After some
interesting discussion here, that somehow deviated to a "tube wars" thread, I thought it would be cool to add some pizzazz to the discussion.
Personally, I think, I'm convinced, I vouch and I can swear everything is about
RETENTION. See, most people tends to believe the so called "mainstream" marketing rules don't apply to adult, or if they do, they do it just incidentally. Of course, that is the same like saying people surfing adult sites or buying adult products are not rational human beings in a society with given uses, values and habits and they're some kind of aliens from outer galaxy instead. This is a perception usually maintained and encouraged by people who has no knowledge on the subject and they're afraid of losing business, power, whatever.
IMHO, not only mainstream marketing techniques applies to adult: it's basically the same
So yes, I've some idea about what I'm talking about. I've a degree in Marketing and was a Marketing Manager for several mainstream companies, including Citibank NA, Deutsche Bank AG and Cinemark Mexico and Argentina. And even when I recognize some differences based in PSYCHOLOGY (question: how many psychologists do you know in adult biz?), I can't see a single difference when it comes to techniques, research and such. As some people knows, I use to research a lot, work with tendencies data, apply it to design, etc. And frankly, everything is exactly the same, no matter if you want to believe it or not.
Going to the point: one of the basic premises in marketing is "getting new clients is difficult. Losing them is really easy". Hence, most efforts are put in keeping clients, and there are formulas to set the cost of a new client and the time you'll need to recover the investment in getting that client (yeah yeah, I know). Anyone that knows the "kitchen" of adult biz knows IN MOST CASES (with some honorable exceptions) it's the exact opposite to adult business, where efforts are set to get new affiliates and/or members (CLIENTS!) and after that, or even in the same proccess they lose it. A perfect example is the crazy xsells and shady rebillings.
So, most webmasters I talked to are perfectly happy with a 50% retention rate, some of them even BRAG if they get a 50% retention rate. IMHO, that's obnoxiously low. I'll show you an example I call the "stalled growth paradox"
the first example takes 60 sales a month (fixed, no sales loss) and a retention rate of 50%. You'll see that by month 6 you'll be stucked in the same numbers. No growth but some marginal centesimal. Of course, it's worst with less than 50%, although the tendency is maintained.
In the second graph, I'm showing you a 51% composite retention rate. As you can see, you grow and grow. To make it easier, with just less than 6% constant growth in retention, you'll double your income by 100% in 11 months. Nice, huh? That's the beauty of rebilling businesses, and it's the nature of the game. Many programs are setting for "1 buck today, tomorrow we'll see".
So, what does it leaves us with? Well, to avoid loses or stalled growth, you need to increment any of the numbers of the constant, whether it's sales or retention rate. In a context where sales are going down the hill, your only remedy is to increment conversions at the same rate you lose traffic just to be even, or increment conversions beyond your traffic loss rate. Or, increase the amount of traffic in absolute terms. This will increase costs as well, of course. Depending on many factors, it could be worth it or not. In absolute terms, ie absolute amount of money, big programs will have no big deal with this. However, smaller programs will face losses sooner or later. And both of them will decline any growth ratio they may have.
Now, I won't show you a graph where sales goes down instead of my fixed rate example or you'll want to shoot yourself.
In the meanwhile, keeping a member happy is relatively easy and with way lower costs in the short/mid range. Some of them are "adult only" solutions, but most of them already exists in the dreaded "mainstream" marketing.
So yes, the short, easy and rational answer is RETENTION is the key of the game
(and marketing and research pwns you)