So this is why RETENTION is the key of the game (warning: biz thread)
 

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"

http://fdsign.com/gfy/stalled-growth.png

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 :thumbsup

(and marketing and research pwns you)

Interesting read Harvey ,thanks for posting :)

I like those numbers. But why are you trying to help the retards here?

costs 8x more to get a new customer than to keep a current one.

Dyna Mo, that's one of the lessons from b-school that I remember as well. One of the reasons why as an affiliate I promote quality sites on revshare.

It's all about retention! Yes it is!

When people brag about 50% retention, it's trial to conversions.. When they talk about rebill %'s, it's first months sales.

Just because I have 4 guys join, 3 cancel, that appears to be a 25% rebill rate, but if that one guy rebills 9 months.. my retention rate isn't 25%. Your graph doesn't factor in the compounding rebills, which are not a steady 50% for any company.

Time and rebill cycles are a factor in the retention rates of sites. And with time, you should convert people to money values.


If you want to use 50% retention numbers, you would use sales+rebills vs. the cancels after the day ends. If you can keep your cancels 50% or less of your sales+rebills, you are growing.



But rebills are king :) And we aren't anything like the mainstream business...

You messed something up, the numbers at 51% retentions rate should be more like this ->

60
90.6
106.206
114.16506
118.2241806
120.294332106
121.350109374
121.888555781
122.163163448
122.303213359
122.374638813
...
122.448979592

So actually there is minimal difference between 50 and 51% retention rate :2 cents:

:thumbsup:thumbsup

as usual .. Harv has some decent input .. kind of obvious but thank for the graphs for those of us who have no ability to visualize lol .. JK .

decent read ..

Very interesting post! I agree about retention. It's really the best gauge of how satisfied your customers are with your content, price point, and your entire offering.

Ok, I'm too tired to bring up the calculator and check this for my self. Which one is right? Can we get input Harvey?

Fuck it I did it and woj is right.

sadly retention is one of the things that's dropping along with conversions

I might have a mistake in my english, when I said "51% composite retention rate" I guess it was "51% compound retention rate". Of course Excel did the maths for me, lol :winkwink:


@The Doc just about to have dinner, I'll write an answer about that later, however you're right, I mean REBILLS, I even mentioned it

ok, back from dinner.

So as I said above, I was talking about rebilling, basically the retention rate thru billing cycles, hence why I used a fixed amount of new sales for ease of visualization of the retained amount of members. Of course this is a great simplification and there are a few factors I'm leaving out of the picture, but they won't affect the results greatly. Anyway that steady 50% will include members that rebill once and members that rebill forever. if you take a closer look, I'm doing the same as when you say "If you can keep your cancels 50% or less of your sales+rebills, you are growing." Hence the 51% ratio, since 50% (or less) will take you to a virtual no growth. Again, assuming you have a fixed amount of sales. You'll be growing if you have more sales, you'll be losing if you have less.

Anyway, barring some translation issues on my side, I said (or try to said) exactly the same you're saying. The only thing I don't agree is with your last sentence. Or better put, I agree to some extent, however the same psychology, marketing, research, compulsions and specific tools (translated to adult if needed) applies equally to any niche where the audience is shared between adult, mainstream or whatever.

Note that I make a difference between markets, since there's another (REALLY BIG) issue no one gives a damn: regionalization (let alone age and genre). Take a look at the image below:
http://www.toptenreviews.com/i/rev/m...ldporngrap.jpg

If you ever readt GFY (which I know you do) you should have noticed people saying Asian traffic is worthless. Exactly. The biggest market in the world is WORTHLESS while US (the 4th -FOURTH- adult market) is the one to aim.

Take a look at this:

Let's talk about genres:

So yes, mainstream adult could have told anyone here how wrong they were about regional markets, since it's about the same share mainstream markets had for the same countries.

And yes, rebilling is king :thumbsup

Shut up Harvey... You dont know what the fuck youre talking about...

:winkwink:

wow... biz stuff on gfy....
who would believe that?

After many many years in the business here is what I found:

Many people will cancel within minutes of the join, they will cancel even before they log into the members area, tons of people hate the word "automatic billing" or "recurring billing". For those types of people you can have 5 million porn movies in your members area they will still cancel.

These people hate rebills so much that if they have an option to join a site for 29.95 Recurring every 30 days and 31.95 No rebills, they will sometimes choose the 31.95 just to make sure its a one time charge and that they dont have to worry about canceling.

