unfurl the full post. After being unfurled, the main points of the newsletter post are listed, followed by a prompt to subscribe to the newsletter (there’s usually a similar post on Twitter).

Below is an example of how ByteByteGo will share bite-size topics with only the most salient bullet points, with most of the insights and details covered in the newsletter.

Here’s another example of a more image-centric post for LinkedIn and Twitter:

With this approach, publishing a post becomes a meaningful recurring sharing moment — an excellent tool for building a following on social and bringing on new subscribers.

Previewing upcoming posts

ByteByteGo will occasionally share a preview of each week's upcoming posts. These schedules help existing readers know what to expect and nudge followers to become subscribers.

of is another writer who does an excellent job teasing upcoming posts. Roughly 24 hours before the post is published, Edwin will share a teaser on Twitter. Edwin’s audience includes investors who value timely analysis, making these previews particularly impactful. Here are a few examples:

Celebrating milestones

Another moment ByteByteGo leans into for sharing is celebrating subscriber milestones. These milestones provide an excellent opportunity to thank existing subscribers for their support and to show compelling social proof for prospective subscribers. BBG also uses this opportunity to spotlight some of its most popular posts, helping new readers find their best work.

Another moment worth marking your calendar for is when you launched your publication or business. Many writers on Substack write anniversary posts, sharing their stories, reflections, and plans for the future (e.g., Platformer, Doomberg, Popular Information). ByteByteGo turns its anniversary into a shareable moment, using it as another opportunity to surface the best posts and encourage folks to subscribe.

Turning on paid subscriptions

Launching paid subscriptions is another crucial sharing moment, providing an opportunity to highlight any extra value paid subscribers get and encouraging your audience to support you with a paid subscription.

When ByteByteGo turned on payments earlier this year, they offered a launch discount for anyone who became a paid subscriber in the first three days. Launch promotions can be especially effective for encouraging followers on social to upgrade to a paid subscription. One week after turning on paid subscriptions, Alex highlighted that BBG had made it into the Technology leaderboard, thanking subscribers for their support (and surfacing valuable social proof).

Summary

Alex and the ByteByteGo team have built a systematic approach to sharing their work on Twitter and LinkedIn, turning various events into valuable sharing moments. For BBG, sharing to social is baked into the process of publishing a post, creating a repeatable sharing moment. As someone who has struggled with sharing my writing on more of an ad-hoc basis, I admire the more systematic approach to sharing by Alex and the ByteByteGo team.

ByteByteGo’s approach will probably not work for you. But maybe the examples above can spark ideas that make sense for you. Think about your audience — what’s the best way to communicate with them and find more people like them? Think about your publication or business — what events or milestones could you turn into shareable moments? How could you get into an easier, more effective rhythm of sharing, or create more of a systematic approach to sharing?

If you’re looking for more inspiration for sharing to Twitter or LinkedIn, here are a few accounts worth exploring and following:

• Twitter: Astro Poets, Judd Legum, Joyce Vance, and Aaron Rupar

• LinkedIn: Aakash Gupta, Linas Beliūnas, and Avi Chawla

• Systematic approach to sharing: Lenny Rachitsky (LI, Twtr), Anthony Pompliano (LI, Twtr), and Gergely Orosz (LI, Twtr)

As always, I’d love to hear from you — reply to this email or drop a comment below.

Thanks for reading,
Reid

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew some of the most well-known consumer subscription products: Hulu, Crunchyroll, HBO Max, and now Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

In a recent post, we discussed some of the trends defining the future of media. To help show what the future of media will look like and to bring some of the frameworks from the Croissant to life, we’ll do an occasional deep dive into examples of modern media businesses.

Today’s post will cover No Laying Up (“NLU”), a golf media brand that has spiced up an otherwise sleepy niche. It’s an excellent example of a modern media business:

• A lean team catering to a specific group of people.

• A thoughtful, focused approach to distribution and building an audience.

• Multimedia creative output, supported by multiple revenue streams.

• Owned by the team running it with no investors or outside capital.

What sets NLU apart is a focus on slow, incremental growth and improvement across everything they do, and the ability to focus and say “no” to a bunch of opportunities. It’s also a bit unique in its origin as a friendly group chat, which morphed into a Twitter account, and has now become a full-blown media company with five “partners” and a growing cast of key team members.

I deeply admire how No Laying Up operates and have wanted to write about them for a while. The final nudge came after listening to an interview with Neil on the Making Media podcast. I strongly recommend listening to the interview (Spotify, Apple) — it’s a true masterclass on building a modern media business and a primary source for much of what’s written below.

By diving into No Laying Up, I hope to bring to life some of the themes and frameworks we talk about on the Croissant, and paint a picture of where the media world is going. 

Let’s get to it!

Would you do it if no one was watching?

In 2013, No Laying Up started as a friendly group chat and eventually morphed into a shared Twitter account. For a while, NLU was a hobby — something they all did for free (or even spending money out of their pocket) while working full-time jobs. Gradually, the five partners eventually quit their jobs to focus on NLU.

In interviews, Neil mentions how much effort and patience it takes to build an audience. For the first few years, no one paid attention to what they were doing. But that was fine — they had no intention of starting a business and were making each other laugh, and that’s all that mattered.

If you’re starting a podcast, newsletter, YouTube channel, or any creative pursuit on the internet, having the right motivation and expectations is important. A lot of people expect to find an audience right away, partially because the success cases are well-known. But it’s far more normal for no one to pay attention when you’re just starting.

If you’re trying to make something you think other people will like, but you’re not into it, the first year or so will be a slog. Conversely, if you find inherent value in what you’re doing, it’ll be much more enjoyable and easier to keep doing it. You won’t care as much if no one else reads, watches, or listens to what you’re making — any audience or engagement will just be icing on the cake.

For anyone thinking about making the leap and starting a creative pursuit, it may be worth asking yourself: would you do it even if no one paid attention?

Creative footprint and distribution

Fast forwarding past its humble origins, No Laying Up has blossomed into an influential brand in golf media’s small but passionate and growing niche. Let’s take a quick look at NLU’s creative footprint, approach to distribution, and how they build their audience.

Social and audience building

Many folks are introduced to No Laying Up on Twitter through the NLU handle or the team’s personal accounts. Golf is a slow spot and lends itself well to a second-screen experience, making Twitter the best fit for NLU to engage with its audience in real time and reach new people. Other social platforms (e.g., Instagram, TikTok) serve as a way to highlight the “greatest hits” from videos or podcasts they’ve published.

Focus is imperative when building an audience. The NLU team puts tons of effort toward Twitter and other social platforms, serving as a forum for live discussion and a way to reach new people. But the team is careful to avoid splitting their attention and chasing new platforms or trends, instead taking a more measured approach to expanding and evolving what they do. Their careful approach has paid off — their audience knows where to tap into the latest conversation, leading to one of the largest, most engaged followings in golf media.

Podcast and live shows

The backbone of their creative footprint is the No Laying Up podcast (Apple, Spotify), which just crossed over 700 episodes. The podcast includes interviews with professionals and other folks from the golf world, as well as tournament previews and recaps. They have a few other podcasts, including the fan-favorite Trap Draw, where NLU dives into non-golf topics (e.g., Rory McIlroy joined a few times to discuss the final season of Succession).

Video series

NLU flexes its creative muscle the most with its video series on YouTube, especially the two flagship series: Tourist Sauce (8 seasons with 78 total episodes) and Strapped (11 seasons with 33 episodes).1 These shows deserve their own posts — they are unique, authentic, entertaining, and the special sauce that separates NLU from other golf media brands. On a more pragmatic level, part of the nudge toward video was how much easier it is to sell a multimedia package (podcast + video + social) to sponsors.

In the Making Media interview, Neil often references getting into a rhythm of continuous, incremental improvement with everything they do. There’s no better example of this in action than their video series — while the earlier seasons of Tourist Sauce and Strapped are endearing and entertaining, both shows get markedly better each season. 

Not long ago, these types of highly-produced shows could only be done at larger media companies. NLU is showing that’s no longer the case. Here’s Neil on the production value and approach to storytelling for their YouTube series:

One of the beauties of the Internet and YouTube and current media landscape is that it democratized video, like it doesn't have to be a movie production. The story and the authenticity matters more than anything else.

Site and newsletter

At the center of the NLU universe is their site and newsletter, which host some integral parts of NLU:

• Longer-form writing, now led by former ESPN writer Kevin Van Valkenburg.

• The Pro Shop, which sells a variety of NLU merch.

• The Refuge, a forum for NLU fans, some of which is limited to Nest members.

The Refuge is a vibrant forum that brings NLU’s biggest fans together around a digital water cooler. Discussion topics range from planning in-person events and golf trips, coordinating Peloton rides, or discussing what to know as a new homeowner. When NLU tries new creative ideas, The Refuge can serve as a constructive source of early feedback, helping them better understand their audience and reactions to what they produce.

The newsletter is also an essential ingredient to NLU operations. In the past, the newsletter has focused mainly on new merch. More recently, the newsletter has evolved to spotlight long-form writing, podcasts, and videos.

Revenue breakdown

No Laying Up’s revenue breakdown and associated distribution strategy is similar to Barstool Sports, with three main ways of making money: sponsorships, merch, and community. Here’s a rough breakdown of how NLU makes money:

NLU has a thoughtful approach to how they’ve built their business — they don’t chase money mindlessly and often turn down growth opportunities. Let’s take a closer look at how NLU makes money.

The right way to do sponsorships

NLU is a gold standard for how to sell sponsorships the right way. They only work with a few sponsors, most of which commit to annual or multi-year agreements. The upfront commitment provides stability for a small team, helping plan and fund a full year of production.

Of course, it’s not easy to sell these annual, multi-media packages. With that kind of commitment, you could imagine sponsors coming up with some requests or ideas of their own. NLU has shown a growing astuteness at threading the needle, successfully balancing the needs of the sponsor, NLU, and, most importantly, the audience.

For example, right after welcoming Titleist as a new marquee sponsor, they published a video of the NLU team visiting the Titleist Performance Institute.2 While it could be viewed as an entirely-sponsored video, it’s one of NLU’s most watched and liked videos over the past year.

And then Titleist played a part in helping bring this gem of a video together, the most-watched video of all time on NLU’s YouTube channel:

Forming this partnership with Titleist came with some wrinkles. There’s a hot debate in golf on how to limit the advancement of the golf ball, which is making a growing list of golf courses obsolete. Titleist has a strong view on this debate as new regulations would seriously impact its business. The NLU team has a mostly opposing opinion — something they had to over-communicate early on, making it clear that it was a topic they would have to discuss in an open-minded and honest way.

