Engagement and Retention Startegy
Engagement and Retention Strategy for Spotify
Spotify
Note: The below Engagement and Retention strategy of Spotify is crafted for India
Spotify is freemium digital music, and podcast service that started in 2008 and grew from 68 million MAUs in 2015 to 419 million MAUs by Q1 2022. Out of all users 182 Million are paying subscribers (as of Q1 2022) listening to millions of songs, and podcasts in 60+ languages across the globe.
It provides access to songs for free with customized and personalized advertisements in between. There are premium plans as well to provide an ad-free experience.
Whether you have Premium or not, you can:
A great recommendation engine, providing song recommendations as per listener’s preference and liking
Create and share your playlist
Understand
What is the core value proposition of Spotify?
Music Accessibility: Making music accessible to a mass audience
Personalized Recommendations: AI-based engine to understand the preferable genre, and listening pattern of listeners and suggesting them songs as per their preference
High-Quality Audio: The HD quality sound provides a better experience
Ease of Download: The premium feature allows users to download songs on the device
Customizations: Easy to customize the playlist based on artist, genres, audio quality, etc.
Advertisement: (This one is the odd one out) I came across one ICP (Brand Marketer) who listens to Spotify for 3 hours a day, it runs in the background in his home and he loves to listen to the advertisements as it is customized and even you can select the audio quality of advertisement to save data. It even allows stopping video advertisements to save mobile data. This feature is handy to someone who is in the branding and marketing domain.
Range of Songs: Not only popular songs but old songs and that too songs in different regional languages are available. That makes it easy for users to use Spotify as a daily audio player
Podcast: Audio and Video podcast
How do users currently experience the core value prop repeatedly?
Workout: Morning/ Evening run or GYM sessions
During commute: Playing songs in their car or on their mobile phones or their smartwatch
Background Music: Music at home during daytime or during parties etc.
Podcast: to listen to their favorite podcasts during a walk or run
Other use cases: Meditation, during a specific mood
What is the natural frequency of your core product?
Core Product: Music
Casual Users: Checking app: 2-3 times/ week. Listening Time: 30-60 Mins/ Week
Core Users: Checking app: 2-3 Times/ Day. Listening Time: 30-40 Mins/ Day
Power Users: Checking app: 5-7 Times/ Day. Listening Time: 1 Hour- 3 Hours/ Day
Do you have other Sub-products? What is their natural frequency like?
Sub-Product: Audio and Video podcast
Casual Users: Checking app: 2-3 times/ week. Listen/ Watch Time: 20-30 Mins/ Week
Core Users: Checking app: 2-3 Times/ Day. Listen/ Watch Time: 20-30 Mins/ Day
Power Users: Checking app: 5-7 Times/ Day. Listen/ Watch Time: 40 Mins- 90 Mins/ Day
What is the best engagement framework for your product?
Breadth:
Exploring sub-product: Like a core music listener trying to explore podcasts and listen to podcasts.
o Impact: Users may find podcasts to be more productive and engaging and hence the time spent on the app increases.
o The more time spent on the app, the more time spent consuming advertisements and, hence a positive impact on revenue.
Depth:
Exploring different genres: A user listening to music from different genres and trying to explore more songs on the platform.
o Impact: Time spent on apps increases and hence time-consuming advertisements increase, which positively impacts revenue.
o Impact: Users may get fed up with advertisements and may prefer to pay for the premium plan to explore premium features
Exploring Sub-features: Spotify supports all major Operating systems and tech gadgets. It runs smoothly on android, iOS, iPad OS, Google wear OS, Tizen OS, Apple car play, Android Auto, etc. Hence if a user tries to explore Spotify on different gadgets like smartphones, smartwatches, Smart TVs, Home assistants, etc. there are high chances of users liking the platform and becoming loyal users with premium subscriptions.
Define
Mention an action that makes someone an active user of the product
1. Opening an app
2. Listening to a song
3. Creating/ Updating/ Sharing own playlist frequently
4. Searching for songs/ artist
5. Searching for podcast/ creator
6. Liking the song
7. Uploading user-generated content (music, podcast)
Mention natural frequency for your product
Metric: Opening the App, Time spent on the app, Time spent listening to the songs/ podcast
Segment
Casual, Core, and Power Users:
Persona Based Ideal Customer Profile:
Natural Frequency Based:
Revenue Generated:
Products/ Features Used:
Creating your personalized playlist and sharing it with connections (friends and family)
Develop a liking and following an artist
Downloaded the song on local storage (only with Premium)
Listen to podcasts
Advanced Segmentation:
Engagement:
Product Hooks:
1. Allowing Free users to download a total of 20 songs on their local device
Goal: To make the user familiar with the feature of download
Success Metric:
Increased conversion from casual/ free user to Core/ power premium user.
Increase in Time spent listening to the songs (more the time spent higher chances of a user converting to core/ power user with the premium plan
Problem Statement:
The user is unaware of the download feature.
Unstable internet making difficult to listen to songs while traveling
Current Alternative:
Download songs from the internet/ torrent.
Solution:
A download song button for a free user
Metrics to Track:
To track how many users are using the download feature?