The best rebills come to sites that have a history of constant updates, here is how some sites operate:

January: surfer joins your site cancels right away, yet he loves the amount of content and sees updates

February: He tried to login but his membership expired so he buys another membership for 30 days, he doesnt trust you just yet so he cancels again, he logs in allot
enjoys the content and sees new content all the time.

March: Login expires, this time thou he trusts you more, he says wait "im anyway logging in every few days let me buy the 50 dollar or 70 dollar 3 mo. option save some money and be less annoyed when im in the jerking off mode not to be able to login" or he says "ill cancel if they stop updating, but for now let me let the membership run as its easier than rejoining" (if you have a membership that is 39.95 to join and 29.95 rebill this can push a few not to cancel given they trust you as there is a financial motivation for them as well).

April: You continue updating hes happy your happy, he trusts you more he might check out other companies you mention in your members area etc.

May: You decide fuck updating, you read on GFY it doesnt matter at all

Mid may: You post to confirm that updates and exclusive content dont matter

June: Your member sees no update, cock in hand hes frantic he emails you "what happend to the update" you ignore, he cancels

July: More members cancel and those with longer memberships dont repurchase memberships, you lose trust, and many will never trust you again.

Aug. You post that: Rebills suck and ccbill scrubs too hard
Mid Aug You need info on your own merchant account

Sep: You lower your membership price, not understanding that if people trust your site they will pay a few bucks more and that money is not the top issue for porn even in this economy.
Sep: you get some software and some script or use a biller script to offer them a low price not to cancel or some deal, you dont understand that at that point even paying 5 cents for your site is too much for them, they already have all your old stuff on their HD.

Oct: Because there is no new content on your site by now lots of your old stuff is all over the tubes, you make it easy to find because you title each set with a label like "Milf gets fucked in outback steakhouse" followed by the talents real stage name.

Nov: you throw a real update up but you dont understand that its like starting all over again

Dec. your make a post that because of the holiday season approaching and the new things you are involved in your are selling your business, you expect to sell it for 10x what the market will pay for it, 100 people waste your time acting as serious buyers, 100 other people offer to run the site for you in exchange for a %.

The above is very typical in this business and has been for a while, id like to believe that updates and exclusive content dont matter, I mean it would save me a shitload of money and time if id never have to update but in these days especially in these days unique updates do matter.

This makes the affiliates life easier too, because if your site is trusted then when the affiliate gets a gallery somewhere or some other promo and a old member of yours comes across it and its a new set that gets him excited, it will be easier to convert as you already have this surfers trust.

DRM and Anything you can do to protect your movies in these days is a must too, back in the day I pulled DRM as it was a nightmare support wise, many where using Windows Media 8 or lower etc, now with most people have windows media 9 or greater and almost everyone has the ability to stream flash you will get less complaints from members, in addition that one clip that they loves or 5 clips they jerk off too all the time wont work after their membership runs up, and in many cases they will rejoin just for those especially if they see new content on your site as well.

I wish it would be easier to find new faces for my sites, on my site tushymodels.com there is a reason I pay $750 for a model referral, its because the best content will still always be with talent that hasn't been seen in 200 online movies doing the same thing shes doing in your movies.

The problem is that with the net girls can do some hooking without a pimp and make in a day what porn would pay them shooting for 3 days, making it harder to find hot girls for decent prices.

I can tell you that up until NOW if you had a great website that delivered what your target audience wants...rebills took care of themselves. No need for analytical work and graphs and stats. As long as you love what you do and became a master of it and delivered the goods...rebills happened as a natural effect.

And they still do. :)

BUT...with the economy in the current shape it's in. I'm starting to get emails on a weekly basis from members who are APOLOGIZING to me because they can no longer afford to keep a membership. The standard one I have been getting lately follows the lines of: "I'm sorry but I need to cancel my membership. I just can't afford it right now, but as soon as things turn around I'll be coming back."

I know the OP is posting this in support of his recent posts about looking for work for a large company to raise their rebills and revenue etc., etc.

But this is one part of the equation that I haven't seen addressed. And pretty much there isn't a damn thing anybody can do about the fact that people are less likely to rebill right now. Some because they may have lost their job or are in fear of losing their job. And the majority just because they are not confident in what the economic future holds and are temporarily cutting back on everything but the essentials. Add in the fact that everybodies members areas are ripped and available for free out there all over the net and you have the perfect storm.