With any creative idea, NLU starts with “Does it serve the audience?”, an especially valuable question for sponsorship-centric businesses. Of course, an audience-centric approach leads to saying no more and takes extra effort to find the right partner, but it helps protect NLU’s brand and relationship with its fans.

In an earlier post, we mentioned the risk of ads harming the user experience, especially when letting an ad network or platform sell ads on your behalf. NLU handpicks each of their sponsors, which are usually products they already use. NLU does not monetize via programmatic ads, turning down easy money from YouTube’s AdSense or Spotify’s automated ads.

“Marketing we make money on”

At 40% of revenue, merch is a meaningful part of the NLU business, especially as a source of cash flow during the year (most sponsorship revenue arrives at the start of the year). But the merch business also provides strategic value, serving as an influential marketing vehicle for NLU and helping expose new people to their brand.

Most importantly, merch allows folks to express their fandom and easily identify other NLU fans. If you’re wearing NLU merch at a golf tournament and see someone else rocking NLU gear, there’s an instant connection (in other words, NLU passes the t-shirt test).

Neil is careful to point out that merch is tedious and time-consuming. It can quickly become a cash drain if not managed well. He also points out that their focus on merch and membership likely limits the growth of sponsor revenue, but that’s ultimately a healthy tradeoff.

I'm a big believer in not becoming too reliant on one revenue stream or one part of the business, even if that hinders growth.

Community

While sponsorship and merch are well-oiled revenue streams, there’s untapped potential for NLU’s membership: The Nest. As it is today, The Nest caters to the most passionate NLU fans, providing full access to The Refuge, invites to events, and discounts on merchandise.

For a new person entering the NLU world, the value prop of a Nest membership can be a bit opaque, and the signup flow can be hard to navigate. The NLU team rarely promotes The Nest, occasionally appearing in the newsletter or on social. All of this results in only people dead set on buying a Nest membership doing so, leading to a virtually nonexistent churn rate.3

The NLU team is fully aware of the opportunity around The Nest, but again, they’re careful to split their attention across too many things. While NLU has steered clear of over-promising the value to Nest members, Neil mentions memberships have grown steadily without any consistent promotion, allowing The Nest to evolve naturally alongside the community.

With the recent addition of Kevin Van Valkenburg, a superb writer and seasoned Nest member, perhaps NLU’s long-form writing will become a bigger part of The Nest membership. In any event, it’s not hard to imagine The Nest becoming a gradually more meaningful part of the NLU business over time.

What’s your mission?

To start each year, the NLU team does an off-site and reviews their mission statement, carefully reviewing each word. The mission statement is a guiding light in sharpening what creative projects to pursue and how to go about them. Here’s NLU’s current mission statement:

To entertain and inform a community of avid golfers around the world.

Through various interviews, the NLU team consistently points to two mistakes they see other media outfits make and try to avoid themselves:

1. Treating your audience as if they’re stupid.

2. Trying to make something you think other people will like.

My take on the first point is that many media businesses try to be too much for too many people, spreading themselves too thin, to a point where no one really cares about what they’re doing. There will only be a few media brands like the New York Times or Netflix, but there are endless opportunities for niche media businesses. It’s okay to focus on a specific type of person and go deep. For NLU, “avid” is the operative word differentiating them from mass-market brands targeting all golfers.

On the second point, the NLU team are avid golfers, so they’re firmly part of their audience. When discussing which projects to take on, a useful initial filter is whether they’re excited or curious about it. That doesn’t mean they pursue everything that passes this filter, but it’s a crucial first step.

Often, there’s a gravitational pull to please your entire audience.4 Having a mission statement helps you stay true to your values, motivations, and worldview — why you’re doing what you’re doing. As an extension, you’ll maintain the trust you create with your true audience and the authenticity that defines your brand, even as the team expands and your creative footprint evolves.

Summary

What I most admire about No Laying Up is their focus on gradually improving what they create and how they operate, not searching for growth hacks, chasing new platforms or trends, or capturing short-term wins. One of the recurring themes of the interview with Neil is the Warren-Buffett-inspired idea of getting rich slowly. A defining characteristic of NLU is turning down easy money or growth opportunities and staying focused on a slower, more sustainable pathway to growth.

I'm cool with people criticizing us for moving too slow.

My motivation is like, I don't want to exit. There's no 10x thing.

That’s all we have for now — what stood out about No Laying Up and how they operate? Do any lessons or notes resonate more than others? I’d also love to hear whether these types of deep dives are valuable and, if so, which individuals, teams, or brands we should cover next.

As always, thanks for reading,
Reid

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew some of the most well-known consumer subscription products: Hulu, Crunchyroll, HBO Max, and now Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

Increasing your price is one of the most immediate ways to boost earnings and customer lifetime value (“CLV”). But often entrepreneurs and leaders will go years without even considering a price increase, potentially leaving quite a bit of money on the table and under realizing their full earnings potential. Part of the reason is that increasing price is intimidating, delicate, and can easily backfire — it's crucial to nail the timing, messaging, and broader execution of a price increase.

The post below will focus only on raising the price of your core subscription product.1 We’ll cover how to know when it’s a good time to increase your price, how to gauge the impact of a price increase, and how to avoid common mistakes in executing a price increase.

Let’s dive in!

Should you raise your price?

The first step is to gauge whether now is an ideal time to increase your price. A great starting point is to check your health metrics, including:

• Paid subscribers as a % of total subscribers (paid + free)

• Free trial to paid conversion rate (if applicable)

• Paid retention rates

• Growth rate of new paid subscribers coming in

If these metrics are well above your peers, that’s great! But it could also indicate that your product may be underpriced and you may be leaving money on the table.

We recently met with a small team on Substack to review their health metrics. Roughly 40% of all their subscribers were paying, and they were retaining 85% to 90% of their subscribers after the first year — both extremely high. They had an ambition to grow their revenue, expand the team, and do more of what they were already doing, but better. As we discussed growth ideas, the most obvious was a thoughtful approach to increasing price, including what existing subscribers were paying.

Often, when we tell entrepreneurs or leaders that their health metrics are above-average, they feel reassured and tune out. But it’s important to realize this may also be a strong signal that your price is too low, and you may not be realizing your full earnings potential.

Another important consideration is how a price increase relates to your priorities. Businesses will regularly rotate between prioritizing growth and profitability. All else equal, raising prices will make it harder to bring in new subscribers, which can have a ripple effect and limit audience growth. If you’re early in your business journey or focused on subscriber growth, it may not be the best time to increase your price.

Conversely, raising prices can be the most effective growth strategy for a mature business with stable subscriber growth. A good example is Netflix's domestic business (US + Canada), where subscriber growth has been virtually flat since a COVID-induced surge in early 2020. As paid subscriber growth has stalled, Netflix has consistently relied on price increases to drive continued revenue growth.2

Once you decide the moment is right for a price increase, consider any upcoming initiatives to fine-tune your precise timing. If you’re about to launch a new feature or anticipate a meaningful improvement to your value proposition, announcing a price increase with those changes can help land the messaging and increase the odds of more subscribers sticking around after their price goes up.

Gauging the impact of a price increase

Two things that tend to surprise people about price increases:

• Most of the revenue lift from a price increase comes from existing subscribers. Finding a thoughtful way to increase what existing subscribers are paying is key to realizing the value of a price increase.

• A price increase impacts subscriber acquisition much more than subscriber retention. After a price increase, it’s most likely that new paid subscriber growth will slow down, whereas retention rates will be stable.

Let’s go through a hypothetical example to give you a framework for gauging the impact of a price increase. We’ll imagine having 5,000 subscribers paying $5 per month ($300,000 in annual recurring revenue; “ARR”3), and we’re considering raising the price to $6, $7, or $8 per month.

We’ll start with how a price increase impacts existing paid subscribers, then cover how it impacts the inflow of future new paid subscribers. (Here’s a Google Sheet if you want to follow along.)

Impact on existing subscribers

Without any material change to our product or value proposition, the more we increase the price, the more we can expect retention to worsen. In the image below, compared to the status quo (i.e., no price increase), we see worse retention if we increase the price to $6, but much worse retention if we increase the price to $8.

With no price increase, we expect to keep 75% of our paying subscribers two years later (3,750 out of the starting 5,000). If we raise our price to $6, we end up with 3,200, losing an additional 550 subscribers; if we increase the price to $8, we lose 1,200 subscribers.

As shown below, even with worse retention in our three price hike scenarios, our per-subscriber and overall earnings during the first two years are still higher. But the drop in paid subscribers severely limits future revenue growth. If you press a price increase too far, even if the near-term gains are compelling, those gains can quickly vanish if you end up on a lower long-term revenue trajectory.

Impact on future subscribers

While a price increase is unlikely to change retention for new subscribers, it will slow down the inflow of new subscribers.4 The more we increase the price, the more we can expect new paid subscribers to slow down.

Let’s assume we’re adding ~100 new paid subscribers per month. We’re growing fast and expect to maintain a monthly growth rate of 4% for the next two years (~160 new subs per month). With no price increase, we expect to add 2,800 net new subscribers in two years, equating to an additional $167,000 in ARR.

If we increase the price to $6, let’s say our monthly growth rate slows to 2.0% — we only add 125 new subs per month (vs. 160 status quo) and end up with ~670 fewer paid subscribers. With a significant price increase (e.g., $5 to $8), it’s possible our growth flips negative and we actually see retraction (-2% vs. +4% status quo), leading to a substantial drop in paid subscribers (1,500 fewer paid subscribers).

The slowdown in new paid subs doesn’t impact the near-term earnings as much — all the scenarios have roughly the same revenue during the two years after a price increase (bottom two rows in the table above). But all the scenarios lead to substantial drops in paid subscribers, limiting our long-term growth trajectory. As a proxy for our momentum, here’s a chart showing paid subscribers and our ARR run rate two years after the price increase:

Bringing the pieces together

Now we can combine our expected impact on existing and future subscribers to understand what could happen after a price increase.5 While the numbers are made up, I did want to show that it’s pretty common for a price increase to yield near-term revenue gains, but that usually comes at the expense of paid subscriber growth.

Finding the right balance between near-term earnings boost and long-term paid subscriber growth is crucial. The extra revenue from a well-executed price increase can be hugely beneficial. But when pressed too far or mishandled, the slowdown in new subscribers and the downward pressure on retention can be a severe headwind on subscriber growth.

How to raise prices

While Netflix has sunk into a regular rhythm of price increases, their first price increase didn’t go so well. It would become known as the Qwikster debacle — a fumbled attempt to navigate the transition from mailing DVDs to streaming video. The business decisions were sound, but the comms and execution were deeply flawed. After the pricing mishap, Netflix’s brand took a severe hit and its stock sank 83% in four months.

