# How to Use Segmentation to Maximize LTV — Greg Stewart, Ladder

Channel: Sub Club by RevenueCat
Video: https://www.youtube.com/watch?v=H70Kcp83Oxs
Duration: 17 min
Language: English
Words: 3284
Transcript page: https://viewrankai.com/tools/youtube-transcript/H70Kcp83Oxs

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[0:00] hello I'm your host David Bernard today's conversation is shorter than usual and will be featured in Revenue cat state of subscription apps report each episode in this series will explore one crucial metric and share actionable insights from Top subscription app operators with me today Greg Stewart CEO of ladder on the podcast I talk with Greg about why optimizing for user success drives more Revenue than conversion hacks how to maximize the impact of annual plans and why relying too heavily on discounts is a trap hey Greg it's nice to have you back on the podcast looking forward to chatting today thanks for having me awesome to be

[0:39] here we're huge fans of the podcast and glad we could do it again so one of the big sections in the forthcoming report is LTV and so we're going to share all sorts of stats around what we see patterns we see in different cohorts in different segments and different time frames of how our customers are monetizing their users how do you as one of the fastest growing fitness apps out there right now how do you think about LTV yeah we we don't spend a ton of time thinking about LTV as a metric for a couple of reasons and then we'll talk about what we do look at but LTV for us

[1:15] is a little too wishy-washy and too macro to make decisions on like you you think about LTV and you're looking at some of your oldest cohorts the product was different many things changed by the time you've got a good read on anyone cohor the entire picture could have changed so it's not close enough to real time to help inform the decisions of the business we manage the day-to-day business on Payback period which is a far cleaner very tangible metric that we can talk to the entire team about we invest in our growth that growth gets payback over time we understand the cash flow Dynamics and that we're what we're

[1:55] able to pay and invest in based on the expectation on when that investment is recruited so far more real time from a growth perspective instead of LTV we spend a ton of time thinking about retention obviously this is an extremely consumer oriented retention minded team and business and and app and that's been true from the beginning Fitness is easy where there's a natural retention metric which is workouts if you don't start a workout you can't complete it if you don't complete workouts in ladder you're not going to join you're not going to continue on as a member everything that we build every feature that we contemplate inside the app is all aimed

[2:35] at incremental workout completions it's all aimed at keeping you around the app keeping you motivated to continue on and stay consistent with your plan that as a metric looking at workouts is far more tangible and easier to predict kind of the outcome of what's happening at the user level versus thinking about LTV High workouts equals High LTV so these things lead to LTV as an output metric but really hard to control input metrics when you're just anchoring to what in value I love that you brought this up and maybe some people are listening like well why did Revenue cat then do a whole section of their report on LTV but I

[3:13] think that's actually kind of key to properly contextualizing what LTV is so even though you don't think of it in terms of LTV you are measuring payback period a revenue cat we have a chart and you probably look at this dayx realized LTV is kind of what we call it so you can check into different points like 30 days you know how much revenue you've realized from that cohort yeah like we are looking at that and that is payback period right at the end of month one at the end of month three at the end of month six at the end of the year how much has been recouped are you

[3:44] profitable on that user that unit so we are certainly staring at that lifetime value in terms of what is that customer worth over the three years that they've been a member we have a estimate and a number there but it's just not doesn't give us the ability to make any decision around it so it's just not practical from a day-to-day management of the business we do spend a ridiculous amount of time kind of understanding retention at various kind of points in our customers journey and it all starts with who's coming into the app like we spent a lot of time defining at a very granual level who are the relevant personas for

[4:23] ladder and the programs that we have we called them teams teams are led by a coach each one of those teams represents a unique Persona a unique workout style that we are speaking to directly in Creative that's aimed at that particular audience so we're very very focused on speaking to the right user users that we know are more likely to find success and long-term success with ladder even before they're in the app and we use the quiz which we talked about in the last podcast which collects a handful of questions to understand the fitness profile of a lead coming through how many workouts doing what modalities they

[5:00] like what equipment they train with where they want to work out and we have a really good sense in real time who's coming through our funnel and we cater to multiple personas and we can see that in real time on one side of the spectrum we have Pilates influenced at home with a dumbbell with a lot of women who are newer to strength on the other side we have advanced gym goers full access to equipment and machines they know what they're doing when they show up and they're looking for an easier way to plan the workout itself so very very different person that we're speaking to uniquely in

