Skylight · B2C · digital family calendars and frames
Don't mark which features are premium once someone has subscribed
Renewal rates high even for light users of paid features; no numbers
What they did
What happened
In their words
How Skylight Balances Growth and Profit for Sustainable Success – Michael Segal & Mark Ungerer, Skylight
Mark Ungerer… in that relationship with the customer it's like, well, they got something for free. The user shows up and then they try to basically sell them on the value, give them a taste of all the features. But because of the dynamics we've been talking about here, which is like, Mom has been thinking for six months about this purchase. They've been on our website, and Reddit, and they're doing the YouTube reviews, they've made that decision to go all in.
Mark UngererAnd so, that instinct to say, well, you've got to convince them that it's worth 399 a month, and they're doing some calculation in their brain of what's the alternative to that is like yes, there are some customers who do that for sure, got a diverse customer base. The point there is most are actually not doing that once they've made that decision to buy. They just want to know that this is really valuable, they're going to be using it every day, it's meaningful for their family. And then I'll add a little trick. We don't actually in our product call out what is a premium plus feature if you are subscribed, which I think makes a pretty big difference as the person is thinking about when it's renewal time. And they're going, okay, well, I'm paid $79 a year right now for that.
Mark UngererWhat did our family get from these, and what was in the bundle and did I use this? If that's your intuition as a product person is like that's not I think what's normally happening. And we see renewal rates are pretty high, even across folks that heavily use the bundle and those that don't. But that's because what's common across all of those customers, the device is on, they're regularly using it and it's bringing a lot of value to their families overall. They want the full thing. And so, that's what we mean by not being too overly fixated, at least in a hardware business. I can imagine a non-hardware business, the relationship might be different and more tenuous to those free users than what it is to our free users, who actually paid $300 and have a physical thing on their kitchen counter they see every day.
David BarnardOne thing I was curious about, and I should've just done more research, but I think it might be an interesting topic if you have thought about it. Is there a software only experience, as you're building out all of these tools? And we'll get to the whole family OS concept later. But is there a software only experience where people can use some of these scheduling tools and other stuff, whether it's on a home...? We have an iMac that sits in the... …
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More from this episode
- Raise the yearly plan from $39 to $79, not the $99 tests favoredMinimal loss of subscribers or retention; ARR curve 'transformative'; no exact numbers
- Keep old customers on the old price, and honor it for anyone who asksGave up an estimated couple million dollars for goodwill; no measured effect
- Send the device's QR code to an Apple in-app purchase instead of a web checkoutOver 100% more conversions, on a small slice of users
- Knock money off the device when people buy it with the subscriptionMuch higher subscription attach on the own website than on Amazon or in stores; no numbers
- Test a free trial, with and without asking for a credit cardNo extra subscribers; trial takers were people who'd have subscribed anyway
- Make every first purchase cover what you paid to get the customerEvery order in company history paid back on day zero; grew without VC money
- Borrow from risk-tolerant lenders at 15-20% to buy holiday inventory, not raise VCStayed bootstrapped and profitable; paid 15-20% a year at times
- Keep what people bought the device for free; charge for new add-ons like meal planningPhotos-on-calendar paywall 'just worked' for years; now some customers want it free
- Survey customers on whether the product is life-changing, and build to raise that shareAbout 20% say life-changing today; goal is 50%
- Push marketing spend on a new calendar product before the product was goodDidn't work; nearly killed the product; took off only after product fixes in fall 2022
- Sell the device everywhere: your own site, Amazon, Costco and Best BuyCalled very successful; retail acts as a quality stamp, but lowers subscription attach
- Change how you show what's in the subscription bundleRarely moved the share of buyers who subscribe
Tags: renewal, premium-badges, merchandising