Increasing the price for existing subscribers is extremely delicate — nailing the messaging and framing is essential. To start, make sure you’re being transparent. At a minimum, make sure you're being explicit in letting subscribers know when their price will change and by how much.

When you inform subscribers about the price increase, it’s usually best to avoid making excuses, pointing to things like currency fluctuations or increased costs as the reason for increasing the price. Instead, it can be valuable to remind subscribers how much the product has improved and announce any notable upcoming changes. You can also reference what the additional funding will enable you to do, including just more of what you’re already doing, but better.

For the next few price increases following the Qwikster debacle, Netflix let existing subscribers pay the same rate for a while after the price increase. Netflix has moved away from this approach, instead raising prices for existing and new subscribers simultaneously. But if you’re going through your first or second price increase, showing a little love to your existing subscribers can go a long way to reducing any risk of churn or hit to your brand.

Let’s wrap up with a few other best practices for executing a price increase:

• Gradual price increases are way better than larger price increases. Netflix and Spotify have never increased prices by more than $2 at once, instead opting for a series of gradual price increases.

• Price increases should be very infrequent. It depends on various factors, but once every 2-3 years is a good starting point.

• It’s awkward to raise prices and then lower them again. Of course, offering the occasional discount or special offer can be valuable. But try to be confident and firm in raising your “retail” price.

Summary

I've seen several products improve significantly without any price adjustment. Increasing prices can be intimidating, and rightfully so — it's tough to get right and can easily backfire. But choosing not to increase prices is a decision as well, one that often leaves a lot of money on the table and the business on a lower growth trajectory.

It's important to periodically evaluate whether it's a good time to adjust your price. If the time is right, a well-executed price increase will give you extra funds to invest in the business, placing you on a higher, long-term revenue trajectory.

That's all we got for now — what are your takeaways? Have you ever thought about increasing your prices? If so, what's held you back from doing it?

As always, thank you for reading,
Reid

5

Here’s the breakout of how our hypothetical price increase impacted existing vs. future new subscribers:

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew notable consumer subscription products: Hulu, Crunchyroll, HBO Max, and Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

Welcome back to our ongoing series on better retaining your paying subscribers — one of the best ways to drive sustainable improvements to customer lifetime value (“CLV”) and long-term revenue growth.

Here are the topics we’ve covered so far on how to improve retention:

1. Growth tactics to retain folks that are on the fence about canceling.

2. Better onboarding to connect new subscribers with your value proposition.

3. Using audience surveys to identify your core audience and how to 10x the degree to which you solve their problem.

4. Community-strengthening features (e.g., status, inside jokes) to encourage loyalty.

5. Healthy habit-forming features (e.g., goals, streaks) to help folks reach their goals through your product.

It may not be the most electric topic, but I’d be remiss if we had a retention series without mentioning payment failures and how they impact cancels. From our first retention post:

It’s also essential to segment by the two primary flavors of paid cancels:

• Voluntary cancels — when the subscriber chooses to cancel their subscription. 

• Involuntary cancels — when the subscriber’s subscription ends due to a payment-related issue (i.e., the subscriber doesn’t necessarily choose to cancel).

Most businesses are surprised to find that involuntary cancels can represent between 25% to 50% of their total cancels. At any point, roughly 5% of your paying subscribers may be “past due” — they’re going through the credit card retry process after a payment failure and are at risk of canceling. (If you use Stripe Connect, you can see all your past-due subscriptions by clicking here.)

With involuntary cancels, the subscriber hasn’t chosen to cancel. Compared to voluntary cancels, involuntary cancels disproportionately impact your most valuable subscribers that would have stayed subscribed for a long time or forever. 

Payment-related cancels are such a big issue that a few sizable businesses have emerged to solve this problem (e.g., Recurly, Chargify, Zuora). Luckily, the major payment processors (e.g., Stripe, Adyen) are adding these value-added services and features, making it less necessary to use another tool.

But as a subscription business grows, so does the opportunity to improve retention by reducing involuntary cancels. While working on voluntary cancels centers on guiding folks away from choosing to cancel, reducing involuntary cancels is primarily about letting subscribers know there’s an issue and making improvements to your payments infrastructure. Let’s explore a few ways to reduce payment issues and improve retention.

Disclaimer: if you’re just getting started, you shouldn’t worry about any of this stuff. Also, similar to our habit-forming post, this post may lean a bit toward product managers or larger consumer subscription products.

What are payment failures?

Online payments can fail for a variety of reasons. Usually, a payment processor will provide insight into the decline reason. Sometimes it’s due to straightforward issues, like an expired credit card (“54: Expired card”), or there’s not enough money in a person’s account (“51: Insufficient funds”), or the customer’s bank suspects the charge is fraudulent (“59: Suspected fraud”).

Other times, the reason the payment fails can be a bit opaque, including the familiar “05: Do not honor” decline reason, which acts like a catchall for a range of reasons a charge doesn’t go through. Often, these failures can come from a lack of trust between the issuing bank (which represents the consumer) and the acquiring bank (which represents the merchant or business). Payment failures from a lack of trust between banks happen much more frequently for international, cross-border transactions.1

Stripe provides the image below to show a representative share of charge declines by decline code. It maps close to what we’ve seen — “insufficient funds” were usually 35% to 50% of our declines, while “do not honor” would account for 25% to 35%.2

After the initial payment failure, nearly every payment platform will help you retry the credit card.3 The image below shows the basic retry schedule that is part of Stripe Connect.

Stripe’s Smart Retries feature uses machine learning and a bunch of payment data to choose the best time to retry a failed payment. Smart Retries is a great example of Stripe adding features aimed at lowering involuntary cancels, though it’s only available as part of the higher-priced Scale tier.4

If you’re not retrying cards after a payment failure, you should absolutely start retrying cards as a first step in lowering involuntary cancels. Even a limited retry schedule like the one offered by Stripe Connect will save a lot of subscribers from canceling.

Notifying subscribers

In the streaming world, we tried various things to chip away at payment-related cancels — nothing had more of an impact than simply letting subscribers know their payment failed and giving them an easy way to update their payment info.

Below is a (fairly dated) example of automated payment failure messaging from Spotify:

Some things Spotify does well in its payment failure notifications:

• Unifying comms across each touchpoint, including email, the mobile app, and the desktop app.

• Balancing a firm nudge to update the payment info (i.e., four dedicated emails) without becoming spammy.

• Making minor tweaks in their messaging to avoid sending the same email repeatedly.

• Adding a sense of urgency by reminding the recipient how close they are to losing access in the last week.

At Substack, we send similar messages to encourage subscribers to update their payment info, helping save a significant portion of subs that experience a payment failure. We also have a few tactics aimed at preventing payment failures. For example, when a subscriber approaches their renewal date with an expired credit card, we send an email and dashboard notification asking them to update their payment information (especially helpful for annual subscriptions).

Other ways to reduce payment failures

For most earlier-stage subscription businesses, a basic retry schedule and messaging subscribers will be all you need in fighting involuntary churn. For larger subscription businesses, here are a few other tactics and features that may be worth considering:

• Storing multiple payment methods — allowing subscribers to have multiple payment methods so there’s a backup card on file in case the primary one fails.

• Using account updater — card networks provide updated credit card information so that merchants can always access up-to-date credit card details for their subscribers.

• Optimizing retry schedule — there’s a world of optimization opportunities around retrying cards after a payment failure, like adjusting the retry schedule based on the decline reason, the subscriber's location/region, and the issuing bank.

• Adjusting the “grace period” — most subscription services will give subscribers the benefit of the doubt and allow them to keep their paid benefits after a charge failure. We tried shorter grace periods, where subscribers would lose access seven days after their payment failed, but we would keep retrying their card for the next few weeks. The shorter grace period can create urgency for folks to update their payment info.

• Routing payments to different processors — some processors will outperform in certain regions or types of payments. At scale, a business can route each transaction toward the processor with the highest expected value (e.g., higher authorization rate, lower payment fees, etc.).

• Enabling wallet-based payment options — for many wallet-based payment methods (e.g., Android & iOS in-app billing, PayPal), when a payment fails, the subscriber needs only to update their payment info in one place. As such, subscribers using a wallet-based payment method can retain better than those using a credit card. (That said, the impact on retention is only a small slice of evaluating wallet-based payment methods.5)

Summary

Involuntary cancels can act as a forceful headwind to paid subscription growth. While payment failures are inevitable, it’s possible to chip away at this problem, driving noticeable improvements to retention and boosting customer lifetime value.

For any subscription business, make sure to retry cards after a failed payment and let subscribers know they need to update their payment method. These two things alone will capture most of the value in reducing involuntary cancels.

As a subscription business grows, its investment in preventing payment-related cancels can ramp up. To give a sense of the promised land, the largest consumer subscription services (e.g., Netflix, Spotify) have teams of folks focused on A/B testing retry schedules, different communication strategies, and routing transactions to different processors, all on a segmented basis (e.g., decline reason, country/region, type of payment method).

Let me know what you think. Were you surprised to find involuntary cancels can represent such a large portion of total cancels? Any tips or learnings to share with others on how to lower payment failures?

As always, thanks for reading,
Reid

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew some of the most well-known consumer subscription products: Hulu, Crunchyroll, HBO Max, and now Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

The post below is a summary of a recent interview I did with Alan Hunter at FIPP World Media Congress, where we discussed a few key trends shaping the future of media:

1. Large media companies → niche media led by individuals and small teams.

2. Renting audiences → ownership of audience.

3. Ads-based internet → subscription-based ecosystems.

While predicting the future is always a fool’s errand, the people publishing on Substack are a big part of these trends, so I thought it would be a good topic for the Croissant. Let’s get to it.

Large media → niche media

Throughout the history of media, each technological breakthrough has ushered in a new wave of companies trying to control distribution to gain leverage over their customers and suppliers (including creative talent):

• The Big Five film studios dominated the dawn of Hollywood.1

• Newspapers enjoyed regional monopolies.

• The three broadcast channels controlled TV for decades.

• Cable TV became an oligarchy of companies laying wire across the country.

Then along comes the internet, which dismantled many mechanisms that throttled distribution and drastically changed the media industry.

I was fortunate to ride one of the waves of change as immense value shifted from cable TV to streaming video. Netflix has morphed into a powerhouse global media company that reaches more people than any network could have imagined. On the more niche side, Crunchyroll is a perfect example of a media brand that wouldn't have found distribution as a cable TV channel, but now has a direct relationship with 10 million paying subscribers.