It's a bad time for rebilling in my opinion. I've made millions of dollars off of rebills as an affiliate of hundreds of programs over the years. But this year? Forget about it. By the time 2009 is over I'm not sure that I will have even one major program that I am an affiliate of that still has a single rebill left.

Matter of fact, for all the attacks on Incredible Dollars at least I can say that I still have 121 rebilling members on their sites. Which is a hell of a lot more than I can say for any other program out there that I promote.

Just a for instance: Last year I had over 500 rebills for Naughty America. This year? So far 111 and dropping every month.

In 2006 I had 551 rebilling members on Jugg Cash. This year? 25!

That's just a couple. I could go down the entire list of 400+ programs that I am an affiliate of and it all looks the same.

People simply aren't rebilling when it's being given away for free and the economy is in shambles. Not sure if anything can change that.

Oh wait, so "member retention makes money" ?


In other news: water is wet

there's quite a few programs that put most of their time into the tour, join pages and promotions, yet hardly any time into the members area.

That's correct, as a matter of fact we're launching this week so called member loyalty bonus - every member gets after 15 days new regularly updated bonus videos and bonus feeds.

That in addition to our own exclusive live program included, more than 9 000 scenes with daily exclusive updates.

There's no secret that money are in rebillls and certain percentage of members we get stays forever.

Even with the numbers you show here so few will understand/grasp the concept of retention.

Retention and branding are the very 1st things I was taught in the biz, once I decided to take it serious and not just as extra drink money.

Why more companies/people don't understand the basics of marketing I will never get, but truly makes me wish I had extra money to invest in projects I know will work.

radical , isnt it ?:2 cents:

I just fired up Excel, and I'm with woj on this one, if I'm using 51% I'm getting the same results as you till the 4th month, and then somehow rentention start's growing in your calculations, 62/114 is 54% rentention for the 5th month, 57% for the 6th, till 67% for the last month.

As I see it a rentention below 100% will always result in a stall at some time, more % just means that this stall is reached later and at a much higher level.
Unlimited and exponential growth as in your second graph can only be reached with a rentention above 100%.

But maybe I'm just wrong, I have a horrible hangover right now :)

BTW, the same calculations are important if you want to grow your sites with traffic trading (TGP/MGP), only with the exception that you're actually able to go above 100% sometimes, at least technically. :thumbsup

There is no money in retention so move along back to PPS

People.... if you always have 51% of a set rate... fucking duh you will grow. If you have 49%, it's a duh that over time you will die. It's an even set number, come on... really?

Retention, does not work on even numbers, it can NOT be "pretended" to be calculated with set numbers.

Retention %'s are NOT what you look at to see how you are doing. They are ONLY accurate if you are doing a history of data that ended already, not current trends.

The #'s CAN lie to you. You could have been doing 200 sales, dropped to 100 sales because traffic went down, hold that for months and STILL have a 75% retention ratio, yet you lost half your members either way...

Are you sending these sites an equal or more, sales, than you previously did? Do you still send 500 sales a month to NA to help you hold those 500 rebills?

Rebills are directly tied into sales... If your rebills are dropping it means your sales are dropping...

This is depressing but really shows up the shape of the industry right now.

Disclaimer... it's a super niche..

I can show you #'s where a site that hasn't updated in 4 years, out retains a highly exclusive niched siteSSS that update weekly. Even though the site doesn't convert as well. It's ALL about the tour's pitch.. If you don't say it updates, members don't expect it.

But I'm going to bet they aren't rejoining for updates :)

Go DRM! Even just the basic flash player, while not DRM it is some download protection. Clearly streaming flash is sticky enough for Tube sites... but so many paysites think members must have downloads.

Just remember, if the tour doesn't say it.. the surfer doesn't expect it!

Which also means if you only put 10 girls up on a tour, and you sell them for $30... why are you giving them 11 girls for the same price? You just made the value of 10 girls $30.. sell them the other updates!

This is turning out to be a good thread :)

My mainstream business ab-so-fucking-lutely depends on renewing contracts as low cost profit centers. New clients are pretty much at break even because it costs so much to get them and then get them set up.

After that its gravy for as long as I can keep them happy.