[5:33] different creatives on social platform so step one is getting to the right people and really making sure that you understand the pain points and how our solution addresses those pain points at the Persona level and the quiz and our marketing is all all geared towards that in the app itself we have a 7-Day free trial we intentionally don't ask for a credit card upfront which we didn't know was unique when we launched turns out it's pretty pretty unique we just had a hunch that like as a consumer oriented team it's a better experience we launched the business in the middle of Co there was an app being built every

[6:08] single day in our space it was very hard to stand out to the capital markets it was very hard to get the consumer attention and we knew we had a superior product from very early on in our life cycle as a business so we wanted to create a entry point into the app with little to no friction like let's use the product to move people through the funnel to do the selling to work people through one or two workouts then ultimately if that happens the likelihood to pay is is very high so we use the product to convince not getting them to pay and then hoping that

[6:42] something happens after the fact so we spend a ton of time and continue to spend time iterating on that experience of what happens when you come into the app what's the first thing you see how do we get you through the first workout in the right program as quickly as possible how do we get you through a second workout how do we introduce these features that aren't typical in fitness apps we have chats and social oriented experiences that are in other apps like us so we have to figure out the right moments to introduce these experiences and to make sure that we don't overwhelm Our member who's coming in with some

[7:17] context but not committed yet on lud as a solution for them so the trial is really really important and we can we can pretty accurately predict what will happen from a conversion perspective we week one workouts perspective month one retention perspective based on how the trial starts the level engagements the number of workouts that they're completing and that continues on into the into the membership week one is an incredibly important kind of fork in the road for us you know we're solving for three workouts per week per member and most of the Iration is happening around that first week if you're hitting that metric in the first week the odds of

[7:55] doing it again the second week are exponentially higher the odds of retaining at theend into one month if you're a monthly member are very high and so we use workout completions both in activation in first week and then beyond to understand the retention profile of our members and to understand the retention profile of cohorts of users that are coming in over time in that first week you've already collected a ton of data to understand kind of what Persona you have and then you start seeing kind of the early signals of potentially being a good fit how deep does this like segmentation and customization go are you showing

[8:29] different pay walls are you showing different offers how deep do you go with that segmentation to get people to that place where they are going to start paying not on the happy path so if you come in off the quiz you download the app you start a trial you start completing workouts we're not really trying to optimize or configure the pay wall against what's happening most of our happy path conversions are happening in the first two weeks post trial expiration where we do segment on workouts and offers is if folks don't commit and don't convert right after the trial and we do have a significant number of people in anyone coworth that

[9:06] will convert down the road because Fitness is very personal and just because it wasn't relevant today it doesn't mean you won't have a need come spring summer fall the following January so we have lots of shots at bat with our leads to convert them over time and we'll think about offers and coupons and the right mix of urgency levers based on the number of workouts that they completed in trial as a proxy for how much context they have coming in if you haven't completed a first workout you really don't understand what ladder is you don't understand the concept of a team that it's programming that it's

[9:40] Progressive overload trading that it's not a library of workouts you're on a team you don't know if it's the right team or not so we have to both configure that experience when they do pay to someone who has very little context but even before that we need to Market to that user knowing that they're not sold yet on the core value prop itself how does that play out I know you've been and I think we talked about this either in person one time we were hanging out or maybe even on the last podcast that you've been shifting a lot of your subscribers from monthly which is what

[10:10] you used to kind of promote more to annual as a way to increase that LTV so in the report we're going to be sharing like 14-day LTV and 60-day realized LTV so how are you thinking about that kind of balance between monthly and annual and getting those payback periods reduced yeah our payback periods are very very very tight and we've over time increased the penetration of annual members in our subscriber race which has been exciting the first rev of that was on price and that was a bunch of testing and iteration and then we got to a place where we thought we had the right clearing price for folks that were

[10:45] willing to commit upfront and then we did some experimentation around the pay wall anchoring to annual putting incentives and added features into the annual membership to entice folks to commit on longer time frame and then when we are close to the end of a trial for any user and you actually have completed a workout we'll first introduce the annual offer is a hey did you know you know there's a cheaper way on a monthly basis to purchase ladder you get a significant discount you get added features and you're committing yourself to a year which is good for motivation and and accountability so certainly something that we've spent