Another meaningful change is the increasing commoditization of a media company’s “tech stack”. When I got to Hulu over a decade ago, it’s hard to describe how hard it was to accept credit card payments and how much more tepid folks were about giving their payment info (rightfully so!). Today, it takes a few minutes to create a Stripe account and start collecting subscription payments.2

The same can be said for other pieces of technology that power media businesses: content management systems; text, image, audio, and video publishing; customer relationship management; advertising solutions and products; data infrastructure and analytics; and so on.

Not long ago, these tools weren’t really accessible to individuals or small teams. Creative talent had to work at big media companies to reach an audience. Many larger media companies leaned heavily on the value of their technology, including Vox Media’s Chorus and WaPo’s Arc & Zeus.

There’s been significant improvement in open-source software and commercial products, all of which continue to put pressure on “tech” as a competitive advantage for larger media/tech companies. Writers, video creators, podcasters, and all sorts of creative talent no longer have to work at big media companies — they can pick up their phones and start their own media companies.

Renting audiences → owning audiences

In a post-internet world, where distribution is accessible to everyone, building an audience becomes more challenging. The big tech platforms — including YouTube, Instagram, TikTok, Spotify, Twitter, LinkedIn, etc. — have become essential for any media company looking to connect with its audience and reach new people.

As many have found out, depending on the big tech platforms is a double-edged sword. Anyone that’s built a business on these platforms is probably aware of how hard it is to navigate whimsical moderation, opaque policy adjustments, or unpredictable algorithm changes.

Making matters more difficult: the big tech platforms don’t give you access to your audience. It’s impossible to communicate (e.g., via email or text) with your audience outside any platform; in most cases, reaching your audience within the platform is tricky. If you leave the platform, you’re effectively starting from scratch.

It’s hard to build a viable business in an environment where you can’t communicate directly with your audience or know your creative work will reach your audience.

The good news is that the momentum is starting to shift. For folks publishing on Substack, they own their work, their audience (i.e., email list), and the billing relationship (i.e., Stripe account). If nothing else, Substack has been a huge agent of change — just a few weeks ago, Elon announced Twitter “will provide email addresses of subscribers (who opt in) to content creators”.

To the degree this is true, it’s a massive change for a huge platform. Regardless of what happens, it’s a strong signal of which way the wind is blowing.

Ads-centric internet → subscription-centric ecosystems

Advertising has powered the tech platforms where people meet, communicate, and discover new things on the internet. Advertising has also served as the backbone for many new media companies. But over time, advertising incentives have bent these platforms and new media companies toward a hunt for eyeballs and attention.

There’s a growing set of platforms that offer better incentive alignment by letting people sell goods and services directly to their audience, including subscription-centric platforms like Substack and Patreon. These platforms are enabling a wide variety of new types of sustainable media businesses to emerge.

As an individual or a small team, creating your own media business is still challenging and intimidating today. It may involve leaving behind a salary and the corresponding stability; the camaraderie and support from team members; writing under a meaningful masthead; and other benefits. Even in success, you’ll find champagne problems in various new business opportunities and challenges, which can be hard to balance with creative or editorial aspects.

Given the difficulty, early pioneers are primarily people with large audiences that face less risk of making it or those that are entrepreneurial and excited by the idea of starting their own business. But each successful pioneer pulls more people into these subscription-centric ecosystems, helping develop this new type of consumer purchase behavior and making it easier for the next wave of folks making the leap. 

This cycle reminds me of how unusual it was to buy a streaming video subscription when we launched Hulu Plus just a decade ago. While the few streaming services at the time offered some benefits (e.g., cost, convenience), the content wasn’t great, the product experience was janky (remember the buffer wheel?), and using these services was a strange consumer behavior.

Over time, as more folks signed up for streaming video services, the content got better, the product experience improved, and it was less strange to use these services. Fast forward to today’s “streaming wars” and most households have several streaming services.

Today, it’s a bit uncommon for folks to buy subscriptions to an individual or a small team of writers, podcasters, or video creators. But there’s no doubt it’s becoming more common: Substack has over 2 million paid subscriptions and Patreon has 8 million patrons.

I hope we see a similar cycle repeat for these new subscription-centric ecosystems so that buying a subscription on Substack, Patreon, or similar platforms feels as normal (and more emotionally satisfying) as buying a subscription to Netflix or Spotify.3

Summary

The internet has eroded distribution as a viable competitive advantage, and now the commodification of tech is making it even easier for creative talent to start their own media company. Further, we’re seeing early signs of major tech platforms starting to allow people to communicate with and own their audience, creating a much more stable environment to build businesses.

These are radical changes to how the internet operates. The net impact of these trends has been an explosion of lean media companies (i.e., operated by an individual or a small team), satisfying a wide variety of niches.

Personally, I’m very excited about this future. I think it will add texture, quality, and richer media ecosystems around stuff people are passionate about. Hopefully, it will also bring people together in more healthy online communities.

I’ll stop rambling for now — let me know what you think! What do you agree with, where am I out of my mind? What did I miss? I’d love to hear examples of how these trends have created thriving media ecosystems around your passions or hobbies.

As always, thank you for reading,
Reid

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew notable consumer subscription products: Hulu, Crunchyroll, HBO Max, and Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

Welcome back to our ongoing series on better retaining your paying subscribers — one of the best ways to drive sustainable improvements to customer lifetime value (“CLV”) and long-term revenue growth.

Here are the topics we’ve covered so far on how to improve retention:

1. Growth tactics to retain folks that are on the fence about canceling.

2. Better onboarding to connect new subscribers with your value proposition.

3. Using audience surveys to identify your core audience and how to 10x the degree to which you solve their problem.

4. Community-strengthening features (e.g., status, inside jokes) to encourage loyalty.

The post below will cover ways to improve retention by helping subscribers form healthy habits around using your product.

Compared to previous posts, today’s post may tip toward product managers or larger consumer subscription products. But as always, maybe a kernel of insight sparks an idea or way you can use the below, regardless of your situation.

Encouraging healthy habits

Often, with a new product, you ask customers to create space in their lives to use it — no easy task, especially if the payoff is less immediate or noticeable. For some consumer products, like learning and health & wellness apps, folks want to use the product but may need help carving out new space in their lives to use it (and overcoming the search for a quick dopamine hit).

To that end, many products aimed at self-improvement guide folks to form healthy habits around their product. These products encourage more frequent and consistent usage early on through a combination of features:

• Letting customers participate in competitions or challenges.

• Setting goals and tracking progress.

• Feeling rewarded by hitting goals and maintaining streaks. 

These habit-forming features are a prominent part of the user experience and propel users and paying subscribers toward their goals. These features also make the product better to use over time, helping improve retention and laying the foundation for a sustainable business.

Let’s take a look at a few examples.

Healthy competition

Strava, one of the leading fitness tracking apps, uses challenges as a central part of their product to help folks strive toward their goals (and better retain users and paying subscribers).

Users can set personal challenges (e.g., ride 200 kilometers in a month) and earn badges for their “Trophy Case”. Users can also form group challenges with friends, enabling the always-effective elements of peer pressure and some friendly competition.

Strava also enables folks to create and join “Clubs”, connecting people with similar goals and cultivating healthy competition amongst strangers. Here’s a look at the Santa Barbara Bicycle Club home feed and the club leaderboard for most miles this past week.

Strava also sends notifications when you’ve become a “Local Legend”, awarded to the athlete who completes a given segment the most over a rolling 90-day period, regardless of pace or speed. Even more motivating — Strava lets you know when someone else has nabbed your title.

Other popular fitness apps use similar features to drive engagement and improve retention. If you’ve ever hopped on a Peloton bike for a ride, you’ve probably found yourself out of the saddle and overexerting yourself to climb the leaderboard. Not only does the leaderboard allow you to compete against friends and total strangers, it also spotlights how you’re doing relative to previous personal records, a compelling reason to keep coming back to try to beat your former self.

Other popular fitness apps — Apple Fitness, Nike Run Club, Fitbit, and many others — deeply ingrain similar elements of motivation into their apps to help push users toward their goals. Challenges, leaderboards, and awards & recognition help drive folks toward their goals and enable these businesses to better retain users and paying subscribers.

Streaks

Streaks are another popular habit-forming feature, which prominently shows users how consistently they’re using a product as they strive toward a goal. The longer the streak, the more painful it is to break, allowing streaks to become increasingly powerful as a retention mechanism.

The first time I remember stumbling across the concept of streaks was with the meditation app Headspace. Meditation is a notoriously difficult habit to form. To make it easier, Headspace highlights how many days in a row someone has meditated, right next to earned and yet-to-be-earned milestone badges. Headspace also gives users images showcasing their streak (i.e., “shareable assets”) with easy one-click share options. Headspace also sends data-informed congratulatory messages along the way to get them past habit-forming moments.

Headspace also prompts new users to set a reminder to meditate at a time that fits their schedule and goals. There are also options to let Headspace send a push notification or add the time to a user’s calendar. 

Lastly, Headspace sprinkles in a little social value by allowing users to add up to 5 “buddies”. If one of your buddies falls out of their meditation habit, you can send them a “nudge” to encourage them to get back into it.

There’s probably no product better at tapping into the value of streaks than the language-learning app Duolingo, which uses a similar toolkit as Headspace: 

• Streaks are a prominent part of the in-app user experience.

• Shareable assets to celebrate significant milestones.

• Users can set goals and reminders.

• Friends can challenge each other via a “Friends Quest”.

Duolingo also views streaks as an important “growth vector” — a part of the product they continuously test and optimize to improve user retention. From a company blog post, one example is a “Streak Wager”, which allows users to bet in-game currency that they will be able to maintain their streak. The added incentive from the wager led to a significant improvement in retention during the always-crucial period right after someone starts using a product (e.g., Day-1, Day-7, and Day-14 user retention).

Another example is “The Weekend Amulet”, which allows users to maintain their streak if they don’t use Duolingo during a certain weekend, when users are generally less likely to use the app. The Weekend Amulet led to an increase in users maintaining their streaks and an improvement in user retention.

Duolingo has learned that users will reach their language-learning goals more consistently if they approach it like a marathon, not a sprint. Rather than a few deep binge-learning sessions (that lead to folks not using the product anymore), streaks help cultivate consistent usage over time and help folks reach their goals.

That’s why streaks are such a key part of the Duolingo product. In Lenny’s Newsletter, (former CPO of Duolingo) says this about streaks:

To date, the streak feature is one of Duolingo’s most powerful engagement mechanics. When people talk about their Duolingo experience, they often bring up their streak.

It’s a perfect example of how integral these habit-forming features become to the user experience. If these features were removed, it totally changes the story of the product and how people use it.

While it’s possible for products to dabble with habit-forming features as peripheral or one-off features, these features need to take center stage and become a key tenet of the product experience to influence how people use your product and have a meaningful impact on retention.