Number of songs downloaded
Ramp up milestones:
When 20% of listeners have adopted to downloading option and there is an increase in listening time of the downloaded songs
2. Allowing Free users to experience 30 mins of premium experience (HD quality sound without ads) per week
Goal: To make users familiar and habituated with the high-quality music which Spotify premium provides
Success Metrics:
Increased in conversion rate from free user to paid user
Increase in time spent listening to songs and checking out apps. The transition from Casual to Core or Power user
Problem Statement:
The user is unaware of the sound quality difference between a normal free version and a premium version with HQ sound
Unable to feel the high bass even after using a good quality headphone
Current Alternative:
Other music apps providing HQ music
Solution:
Provide users a 30 min Free access to High-Quality audio without paid ads per every week
Metrics to Track:
How many users are taking advantage of HQ audio and without ad experience
Conversion rate from Free to Premium users
Ramp Up Milestone:
When 20% of listeners have tried and exhausted their 30 mins of premium experience
Some more Product Hooks:
App-based quiz on music artists, awards, podcasts, famous songs, etc.
Gamifying the Experience: Spin and Win free minutes of Premium usage, #song downloads, etc. Wordle: Using the song name, lyrics, artist name, movie name, etc.
Generating a list of top 10 listeners of the week and giving them badges
Video call between Fanboy (someone who listens to a particular artist a lot) and Artist
Organizing concerts in Metaverse and NFT based invites to selective Core and Power users
Different color Theme for different users (Casual- Orange color, Core- Blue color, Power- Dark Green as of Spotify’s brand color)
Integration with Book My Show to book tickets for Concerts, Standups, etc. Also, those who are power users can be given a designed invitation.
When someone is not feeling good in the mood, they try to listen to some good songs to cheer themselves. Many listeners on Spotify are into soothing songs, low-fi songs, etc. Spotify can have mind-relaxing animations in place of song thumbnails to calm the listener. Also, a good quote can be added on the screen along with Gifs.
9. In order to calm the listener Spotify can also provide a white touch-responsive screen wherein the listener can use his/ her fingers in order to create anything to calm them down
10. Apple music has Shazam integration. Song identification plays a major role as it is the first step of identifying the song, if Spotify can provide a mechanism wherein users can detect the son and can play, that will lead to a great start.
11. Introducing streaks, incentivize the good behavior. Users opening the app consecutively for 7 days will be rewarded with some premium offerings.
Retention:
Note: This is worldwide data of Spotify
Source: https://www.statista.com/statistics/367739/spotify-global-mau/
From Spotify’s Financial Report (https://investors.spotify.com/financials/press-release-details/2022/Spotify-Technology-S.A.-Announces-Financial-Results-for-First-Quarter-2022/default.aspx)
First Quarter 2022 Earnings Highlights
MAUs grew 19% Y/Y to 422 million or 419 million excluding a one-time benefit of 3 million MAUs
Premium Subscribers grew 15% Y/Y to 182 million (inclusive of approximately 1.5 million disconnects from the wind-down of our Russian operations)
Premium ARPU grew 6% Y/Y in Q1 and 3% Y/Y on a constant currency basis
Gross Margin finished at 25.2%
Monthly Active Users:
Spotify Premium Subscriber Growth:
Understand:
Bird’s Eye View:
What is your current retention rate in terms of users?
Individual- 69%
Duo- 83%
Family- 73%
Premium Student Plan- 70%
Source: https://secondmeasure.com/datapoints/spotify-paid-subscription-plans-customer-retention/
What is your percentage of transactions in terms of plans?
Individual- 63%
Duo- 2%
Family- 24%
Premium Student Plan- 11%
Source: https://secondmeasure.com/datapoints/spotify-paid-subscription-plans-customer-retention/
At what time period does your retention curve flatten?
· For premium student plans the retention declines in the last 2 months as they need to verify their identity in order to continue with the premium student plan
· Also the retention curve flattens after the 4 month of purchase
Microscopic View:
1. Which ICPs drive the best retention?- Power Users, working in metros/ non-metros
2. What channels drive the best retention?- Mobile App
3. What features/ sub features drive the best retention?- Recommendation engine, Songs as per personality, Curated playlist, Range of songs and podcasts
Define:
1. What are the top reasons users churn?
· Not wanting to pay for the premium plan
· Using Spotify as a secondary app where the primary app could be platforms like YouTube Music, Apple Music, Amazon Music, etc.
· Unable to find the desired song or podcast
· Due to ads- not being a premium user
2. Negative actions to look for?
· App support issues (bugs, UI issues, etc.)
· Decrease in usage time of app (listening time, time spent on searching the song or playlist)
· App facing technical issues on other devices like smartwatches, mobile, tablets, iPad, MacBook, iPhones, etc.
3. Classify Voluntary and Involuntary churn
Resurrection Campaigns:
Other Campaign Suggestions:
Start campaigns based on the location change ex. “Hey Rahul, visiting Goa? Worried about internet stability? Now, carry all your favorite songs in the Spotify app and have fun at remote places” or
“Would you like to listen to songs in the middle of the ocean, but hey internet doesn’t work? Carry all your songs on Spotify, get a premium plan now”
Start suggesting songs that listeners can enjoy in high quality. Example songs of AR Rahman, Coldplay, etc.
The End/ समाप्त 🙂