Hell no. Making a new sale these days to any of those sites is damn near impossible. But those rebills USED to slowly fade away over the years. Now they are dropping like flies to those sites. Going from ove 500 to 25 on Jugg Cash is not something that used to happen. I could see dropping down to incrementally. But these drops were so precipitous it was incredible. Basically cut my affiliate income in HALF since last November. I've never seen a drop like that in the 13 years I've been an online affiliate. :(

I was wondering where you got this data? I'm kind of surprised to see China so high. I've always heard that traffic is absolute crap.

Over the years, if you had sent steady sales to a person, and they slowly dropped down over time, everything would slowly slow down... you prob wouldn't notice a drop.

But... even with a paysite, if you stop taking sales (the extreme)... The first few months may slip, but it won't be that bad... but.. as time goes on, 3 months, 6 months, 9, 12, the first full looped year.. each "cycle" you will see a massive drop.

And... don't forget the lovely VISA/MC... When you can see in your own cancels and failed rebills.. They cancel millions and millions of cards, sometimes hundreds of millions of cards, in one swift movement..

So without sales going in... it will, no matter who the sponsor is, doesn't make a diff how good the members area is. The exact same result will happen.

You're right on the money with everything you're saying. I'm just saying that I believe from what I'm seeing that people are actively canceling their rebilling as well as the other factors. Everyday I see people join and then write me immediately asking me to cancel so it doesn't rebill. Not because they don't like the site (they do it within a minute of signing up so they haven't even been able to watch a single vid yet), but because they simply don't WANT to be rebilled on their credit card.

I started offering my type in surfers a 5 day $10 signup option. And I'll be damned if I don't get guys using that instead of rebilling and they end up spending $80 a month to be a member instead of $29.99 rebilling! It's been an amazing phenomenon, but in a way I understand it. They don't like people just "taking" their money and would rather be in charge themselves even if it costs them a ton more. Go figure. Human nature is a funny thing and doesn't necessarily follow graphs, stats, or even common sense.

And yeah, I absolutely HATE that Visa/MC does that. A person's card goes past the expiration date. They get a new card in the mail. Same number, same everything...except the expiration date. BOOM. We can't hit it for the rebill and we lose money. Happens everyday. :(

Pretty spot on, as usual :thumbsup I disagree somehow with the need for exclusive content. If you have it, then better, but my most successful designs use non-exclusive ultraseen content. The difference is that I could do whatever I wanted with those tours instead of working on given specifications. Check this out:

http://fdsign.com/2007/stats/3rd_week_april2008.png


You're contradicting yourself. I agree 100% that anyone who knows and loves his site(s) niche(s) will do better than some "let's throw 1 million sets in a script and call it a day" company. However, that's not the only thing, at least not in these times, and that's where your contradiction is. You say rebilling will take care of themselves and then you say "these are hard times for rebilling", then mentioning the magic compound of any business: CONTEXT (in this case: global crisis).

On crisis times, people cuts in entertainment as well as other factors. However, it has been fully demostrated that most people will try to keep their entertainment budget as close as possible. In certain cases, and it's not unusual, it will increase. Question is: which entertaiment will they choose? How are you competing to (let's say) Blockbuster video renting or cinema or a new (un-needed) cellphone, or a disco or whatever? Basically, the answer is ADDED VALUE. All of the mentioned will try to keep in shape using promotions, special venues, prizes, whatever. What are adult sites doing on that subject? If you hear crickets sounds.... I do too.

On a side note, which I$ site is the one thatworks best for you?

(continues for GFY's message limit)

If you don't retain, your rebilling will decrease as well, I explained that above. Your retention/rebilling rate will be within a certain ratio, no matter if some of your members rebills for 10 years or 1 month or never, they will be included within that ratio. That's why I used amount of members to ease visualization, the numbers will include those rebilling for years as well as those not rebilling at all.

And I choose 51% because I tried to demonstrate that you need 1% over the "amazing retention rate". Just 1%. Do you know any company working towards that 1%? I mean, it's just 1%! There might be a few, but I don't know of any so far.

The numbers of Robbie regarding some sponsors show you that no matter what, if you don't retain you don't rebill. He's talking about 70% and 90%+ drops, since he's on revshare, the same numbers will apply to the sponsor (at least on that given account). Again: This time I'm not even talking about growing 1%. I'm talking about shrinking 50%+ exponentially!!!