Summary

For certain products (especially those in the “eat-your-vegetables” or self-improvement category), habit-forming features can be an effective way to improve retention. To have a meaningful impact, habit-forming features must be deeply ingrained in the product — so much so that removing these features would dramatically change the user experience.

How could you encourage folks to use your product more consistently over time? Would habit-forming features make sense as a core part of your product?

If you have any stories about how habit-forming features have improved retention, please share them in the comments!

As always, thank you for reading,
Reid

PS — this week’s Croissant is coming to you from Portugal, so please forgive any delayed reply to comments or email responses! :)

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew some of the most well-known consumer subscription products: Hulu, Crunchyroll, HBO Max, and now Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

We’re continuing our multi-post series on improving retention — one of the best ways to drive enduring improvements to customer lifetime value (“CLV”) and long-term revenue growth. Here’s a summary of what we’ve covered on how to improve retention:

1. Growth tactics that help retain folks that are not sure they want to cancel.

2. Better onboarding to connect new subscribers with your value proposition.

3. Using audience surveys to identify your core audience and 10x the degree to which you solve their problem.

Let’s cover a few ways to drive better retention through community-strengthening features, like allowing customers to earn status and the power of inside jokes.

Earning status

We’ve discussed why people buy products, including more emotional motivations (e.g., badge value, affiliation/belonging, self-actualization). In those cases, customers are probably less interested in discounts, free months, or special offers; they are probably much more interested in symbols of appreciation and something they can wear as a badge of honor to showcase their support within the community.

To show us the way, let’s look at the interactive live-streaming platform Twitch, which allows subscribers to earn status within a streamer’s community. These status-building features permeate and define the product experience.

Subscriber Badges are the most prominent symbol of loyalty and fandom within the Twitch product. Twitch allows subscribers to earn different badges the longer they remain a paying subscriber. A subscriber’s badge automatically changes the longer they pay, but if the subscriber cancels, they lose their badge. As shown below, the streamer can customize their badges, tailoring them to their channel.

Streamers can also allow subscribers to earn special flair on their badge if they upgrade to higher-priced subscription tiers. The flair allows your most passionate, loyal subscribers to stand out even further. 

Of course, none of this matters if subscribers can’t show off their badges. One of the most active parts of the Twitch experience is the live chat at the side of the stream, which brings together the streamer and community of viewers. Live chat is the main forum where viewers can show off the badges they earn.

In addition to showing off badges in the live chat, Twitch enables viewers to buy Bits, which serve as a way to “cheer” during the live stream. While Bits may be more about driving additional revenue per subscriber, they may also benefit retention by allowing a deeper connection between the streamer, viewer, and the surrounding community.

These features work uniquely well for Twitch, given its gaming-centric user base, the viewer’s strong emotional motivation for supporting streamers, and the product experience is deeply rooted in live streaming. 

But we also see these status-building features work well outside Twitch, including YouTube channels that use Patreon. A common benefit of becoming a patron for YouTube channels is some form of public recognition, like being added to a wall of thanks (e.g., CGP Grey, Smarter Every Day) or even a custom badge (e.g., Kurzgesagt).

Some channels will also create high-priced subscription tiers with more extreme forms of public recognition, like a shoutout during a video.1 These tiers are often limited to a small number of subscribers to create even more exclusivity and prestige.

If folks buy your product for more emotional reasons, allowing customers to earn status may be an effective way to keep folks around longer. How can you transform the examples above to drive better retention (or higher revenue) for your product?

Inside jokes

We’ve covered how writers, podcasters, and video creators are deepening their relationship with their audience, but also how they’re bringing the audience together. We’re seeing more and more vibrant communities on Slack and Discord; in-person and virtual events bringing strangers together to form new friendships; and membership-based businesses that provide access to experts and cultivate high-value connections.

These relationship-strengthening features have become well-worn benefits and a key driver of superior retention (and, again, a higher willingness to pay). Let’s dig further and cover a slightly less-obvious and more abstract community-strengthening feature: inside jokes. With the rise of niche media, inside jokes are becoming more prominent and a defining characteristic for many 21st-century businesses (especially in media).

In a recent podcast with the golf media outlet No Laying Up (“NLU”), co-founder Neil Schuster says, “the whole thing is one big inside joke”. He references the nicknames they’ve given to professional golfers, the recurring bits they have, and the characters and storylines they cultivate. The interviewer, Dom Cooke, summarizes well:

It's like all of this stuff, these inside jokes, as a listener, it just cultivates more loyalty.

They also cover the risk of inside jokes — it can make it harder to welcome new folks. Neil points out that long-time listeners don’t want the same points regurgitated repeatedly, but new listeners can have a hard time picking up on all the nuances. Here’s Neil:

A lot of people say things like, I can't keep up with your inside jokes. And some of it to me is like, "Well, listen, I'm not going to do the work for you…” 

You can find the answers. You're going to have to work a little bit for it. And I think that the audience that I want to have, it's almost like an investment they're making, which I think long term is more sustainable.

I’m also a big fan of the jam band Phish, which is notorious for using inside jokes, pranks, and other ways to connect with their most hardcore fans. It’s baked into their music — the audience screaming “Hood” in Harry Hood, or the seemingly-random audience clapping during Stash. There’s also the ritual of doing a complete set devoted to covers for Halloween shows or an exuberant gag during New Year’s Eve shows.

Similar to NLU, some of the “inside-baseball” stuff can be a bit mystifying to new fans:

Luckily, there’s no shortage of resources for folks new to Phish, including several online forums, a 3rd-edition encyclopedia, and even a college-level philosophy course. All these elements of fandom provide rich texture and depth to what’s happening on the surface, providing fans with endless rabbit holes to dive down and infinite topics for the audience to discuss and come together around.

The tricky part is that it’s hard to manufacture these elements of fandom — inside jokes, bits, characters, and subtle storylines usually emerge organically in unpredictable ways. But if you see hints of fandom, cultivating it can be a meaningful way to differentiate yourself, boost retention, and increase your customer’s willingness to pay.2

Summary

In some situations, enabling customers to earn status and supporting community-strengthening features can drive meaningful improvements to retention (among other benefits). Think about the brands or products you feel the most affinity toward — what signs of appreciation would you most covet? What symbols or badges would you feel most excited to showcase? What community features would you most like to participate in?

With that in mind, how could you transform those ideas for your product? A more direct path could be asking some of your passionate and loyal fans these questions.

We’ve tip-toed into more abstract territory, but hopefully, some of the examples above spark ideas for your product. As always, I would love to hear your thoughts in the comments.

Thanks for reading,
Reid

I’m Reid, your host on this journey. I’ve been lucky to be part of awesome teams that launched and grew Hulu, Crunchyroll, and HBO Max. A few years ago, I founded Yem to help individuals and small teams build their own media businesses. Yem was acquired by Substack, where I currently work on growth.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

We’re continuing our multi-post series on improving retention — one of the most meaningful levers we have to improve customer lifetime value (“CLV”) and grow revenue. In our first post, we went through a few growth tactics that can help chip away at cancels; in our last post, we discussed improving retention by connecting new subscribers with your value proposition through better onboarding. 

Another way to improve retention is to significantly increase the degree to which you’re solving your customer’s problem. It’s not easy to improve retention this way: minor tweaks or improvements are unlikely to have a noticeable impact on retention. At the risk of being abstract, we need to aim for a 10x improvement in how much we’re solving our customer’s problem.1

There won’t be any obvious or realistic ways to 10x the value you provide for all your subscribers. We must focus on our core audience. It can be uncomfortable to neglect parts of your audience or turn your attention away from expanding your audience. But both are essential if we want to have a noticeable impact on retention through better problem-solving.

If you don’t see a pathway toward solving your customer’s problem in a much deeper way, you may need to accept the zone of retention you’re in. As long as your retention is roughly around your peers, it may be better to focus on expanding your audience and bringing in new subscribers.

If your retention is lower than your peers, and you’re seeing challenges with audience growth, it might be time to go back to the drawing board and rethink your product. I’ve been down this road several times — it sucks. BUT, it’s much better to find this kind of thing out sooner than later. The last thing you want to do is waste your most precious resource — your time — working on the wrong thing.

I won’t be able to tell you who your core customer is, the problem you’re solving for them, and how to 10x the degree to which you’re solving that problem. But let’s talk through one of the ways we may be able to chip away at answering these questions: getting feedback from your customers through surveys.

Audience surveys

At Yem, one of the things we did right after starting to work with newsletters was run an audience survey. There’s no better way to get an understanding of your audience and why they use your product than reading through tons of survey responses. Let’s go through how we ran audience surveys in case it sparks any ideas for you.

We would send a dedicated one-time email asking subscribers to complete a survey, split into one version for free subscribers and another for paid subscribers.2 We would also apply a few filters, ensuring recipients had engaged with the newsletter recently and had been subscribed for enough time to experience the product (e.g., signed up more than 30 days ago).

With a dedicated email and these filters applied, we would see 5% to 10% of email recipients finish the survey (20% for paid subs and 5% for free subs). To encourage a higher rate of responses, we would frame the request as a way for us to improve the product for the recipient. Here’s an example of an email we would send to ask subscribers to fill out a survey:

For the survey, we would use Google Forms or Typeform. Here’s a sample survey — please feel free to duplicate it and make it your own. Each survey was different, but we always asked some version of these questions:

The first question was helpful in generally (but certainly not perfectly) segmenting responses into your core audience vs. non-core audience. The “main benefit” question drills into the value subscribers get from your product — the essential question of the survey and, for the purpose of improving retention, where you should spend the most time.

For paid publications, we drill further by asking paid subscribers what encouraged them to upgrade to paid and asking free subscribers what would get them to upgrade to paid. If you’re considering certain benefits (e.g., community features, live events, courses, paid-only posts), the survey is an excellent opportunity to get a signal on which ideas are most enticing.

Here’s an example from a finance newsletter, showing a summary of responses to questions on primary benefits, reasons for paying, and how we could improve the product them. To improve retention by 10x’ing the value for existing subscribers, we would need to focus on the bottom section. As you can see, these ideas often rub against new subscriber growth, like increasing price or introducing a more expensive tier.

Other Tidbits and Tactics

It can also be valuable to ask demographic and work-related questions, especially if you’re considering sponsorships.3 This qualitative info helps you tell a story around your metrics (e.g., email list size, open rate, click-through rate), making your audience more compelling to the right partner. Here’s an excellent example from , emphasizing his audience is affluent, highly educated, and in leadership roles responsible for purchase decisions (ideal for B2B/SaaS products).

