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Apr 13, 2004
Case Study

5 Ways NASCAR.COM Keeps Paid Member Churn Rate at Just 15% Despite Doubling Prices

SUMMARY: You might think it's easy to get and keep paid subs for a famous brand like NASCAR.COM, but think again. The sub offering has serious channel conflict.

In our exclusive Case Study, Turner Sports Interactive General Manager Scott Bailey reveals five specific tactics his team uses to keep subs renewing even with significant price hikes. He says he was very surprised by the results of two of them:
CHALLENGE

As every subscription marketer knows, true profits are directly related to lifetime retention rates. The lower your churn, the better your bottom line is.

While NASCAR.COM has incredible name recognition, a pre-existing base of fervent fans, and more than one billion pageviews per year, it wasn't as easy as you might think to get paying subscribers.

After all, there's a wealth of NASCAR coverage on TV, much of the site's content is entirely free, and almost 10 million Net users had access to a version of the paid content bundled into another premium offering from AOL, RealOne's RealPass, or Road Runner. (Can you say, "Channel conflict"?)

Scott Bailey, VP & GM Turner Sports Interactive, who leads subscription efforts, had his team use every trick in the book to convert site visitors into paying subscribers, including:

- Working deals for on-air announcements from commentators during races
- Adding prominent, newsy, links on NASCAR.COM's home page
- Running focus groups to discover what people want
- Promoting gift subscriptions around the holidays
- Having pop-ups with low-price offers appear when visitors leave subscription pages without finishing an order

The team also invested heavily in new tech and site improvements to make the paid service significantly different from the free content. But that cost had to be passed along -- annual subscription fees were jacked up over two years from $29.95 to $64.95.

Could NASCAR.COM keep subscriber churn low despite more than doubling the price tag?

CAMPAIGN

Bailey discovered there was a distinct difference between the types of NASCAR fans who were happy with a bundled service through another provider, versus those who anted up for a direct, dedicated subscription for the site. "Casual fans and fans of multiple sports find the AOL and RealNetworks' offerings appealing. If you purchase NASCAR.COM, you're a hard-core fan.

"The key to that market for us is continually creating a membership mentality for these people. It's not just buying a subscription, it's giving them access to things they normally couldn't do." The team tested five tactics to grow this membership mentality:

Tactic #1. Monthly service input chats

The free site already offered weekly online chats with famous NASCAR drivers, so adding them to the paid area wasn't different enough to stand out. Bailey wondered if instead subscribers would prefer a monthly chat with a site exec where they could offer direct input into the future development of the subscription offering.

Only 260 people could join a chat - it was first-come, first-served.


Tactic #2. Beta testing new services

To give subscribers an "insider feeling," Bailey's team sent out emailed invitations to become a beta-tester just before a new site upgrade launched. "First we do a lot of testing internally. It should be 99% done before we end up emailing customers to come and test for the final two weeks. Then we launch live."

Tactic #3. Real-world event

In addition to having virtual special events every couple of weeks, the team decided to test emailing subscribers the chance to meet a NASCAR driver in person at the Atlanta Motor Speedway.

Tactic #4. Fan Miles

This February 14th, Bailey's team launched an online loyalty program called "Fan Miles." Registered site members could gain mileage points toward unique free gifts by either buying something at the online store, or by being a subscriber. The longer your subscription, the more miles you got.

Offline NASCAR itself is considering launching a loyalty program that Bailey's team hopes to tie into, so the online launch was more of a quiet, barely-promoted, test than a full-throttle effort.

Tactic #5. Emailed notes to cards gone bad

Dead credit cards are one of the biggest problems most subscription sites have to keeping subscribers. Permission for recurring billing isn't much good if the user's closed that card account.

So the team arranged for each annual expiring account to be pre-authorized for a charge 30-days out from actual expiration date. (The charge isn't run, the system just makes sure the account is still good.) Then subscribers with bad cards receive a series of four emails attempting to get a new card number, three prior to expire and one post.



RESULTS

According to Bailey, NASCAR.COM currently has "roughly 200,000-225,000 subscribers" and he expects that number to grow significantly over time. "Our churn is incredibly low," he notes. "We only have roughly 15% churn and the majority of sign-ups are annual."

He's almost embarrassed to admit his fears about raising the price were unfounded. "We've really kicked around the whole pricing structure, and learned price sensitivity was not really an issue. Out of the gate our prices probably should have been a little stronger. We probably left money on the table. Right now pricing seems about right."

Subscribers love the idea that they are influencing the course of the site via chats and beta testing feedback. "When they get a glimpse of what's happening for the future, they take it very seriously. We really immerse them into developing, creating and launching future products."

The real-world event offering was far more popular than Bailey's team had expected. "We had about 2,000 people respond in a four-hour period. We really weren't set up to handle that kind of large event, so we ended up shutting down the invites at that point. Only 30% of respondents were from in-state, and only 40% were going to the race that day. The other 60% didn't have race tickets, they just wanted to come to the members event."

Fan Miles is also more successful than projected. "We're well past six figures which is farther than I expected to be with such a quiet launch. I think the potential is huge. The consumer absolutely gets it and wants to participate. Once we work out strategy with NASCAR and figure out how to play with their new affinity program, you'll see us take a much more aggressive approach."

In fact, Bailey sees Fan Miles as a harbinger of NASCAR.COM's true marketing future.

He explains, "The side benefit is moving towards a consolidated database - it's a prelude to CRM. It enables database marketing." Someday he hopes all NASCAR.COM databases, from free ezine readers, to store shoppers, to paid subscribers, are all mingled together with Fan Miles as a key ingredient.

Then, the team will be able to track each fan's personal preferences in terms of favorite drivers, site sections, and more. They'll use this information to help advertisers target ads on the free site, and to offer personally-tailored content subscriptions on the paid site.

Sounds fascinating....

Useful links related to this article:

Samples of three of NASCAR.COM's emails to expires with bad credit cards:
http://www.marketingsherpa.com/nascar/ad.html


NASCAR.COM
http://www.nascar.com


Real Networks - tech and payment processing for subscriptions
http://www.real.com


Prospero - powers NASCAR's live online chats
http://www.prospero.com
See Also:

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