Just to avoid confusion, that's the revenue each country gets, not the money they spend. China's 60%+ of that revenue accounts for novelty sex toys (no surprise). Still it leaves you with a few hundred million people to work with. As for the info, do a search for Global Pornography Revenue

100 sales, 25 rebills. (25% rebill rate)
100 sales, 25 rebills + 12 from the previous month.
100 sales, 25 rebills + 12 + 6.

I now have 43 members.. Real retention is 25% per month, total members to monthly sales, it's 43% at the end of 3 months.. and with all sales it's 14% retention. So breaking it down, per month, 3 months, cycles of months, daily, money.. it doesn't make a difference..

The member base is growing...



As long as you are adding sales, your retention ratio can be like 5% and you will still grow, because to calculate or even show an example of retention ratio, you have to factor in the compounding rebills and time.






What Robbie is talking about 100% directly is related to the volume of sales he sends in and has NOTHING to do with the actual retention ratio of the site. He stopped sending sales, it's 100% fact that rebills will bomb after a period of time.

Lets see

If its non exclusive that means that

a) the chances of you or an affiliate getting the gallery listed is very low as tons of people are submitting the same content

b) the user has seen it on other sites, maybe a site that fucked him or whatever, people like fresh stuff, exclusive does matter and matters allot

Also this message is to robbie, rebilling carries over to a new card even if the exp. changes, I didnt know that either but recently was told about this.

I don't believe that's accurate.

In the first month, you have 0 members to start.

Month 1: 100 sales = 100 Members End of Month (no rebills yet)
Month 2: 100 sales + 25 rebills from prior month (25% of 100) = 125 Members EOM
Month 3: 100 sales + 31 rebills from prior month (25% of 125) = 131 Members EOM
Month 4: 100 sales + 32 rebills from prior month (25% of 131) = 132 Members EOM
Month 5: 100 sales + 33 rebills from prior month (25% of 132) = 133 Members EOM
Month 6: 100 sales + 33 rebills from prior month (25% of 133) = 133 Members EOM

You can't rebill half a member, so under this scenario you are stuck at 133 members through infinity.

In the real world, these things are never as cut and dried obviously, but the fact remains that regardless of your rebill rate, if your initial sales stay stagnant as in this example, your total membership will reach a plateau and stay there.

Trying to increase the percentage of members who rebill each month is definitely a worthwhile goal, as it likely goes right to the bottom line, but increasing initial sales is crucial to a growing program.

Cool.. always learning :)

Is it the same for this?

Those sweeping fraud card cancels, even if the card didn't have fraud on it? Visa/mc had like 3 or 4 major fraud issues last year, the one time a machines(s) got stolen, had like some crazy millions of cards on it.

If I remember correctly, we did see a drop in rebills after that.

Spot on. In fact that's the first thing I do when I join a website. I'll cancel the automatic billing and wrap things up with that first before I ever set foot in the members area.

Is that a recent development? I know for a fact that I had to re-do my Stats Remote subscription for that very reason. And I also had to re-do my Phantom Frog rebilling subscription as well. These things happened in the last few months.

I have also answered support emails in the last couple of months from members who wanted to know what happened to their membership and after going back and forth we discovered it was the card expiration date.

By the way, I'm talking bank cards here. The "credit" / debit cards that you get when you open a bank account. Those seem to represent a big chunk of sales as opposed to "true" credit cards.

It's what I used for my Stats Remote and Phantom Frog subscriptions. And it was what was used by the members I mentioned.

So maybe that doesn't hold true for that type of card?

shocking is more like it:winkwink: I almost passed on opening the link but glad I did not...

Your numbers show the exact same thing as mine.. it doesn't make a diff if I start with 0 or not, or if you include the .25's or not, but you can add those in, just round up.

I also did my math a bit different too, I split the 2nd month and afterwards, rather than a continual 25%..

Anyway, the point of all this was two things... the rebill % is under 50% and a site can still grow, even with my extreme example, with set numbers.. the site.. grew. A limit "appears" to be set because we FORCE the rebills to run out.. that wouldn't naturally happen even on the worst site, which is why I split.

If you figure in the 2% or lets just say 1 person per month that will never cancel. Then your math, grows again. That's why I had said, add a few % to the compounding rebill, and your site never dies, but that also happens naturally..

That isn't much different than what you said "Trying to increase the percentage of members who rebill each month is definitely a worthwhile goal"

Just 1 extra rebill can make ALL the difference in the world :)

I heard a "rumor" that WellsF "bank credit cards" aren't processing U.S. Cards through International high risk merchant accounts...