Another question we usually asked was a flavor of “What other newsletters or podcasts do you enjoy that are like Growth Croissant?”. Some responses gave us a sense of who we were competing against and how we may be able to differentiate our product for the core audience. Other times, we found complementary products representing partnership opportunities (e.g., a newsletter writer being a guest on a relevant podcast).

For your first time running the survey, except for the first question, I recommend open-ended responses the first time around. Once you have a good handle on how your audience will likely respond, you can transition to multiple-choice, though I’d always include an “Other” option to hear what people want to tell you.

While we mostly did one-off surveys, having a survey email toward the end of an onboarding series can be valuable. Seeing how responses shift over time can help you gauge how your audience evolves and track efforts aimed at delivering more value.

If you’re doing a one-off survey, it could be worth thinking about how to share the results with the audience. Below are a few examples: WaitButWhy sharing results from the audience taking the Myers–Briggs personality test, and another from Shaan Puri sharing survey results with subscribers (subject: “your survey results”). Sharing results can strengthen the sense of community and encourage higher participation in future surveys (or similar activities).

Cancel surveys

Cancel surveys can be a treasure chest of feedback and a vital ingredient in our effort to improve retention. Responses are usually quite candid and come from folks that have paid for your product but weren’t quite satisfied.

From an earlier post, it’s usually best to avoid requiring subs to complete a survey before they cancel. As an optional survey after a subscriber cancels, you will still get plenty of responses, and the quality of feedback will be much better. Moreover, you won’t harm your relationship with your subscribers, increasing the likelihood that they’ll return as paid subscribers.

The core question of any cancel survey is “What’s the primary reason you’re canceling?” Respondents usually choose from a list of potential reasons. Here are a few examples from Netflix and Hulu:

In the streaming world, we saw up to 50% of respondents choose some flavor of “price” as the reason they canceled, which always felt like an easy-out response. Our services were usually priced below most competitors (even HBO Max was roughly in-line with Netflix’s average revenue per membership). Price alone usually wasn’t the issue — folks weren’t getting enough value relative to what they were paying. 

While we weren’t considering lowering our retail price4, we were certainly interested in delivering more value. At Crunchyroll, we eventually removed “price” as a cancel reason and saw responses shift to more actionable cancellation reasons. Here are a few examples of more actionable cancel reasons:

• “Didn’t have a certain series or movie” — buying and making content was our largest expense, and this feedback helped guide programming-related decisions.

• “Switching to free, ad-supported service” — when this would trend upward, we would consider whether we were overly generous in the value given to free subscribers and whether we should shift more value behind the paywall.

• “Video quality issues” — a valuable proxy for the severity of any issues with site or service stability and how those issues impacted retention.

Compared to generally more casual free subscribers, cancel surveys allow you to get feedback from people that have a solid understanding of your product. As such, we would ask more detailed questions on how we could deliver more value, specifically:

1. What features would you like to see added?

2. What movies, series, or genres would you like to see added?

For features, rather than just having “device availability” as the cancel reason, we’d know most folks want us to be on Nintendo Switch or PS Vita. It would also help us prioritize exploratory features (e.g., co-viewing with friends, offline viewing) or features unique to our service (e.g., making it easy to read manga or switching between dubbed and subbed in the video player).

On the programming side, many responses would be the usual suspects of classic anime titles or the hit show of that quarter. But many Crunchyroll subscribers wanted more non-anime shows, specifically adult animation (think Family Guy, Rick and Morty, and BoJack Horseman). We used these survey responses as a key part of our pitch to invest $100 million and a ton of effort into building VRV.

Getting more detailed responses can also help future reacquisition efforts. If we launched on Nintendo Switch, we could message everyone who mentioned Switch in their cancel survey. If we picked up a frequently-requested show (e.g., Dragon Ball), we could let them know it’s now available. These loops helped strengthen bringing back former subscribers as a key growth channel.

Summary

Surveys are an excellent way to better understand your audience and the value they get from your product. With that knowledge, you can explore ways to improve retention by 10x’ing the degree to which you’re solving their problem. But beware: retention is incredibly difficult to improve, and this pathway is no exception — it will likely take ongoing effort over a long period to drive any noticeable impact.

Please share your own stories! Have you ever run an audience survey? What surprised you? How did it help you?

As always, thanks for reading,
Reid

Welcome to a new edition of Growth Croissant, a guidebook on growing subscription businesses.

The post below will continue our multi-part series on improving retention — one of the most meaningful levers we have to grow revenue. Keeping subscribers around longer is the best way to increase customer lifetime value (“CLV”). By extension, the stuff you do to improve retention usually makes your product better, making it more compelling to potential customers.

So improving retention is massively important, but how do we do it?

In part 1, we covered the difference between voluntary cancels (subscriber chooses to cancel) and involuntary cancels (subscriber cancels after payment-related issues), as well as some growth tactics that can chip away at voluntary cancels. Now let’s explore the harder-to-do, less-measurable tactics that prevent churn before subscribers even consider canceling.

Our goal isn’t to have zero people canceling paid subscriptions. If cancellations are too low, it could be a sign that we’re not being aggressive enough on audience growth and user acquisition. When a product has much better retention rates than its peers, we’ll sometimes give entrepreneurs or operators the feedback that their “health metrics are too good,” encouraging them to push the envelope on growth.

Some voluntary churn is natural and unavoidable — some folks who cancel during a free trial period or in their first month may not be your core audience. One theme that will emerge in our series: to improve retention, it’s usually best to focus on delivering more value to your core audience and avoid over-rotating toward fixing problems for more peripheral audiences.

Delivering more value doesn’t always mean launching new features, adding services, or offering more stuff. Sometimes, it’s about better connecting your subscribers with the value they seek from your product, which is especially important when onboarding new subscribers.

Let’s explore how we can strengthen retention by improving the new user experience and onboarding messaging.

Identifying valuable vs. risky behavior

A decade ago, not too long after Hulu Plus launched, we experienced a tsunami of cancellations. We hadn’t experienced any significant churn before, so there were a lot of burning questions from the higher-ups about what was going on. We didn’t have the tools or frameworks to confidently answer why people were canceling or the degree to which retention was an issue.

We were at least aware that most folks canceled early on. There was a massive drop-off during their 7-day free trial: 35% of trial subs would not convert to paid subscribers. For trialists who converted, another 20% didn’t make it to the second month. But after the first paid month, retention was quite strong. During a subscriber’s first month, it was crucial to onboard them effectively and connect them with the value of our product. But what exactly did that mean, and what messages should we prioritize during onboarding?

We started a project to compare the behavior of subscribers that canceled their free trial against those that converted to paid, and then the behavior of those that only paid once against those that made it past the first payment. Our goal was to identify behavior correlated with converting to paid after a trial and making it through the first billing period. We would then run tests to see if we could shape the new user experience and onboarding messaging to maximize conversion.

Many of our findings were intuitive. We discovered inactive users were much less likely to convert to paid subscriptions. We also noticed all types of engagement correlated with a higher likelihood of converting to paid subscriptions, including:

• Depth — watching multiple episodes or several movies.

• Variety — watching different genres or categories of series (e.g., satire/news like The Daily Show; adult animation like Family Guy; and drama series like Grey’s Anatomy).

• Frequency — several sessions within a day or watching every day of the week.

• Cross-platform — watching across multiple devices (e.g., mobile apps, set-top box / gaming consoles, desktop).

We only looked at engagement during the free trial period and segmented subscribers to control for other impactful dynamics. For example, unlike subs that convert to pay, trial subs that cancel on the first day don’t use the product for seven days. Here’s an example of what the summary output would look like with dummy data.

Onboarding new subscribers

The tricky part is that it’s challenging to elevate all these engagement metrics simultaneously, especially when onboarding a new subscriber. People don’t like reading instruction manuals or needing to take several actions to use your product. We want to avoid bombarding new folks with tons of emails/notifications, tooltips, and calls to action.

Where our analysis proved especially valuable was understanding what specific actions we should try to encourage early on. We could then run tests focused on elevating metrics related to those actions — hours watched for depth, series watched for variety, and days using the app for frequency — as part of onboarding new users in the product and through a series of emails and notifications.

For example, to drive more depth, we could highlight deep-catalog shows with multiple seasons in our onboarding messaging, in their personalized home feed, or in “Up Next” at the end of another stream. Here’s an example of HBO Max’s welcome email and initial home feed, which spotlight Friends (78 hours of content), Game of Thrones (70 hours), and The Big Bang Theory (140 hours!).

If we wanted to dial up frequency of usage, we could highlight short-form clips that folks could watch throughout the day. Here’s an example from Hulu Plus using higher-frequency notifications that feature clips from Saturday Night Live and news programs.

In the early days of Hulu, it was novel to stream video on your phone or on your TV. Subscribers that watched on “living room” devices (e.g., Apple TV, Roku, Xbox) had more engagement and a higher likelihood to convert to paid. Below are a few examples of onboarding emails aimed at getting subs to watch across different devices.

It was also useful to discover the relationship between these different types of engagement. It was risky if a subscriber had a lot of variety (e.g., multiple series watched) and low depth (e.g., low hours watched) — these folks were looking for something to watch and having a hard time finding something they liked.

On the flip side, depth without variety was also risky — these were usually folks coming in to watch a particular series and then cancel; what would eventually become known as “binge-watching”. Both these engagement patterns led to higher cancellation rates and shared a similar root problem of limited content availability or ineffective discovery/personalization.

Over time, we made onboarding flows more dynamic and reactive to each subscriber’s engagement. If a subscriber were only watching on their desktop computer, we would prioritize the device activation notifications. If they were only binge-watching deep-catalog series, we would highlight series that were premiering new episodes.

We continuously improved the trial conversion rate by experimenting with in-product onboarding and lifecycle messaging. Crucially, better onboarding also had a positive impact on long-term retention, boosting customer lifetime value. These improvements didn’t require us to buy more content or radically change the product — we just did a better job connecting each subscriber to the value they wanted from our product.

Rinse and repeat

Our team would go on to rinse and repeat this type of exercise at Crunchyroll and HBO Max (aka “Max”), using it to guide new user experience and onboarding messaging. We even used this framework as the basis for forming an onboarding series for paid newsletters at Yem. 

For the paid newsletters we worked with, roughly 25% of new subscribers didn’t engage at all during their first month. Further, out of all paid subscriptions, 60% to 70% converted during their first month. We knew the first 30 days after signup was a critical period to get new subs engaged, aware of the value of a paid subscription, and surface timely prompts to upgrade to paid.  

It may be a bit of an eye chart, but here’s an example of the onboarding emails for (“TCL”):

And here’s a table with more detail on the goal of these emails and when they were sent:

We didn’t do too much testing or optimization, or make the messaging dynamic based on a subscriber’s engagement. But even these basic onboarding emails helped lift free-to-paid conversion and reduce early dormancy for Yem’s customers.