[11:22] time on and not it's now more annual members in our subscriber base than monthly and that wasn't true the time we talked so in that segmentation are you presenting the monthly to certain cohorts and the annual to others or are you now more focused on that annual product and trying to drive as many users as possible to that annual or the fact that it is a kind of bigger one-time commitment do you do you have to kind of find that happy balance both I would say for folks that complete zero workouts in trial we don't push annual the context isn't there we expensive versus must apps in our space you don't

[11:58] know enough on why the price is the price and why it's worth the value versus what you're solving for so for zero workouts we point to monthly for those that have gotten through kind of key activation moments first workout second workout will introduce and socialize and lean into annual right before trial expires and right after trial expires if that offer isn't taken or the conversion doesn't happen then we start moving to monthly offers but the monthly offers are all intra offers they're just a discount on the first month that then clicks up to full price on month two so it's to lower the hurdle to get into the product and to really

[12:36] experience it in the first couple weeks of membership and then it clicks up to full price after that are you making those same kind of offers to those folks who didn't complete a workout I think I saw a promo it's like $5 or $10 or something for that first month do those people that you offer that $5 offer to are they less retentive than the people who were willing to kind of jump in and pay off the bat important point I I would make is if you stacked up all the time on iteration between activation in the product and using our product and levers that we know are correlated to

[13:12] workout completions versus iteration on deals it would probably be 90% product 10% deals so we spent a lot of time moving the needle on the percent of people that get through one workout the percent of people that get through two workout and the conversion rate is extremely high for folks F that get through those moments so we have a lot of atypical levers in our app versus fitness app and I give you an anecdotal story is we have a feature where you can cheer on other folks who are working out you open the app on the home screen you'll see avatars on the top you'll see

[13:46] a yellow Vault Circle and it represents how far is the workout that person is and you can send them a cheers by double tapping and pick an emoji that you want to send seems very simple but we correlated the number of Shear receive to workout completions and long-term retention and so we realize the importance of this feature and people feeling like there are others that are doing it with them and feeling supportive that we now use that to figure out how do we incentivize and increase the number of outbound shears that on the receiving end you're more likely to receive a basket of shears in your experience especially early on in

[14:22] the trial so we spent a lot of time thinking about what are the levers that we have to drive incremental workout completions that ultimately get people to the value prop of ladder of having a plan and ultimately help convert them or increase the likelihood that they'll convert so most of our brain space has gone towards that we do have built-in kind of moments in our calendar where deals are more compelling than not we'll spend a little bit more time thinking about the iteration side of that we program workouts on six we Cycles we call them string series and they become like these great entry point moments

[14:57] into the product where you can tell us story about urgency saying you weren't here or it didn't make sense for you to join for the first string series but tomorrow is day one and it's a great time to hop in and we have a whole motion from a marketing perspective through the plot for mobile through our coaches in the app all telling a story about the next series what we're working on what themes are at the platform level that gives us the ability to then go into our database and tell a story on urgency and use discounting and coupon to lower the barrier to entry to

[15:26] incentivize people to get in experience the value prop so we have moments where it's more impactful to experiment on the deal side the $5 deal is a good good example where folks who claim or take advantage of the $5 offer it's only about half of those that are retained in month two and it's pretty consistent now this is the minority of conversions the small basket of conversions is folks that didn't get through the product in the trial but of that group about half are retained but that half clicks up to full price so they go five to $29.99 so the first month it's a really nice spike a user growth and in the

[16:03] second month it's growth in ARR for that cohort even though it's a smaller basket of users that make it through the first month all right Greg thank you so much for uh all those insights anything else you wanted to share as we're wrapping up I would say if you want to see some of the learnings in real life that we just talked about especially in trial and activation I would try yeah there's a no credit card trials we talked about so very easy to get in there and I think if you get through that first work out the odds of us seeing you as a number are

[16:31] very high so would love to have everybody try the product and let us know what you think awesome we're going to see a lot of like super fit subscription app folks next year well Greg thanks so much for joining me this it's a great conversation they appreciate it thanks for having me thanks so much for listening if you have a minute please leave a review and your favorite podcast player you can also stop by chat. sub club.com to join our private community [Music]

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