For a more sophisticated approach to onboarding, here’s a recent post from Anjali Iyer, Head of Lifecycle Marketing at The Washington Post. Anjali shares examples of how The Post guides new subscribers through a series of “tailored messages based on their individual actions.” Their new subscriber journey has led to a “2% lift in retention and an increase in three-year CLV after 12 weeks”, which I imagine is quite valuable across WaPo’s large subscriber base.

Focusing on preventable churn

Let’s briefly detour back to our initial analysis at Hulu for a final point. When we dug into the folks canceling trials, we uncovered a large group of subscribers that were canceling right away. These “quick-cancels” fell into a few main categories:

• Subs coming in via low-quality marketing channels, like affiliate marketing (e.g., TrialPay, Tapjoy). These subs usually had no interest in Hulu Plus but got rewarded for signing up for a trial (e.g., earning five carrots for Farmville). Not surprisingly, conversion to paid was substantially worse than other growth channels.

• Subs searching for a title and canceling after realizing we didn’t have it. We eventually made it much easier to peruse our library before becoming a subscriber.

• Subs that watched one video and canceling right after an ad break. Usually, these subs expected Hulu Plus to be ad-free and would cancel once they found out there were still ads.

It was helpful to understand why we saw such a large group of subs canceling right away, and we were able to make a few tweaks to reduce quick cancels. But ultimately, these subscribers weren’t part of our target audience at the time — no matter what we did, we were unlikely to keep these folks around. We were able to drive much more revenue growth by improving retention for our core subscribers.

Summary

One of the best ways to improve retention is better onboarding (in-product and messaging) for new subscribers. A good starting point is identifying behavior that tends to lead to better retention, then trying to encourage that behavior through onboarding. It’s imperative to prioritize and sequence the right calls to action, avoiding information overload and irrelevant messages (a surefire way to erode retention). With a solid foundation, you can get into a rhythm of continuous improvement by making onboarding messages dynamic and personalized based on each subscriber’s behavior.

If you’re looking for inspiration, Really Good Emails has examples of welcome and onboarding emails. For in-product tooltips, user flows, and messaging, check out UXArchive, UserOnboard, and GoodUX.

That’s all we got for this week — let us know what you think! Any insights or best practices to share around onboarding new subscribers? Any ideas on how you could improve onboarding for your product?

As always, thank you for reading,
Reid

We’ve discussed how to measure retention and the importance of obsessing over decay curves. The next few posts will unpack how to better retain subscribers and lengthen customer lifetime (i.e., “elevate the decay curve”), a key lever to increasing customer lifetime value (“CLV”) and driving long-term revenue growth.

We’ve already hit on the value of segmentation when trying to understand fluctuations in retention rates, including separating out those that cancel right away from those that cancel further down the road. It’s also essential to segment by the two primary flavors of paid cancels:

• Voluntary cancels — when the subscriber chooses to cancel their subscription. 

• Involuntary cancels — when the subscriber’s subscription ends due to a payment-related issue (i.e., the subscriber doesn’t necessarily choose to cancel).

It takes different tactics to reduce voluntary and involuntary cancels. To set expectations, it’s challenging to have a meaningful impact on reducing voluntary or involuntary cancels. But the value can be massive: in both cases, by keeping a paid subscriber from canceling, we’re saving a longer-term cash flow, not just one additional renewal.

Further, improvements to retention usually have a compounding effect. By reducing involuntary cancels, you strengthen your payment infrastructure and improve the rate of successfully charging future renewals (and, in some cases, initial payments). Even better, reducing voluntary cancels usually means improving your product and delivering more value to your subscribers, making your product more compelling to existing subscribers, but also prospective subscribers — a key lever to sparking new subscriber growth.

Usually, mindshare and effort shift toward retention as a business reaches a higher share of the folks interested in buying the product (i.e., “addressable audience”), and growth in new paid subscribers starts to slow down. Earlier on, it’s usually better to focus on acquisition and building consistent growth patterns. If you’re just getting going, these posts may be helpful to read and keep in the back of your mind, but I wouldn’t encourage shifting your focus away from identifying your core audience, sharpening your value proposition, and finding predictable ways to bring on new subscribers.

Improving retention is an intricate topic, so let’s break it down into a few separate posts:

1. How to reduce voluntary cancels — the growth tactics

2. How to reduce voluntary cancels — delivering more value

3. How to reduce involuntary cancels

Let’s start with how we can start to chip away at voluntary cancels.

How to reduce voluntary cancels

Reducing the rate at which people choose to cancel mostly boils down to how much value subscribers get from your product relative to what they’re paying. There are two large problem spaces to consider when reducing voluntary cancels.

At one end of the spectrum, there are harder-to-do, less-measurable tactics that focus on delivering more value to a subscriber before they even consider canceling. Delivering more value doesn’t always mean doing more stuff. Sometimes, it’s about helping subscribers discover value, or guiding them toward habits that help them consistently get value from your product.

On the other end of the spectrum, there are various growth tactics that help chip away at voluntary cancels right before a subscriber chooses to cancel or their subscription expires. These tactics bend the product slightly toward better retaining subscribers, especially those who are on the fence about canceling. 

Let’s start with a few more tractable, growth tactics that can help chip away at voluntary churn.

Preventing churn in the cancel flow

Thankfully, the idea of making it hard for customers to cancel is a relic of the past (well, almost — some products still make folks call to cancel).

The goal of the cancel flow isn’t to add friction and get in the way of customers trying to cancel. But there are times when you can use the cancel flow to better understand why a subscriber is canceling and, based on their reasoning, help them discover features or parts of your product that solve their problem. 

Below is an example from the earlier days at Spotify. If a subscriber chooses to “switch to Free”, Spotify emphasizes all the features they will lose if they cancel (e.g., offline listening, no ads, ability to skip songs). By today’s standards, this is dancing on the line of too much friction, but I like the general approach of trying to quickly solve the customer’s problem and reminding them of what they lose if they cancel.

Another common tactic is introducing a special offer in the cancel flow, which can help sway folks on the fence about canceling. It’s ideal to avoid surfacing the special offer to everyone canceling. If word gets out (as it often does), you could see some subs try to cancel to get a free month, or you main train folks that they can expect to get a free month every time they try to cancel.

When we first shipped this at Hulu, we offered a free month to 25% of subs canceling, prioritizing the most valuable paid subs (e.g., had been paying for more than six months), or those that had a better shot at sticking around after the free month (e.g., had watched something in the past 30 days). We saw roughly 25% of folks redeem the offer and about 33% convert back to paid. Most importantly, subs that converted to paid after the free month had strong retention.

Another effective tactic is allowing subscribers to downgrade to a lower-priced subscription tier before canceling. Sometimes customers don’t need all the bells and whistles of higher-priced tiers, and they may feel like they’re overpaying for a bunch of features they don’t use. It’s possible to save some of these subscribers by providing an off-ramp to lower-priced tiers in the cancel flow.

Below is a look at Netflix’s cancel flow, which provides the option to “stick around” on the Standard plan. In the streaming world, I’d expect to see off-ramps toward lower-priced, ad-supported subscription tiers become a regular fixture in the cancel flow.

Another typical move in the cancellation flow is to offer the ability to pause subscriptions. Pausing subscriptions can be valuable, but it can create quite a bit of overhead associated with payment issues, requiring attention from support and engineering. It may be valuable to experiment with pausing before committing to having it as a permanent part of the product. For example, Netflix initially supported pausing but has since deprecated it; while they seem to occasionally experiment with pausing, it still isn’t a global feature.

For those who want to give pausing a shot, it’s usually best to position the opportunity to pause next to canceling on a subscriber’s account page, or potentially in the cancel flow before a subscriber finishes canceling. Here’s how Hulu shows pausing on the account page:

Right after a subscriber chooses to cancel, Hulu shows another prompt to pause on the first screen of the cancel flow. There’s a good argument that this step is redundant — they just bypassed the option to pause — and too much friction.

The cancel flow presents an opportunity to solve the subscriber’s problem before they finish canceling, and gives us a shot at saving those on the fence about canceling. But introducing too much friction in the cancel flow can generate negative word-of-mouth and significantly reduce the rate at which canceled subs return. (Bringing back former subscribers becomes an increasingly important acquisition channel over time.) When you try any of these cancel flow tactics, aim to balance retention improvements while minimizing any harm to the user experience.

Notifications to prevent churn

One fairly low-effort, high-value tactic is to let subscribers know their subscription is about to expire and remind them of the value they’re about to lose. It’s valuable to send these notifications — which usually work well as cohesive messages across emails/SMS, in-app/in-product messages, and push notifications — for non-recurring products (e.g., gift cards or gift subscriptions) that are about to expire, as well as free trials and paid subscriptions that are set to cancel and are about to end.

These prompts to get subs to flip back to renew are especially helpful for annual subscriptions. With consumers taking on more subscriptions, we’ve seen growth in demand for annual plans, but we also see many of these subscribers choosing to cancel right away. Often, folks that immediately cancel annual plans say, “I have every intention of renewing; I just want to make a conscious decision to renew for the 2nd year.” Given the gap in time, it’s important to remind these subscribers when they’re about to renew and that their subscription is still set to expire.

Below are a few examples of trying to get paid subs to flip their paid subscription or free trial to renew.

Encouraging annual plans

Compared to monthly plans, annual subscriptions provide the following benefits:

• More cash upfront (vs. payments spread out over time)

• Better retention and customer lifetime value1

• Lower transaction fees2

Annual plans are especially valuable right after you launch your product or service. For early subscribers, annual plans give you time to improve your product before their next renewal date. The upfront cash is also useful early on.

Usually, the best way to take advantage of the benefit of annual plans is to have it as the default in the subscribe flow. If you’re providing special offers, you can limit those to annual only. Here are a few examples:

But encouraging annual plans is another tactic some folks take too far. If you offer an annual plan, it’s valuable to offer a little discount to encourage folks to take it over the monthly plan, but not too much of a discount that you end up sacrificing revenue. Annual plans are still a notable upfront payment — only folks more set on buying your product are likely to buy an annual plan, not those on the fence.

The most common pricing strategy with annual plans is to offer a 17% discount relative to the annualized price of monthly plans (e.g., a $100 per year plan alongside a $10 per month plan). If you discount the annual plan too much, like much more than 17%, you may sacrifice revenue from folks who would have likely paid more. But when priced effectively, encouraging annual plans can have a tangible impact on improving retention without sacrificing long-term revenue.

Summary

Retention is essential to driving growth, so these tactics are at least worth considering. But if you press any of the tactics too far, you could severely harm long-term revenue growth. When done right, you'll save many of the folks on the fence about canceling without harming the experience of those looking for the exit.

In our next post, we'll dive into the harder-to-measure efforts aimed at improving retention, including how to guide subscribers to maximize the value they get from your product and how you can deliver more value to your subscribers.

In the meantime, let me know what you think. Given a wonderful group of new product and growth folks joined from Notes (welcome!), what insights or learnings have you picked up from trying to improve retention? What's worked, and what hasn't worked? Have you ever experienced pushing any of these tactics too far?

As always, thank you for reading,
Reid

PS — if you enjoyed this post, consider forwarding or sharing the Croissant with some friends!

Share

I’m Reid, your host on this journey. I’ve been lucky to be part of awesome teams that launched and grew Hulu, Crunchyroll, and HBO Max. A few years ago, I founded Yem to help individuals and small teams build their own media businesses. Yem was acquired by Substack, where I currently work on growth.

Growth Croissant will be an evolving home for everything our teams have learned over the past 10+ years. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Subscribe now

Hello friends,

Compared to other business models, subscriptions are more predictable and easier to forecast, making it more straightforward to develop and execute growth plans. That said, we've seen many businesses build forecast models in a way that leads to significant inaccuracies, bad investments, and flawed goals. The most common mistake is using churn rate (instead of retention rates) to predict paid cancels, leading to wildly inaccurate forecasts.

But when done well, a reliable forecast of your subscription growth can provide the following benefits:

• Provide baseline expectations for subscriber growth and revenue.

• Encourage a forward-looking mindset by shifting focus from immediate cash earnings to long-term revenue.

• Help set reliable goals (e.g., X paid subscribers by the end of the year) and allocate any investments (e.g., $X in marketing budget with a $Y customer acquisition cost, or establish plans to build your team).

• Explore different growth scenarios to find the right balance of risk and reward.

Our friend from ("TCL") has agreed to partner with us to walk through how to build a forecast model for a subscription business. TCL is a digital-first local news publication, providing original reporting and journalism to Charlotte-area residents. As of today, TCL has 2,450 paying subscribers. Here's a view of their paid subscription growth each quarter:

An important note before diving in: building a forecast model before there’s a consistent pattern of growth will most likely be inaccurate or not the best use of time. Earlier on, it’s usually best to focus on what problem you’re solving, who you’re solving that problem for, and trying to get those folks to use your product or service.

Ok, let’s build a forecast model to help us predict the future.

Forecasting new paid subscriptions

Two major assumptions go into a forecast model for subscription businesses:

1. The number of new paid subscribers joining over time.

2. The number of paid subscribers canceling over time.

Let’s start with predicting new paid subscriptions. To get our bearings, let’s look at new paid subscriptions for The Charlotte Ledger each month, segmented by monthly, annual, and founding subscriptions:

Segmenting by monthly vs. annual renewals is necessary as we’ll want to forecast the two types of subscriptions separately. There’s the obvious difference: annual renewals only happen once per year, whereas monthly renewals occur 12 times per year. But also, annual subscriptions usually have far better retention than monthly subscriptions, which is essential to consider for our forecast.

To predict the future stream of new paid subscriptions, as a starting point, it can help to look at average new paid subscriptions in recent months, as well as growth rates on a month-over-month basis (“MoM”), and year-over-year basis (“YoY”). For TCL, having a long history of new paid subscription data is beneficial, giving us more confidence in our forecast. Over the past year or so, YoY growth in new paid subscriptions has hovered around +50%, while MoM growth has averaged +2.5%. Except for a few months of substantial growth in new paid subs, we see roughly 33 new monthly subs and 45 new annual subs each month. To keep our initial model conservative, let’s use these averages as our forecast for new paid subs for April through the rest of 2023.

TCL’s new paid subscriptions are pretty consistent, but we can still see moments of step-function growth. Our goal isn’t necessarily to precisely predict each month’s new paid subscriptions; we mostly want to get close to the average new paid subscriptions for the rest of the year. If we have initiatives coming up that we think can drive outsized growth — say, a marketing campaign, a major news story, or even a new team member — we could increase our forecast to reflect those efforts.

On the point of irregularity, a valuable byproduct of building a forecast is helping you identify moments of elevated renewals. For TCL, many renewals happen in February, March, and May. We can expect higher cash earnings during this period. But we should also expect more paid cancels, both from payment-related issues and subs reaching the end of their subscription after choosing to cancel. In some cases, it can make sense to adjust your plans around higher levels of renewals, attempting to make your product most compelling during these times to reduce churn.

Forecasting paid cancels

In a previous post, we covered how to use subscription data to build a subscriber decay curve to forecast customer lifetime value. We’ll use the same approach and subscriber decay curve to predict how cohorts of paid subs — existing and expected future subs — will cancel over time. The subscriber decay curve can be remarkably consistent over time, which makes it easier to predict customer lifetime value and subscriber growth. Forecasting paid cancels has a much lower margin of error than predicting the stream of new paid subscriptions. 

The Charlotte Ledger has a few years of data on how well they retain paid subscribers, which we will use to form our assumptions for how well TCL will retain subscribers over time. Like our forecast for new paid subscriptions, we want different retention assumptions for monthly vs. annual subscribers to forecast subscription growth. Based on TCL’s retention data, here’s a view of our assumption for how TCL will retain monthly and annual subscribers over time (i.e., the subscriber decay curve):

You may notice that the decay curve stretches to five years. We need a long time horizon for our decay curve to predict the probability of canceling for all subscribers based on where they are in their subscription tenure, including those that have been paying for multiple years. TCL turned on paid subscriptions in February 2020, making that its longest-tenured cohort. For subs in the Feb ’20 cohort that are still around, to forecast their retention for the rest of 2023, we’ll need to predict what share of them will cancel in their 38th month, 39th month, all the way through their 47th month in December ’23.

Putting the puzzle together

We now have our two key assumptions squared away: new paid subscriptions coming in for the rest of the year and how well we’ll retain paid subscribers (existing and future subs) over time. We can then start to bring these pieces together, plotting monthly cohorts and the number of subscribers remaining over time. As a reminder, we’ll forecast monthly and annual subscriptions separately.

To give you a sense of what this looks like in the model, here’s a snapshot of a few early cohorts of monthly subscribers:

From the snapshot, we can track how a specific cohort churns over time. For example, let’s look at the March 2020 cohort highlighted in yellow above. We see 84 new paid subscriptions started in March ’20. We can then follow the stair-step progression to see what share of that cohort remains over time: 82 renewed into the second month, 79 renewed into the third month, and so on.

We can also track how each cohort contributes to total paid subscriptions over time, creating an ever-blossoming layer cake. For example, by the end of July 2020 (the bottom line shown above), there were 167 total paid subscriptions: 12 of which joined that month; 34 were in their second month from the June ’20 cohort; 11 were in their third month from the May ’20 cohort; and so on.

We can also look at how our forecast of new monthly paid subscriptions will retain over time. As a reminder, we’re assuming TCL will add 33 new monthly subscriptions each month for the rest of the year, driving a total of 297 new paid subscriptions. Combined with our decay curve assumption, of the 297 total monthly subscriptions, we expect to still have 220 monthly subscriptions by the end of the year.

To round out our forecast, we apply the same approach to all existing paid subscribers, predicting what share will stick around for the rest of the year. There’s no elegant way to show what this looks like, so let’s quickly glance at this eye chart below so you have an idea of the mechanics:

After we go through the same process with annual subscriptions1, we have our forecast of paid subscription growth for the rest of the year. The Charlotte Ledger can expect to add 450 net new paid subscriptions, ending the year with 2,900 paid subscriptions at a run rate of $310,000 in annual recurring revenue ("ARR").

We can also forecast our cash earnings based on expected retention and the timing of renewals, which can be quite helpful as we consider growth investments. Here’s a view of estimated cash earnings for the rest of the year:

Cone of possibilities

Now that we have our status quo plan, we can explore different growth scenarios. Let’s imagine The Charlotte Ledger is considering various growth efforts: ramping up the marketing budget; adding more team members; launching a new section; or starting a podcast). We probably have a rough idea of what these types of investments would cost. We can adjust our model to see what we would have to believe for these types of investments to make sense.

Let’s keep it simple and only adjust our assumption on new paid subscriptions. For a “Medium” case, let’s assume +15% year-over-year growth in new paid subs, which brings in an extra 137 net paid subscriptions, $14,000 in ARR, and $10,000 in net subscription revenue. For a “High” case, let’s aim for +35% YoY growth in new paid subs, adding an extra 436 net paid subscriptions, $45,000 in ARR, and $31,000 in net subscription revenue. Here’s a comparison of new paid subscriptions and paid cancels for the rest of the year across each scenario:

Here’s a summary of subscription growth, run rate of annual recurring revenue (ARR), and net subscription revenue across the different scenarios:

We can now gut-check investment opportunities against a few different growth cases. If we’re adding a new team member to launch a podcast or a new editorial section, we can gauge where we need to be to offset that cost. If we want to hire a part-time growth lead, we can set informed goals, ensuring they outperform our “status quo” plan.

Subscription businesses take time to build — for an investment to make sense, it doesn’t necessarily need to return all the cash right away (remember our discussion on CAC : CLV ratio). But having a view of your cash earnings over time will ensure you have the funds needed for any investments. Over time, you will build an intuition on the degree to which specific plans are feasible (e.g., “35% YoY growth in new paid subscriptions!? That’s hard!”), guiding you to better decisions on how to grow your business.

Summary

Forecast models were integral to our operations at Hulu, Crunchyroll, and HBO Max. We used these models to form annual budgets, which would dictate our company goals (with incentives tied to them) and budgets for marketing, content, headcount, and other items. We also used these forecast models for strategic decisions (e.g., price increases, team/company acquisitions) or when asking for tons of money to build new products. As part of our reporting process, we updated our forecast models every week to evaluate performance and longer-term subscriber expectations. Even with pretty simple models, we consistently operated within 1% of our forecast one month out and were usually within 10% accuracy for annual budgets.

In a similar way, having a reliable forecast model as you build your business may help set expectations for subscriber growth, cash earnings, and weigh different strategic decisions. If you would like a template of the forecast model, let me know by replying to the email or in the comments.

I know I always say “I’d love to hear from you” or ask questions at the end, but it really does make my day when folks comment or reply over email. So, I’d love to hear from you — what parts were useful and what parts were confusing? Did any of it resonate with you? What ideas did this spark for your business?

A big thank you to Tony for continuing to partner with us on these posts — we very much appreciate it.

Thanks for reading,
Reid