Even though iPhone sales have dropped over 9 percent over the last year, don’t feel too bad for the house that Jobs built: Apple recently reported fourth-quarter earnings of $64 billion, a 2 percent increase that marks a record result for the company.
Which indicates Apple’s increased emphasis on subscription services appears to be paying off: Service revenue hit $12.5 billion in the fourth quarter, an increase of nearly 18 percent from last year.
Apple claims to have over 450 million paid subscribers across all services on its platform, a dramatic increase from last year’s 330 million.
And that’s before the recent launch of Apple TV Plus, arguably the company’s biggest foray into consumer subscriptions.
Granted, the video streaming landscape is already fairly crowded, both for content and for products and services in general. The subscription e-commerce market has grown by 100 percent per year for the last five years. But gaining subscribers and holding subscribers are two different propositions. Churn rate is the bane of a subscription service’s existence, especially if customer acquisition costs are high. (See: Apron, Blue.)
The key is to make signing up easy–and to give potential long-term customers the chance to turn a one-off trial…into something they feel they need.
That’s why Apple just offered this limited-time deal: Purchase a new iPhone, iPad, iPod Touch, Apple TV, or Mac (or have purchased one after September 10) and receive a free one-year trial of Apple TV Plus.
As long as the device you purchase is “capable of running the latest iOS, iPadOS, tvOS, or macOS” software, it counts. So if you have your heart set on an iPhone 8 instead of an iPhone 11, you’re still good to go.
All of which gives users plenty of time to integrate Apple TV Plus into their iOS ecosystems–and gives Apple plenty of time to collect data on subscriber preferences.
And to take advantage of a common scenario in long-term subscription trial offers: Customers who forget that…
Free Isn’t Free Forever
Like many free subscription offers, signing up for the free year of Apple TV Plus also signs you up for a paid monthly subscription that will automatically kick in–without notice–once the free trial ends.
If you don’t want to pay, you’ll have to actively opt out.
Which anyone who has agreed to a free trial is painfully aware can be problematic. (Here’s looking at you, New York Times free trial I forgot to cancel and paid for nearly four months before I realized it.)
That’s why Apple made the offer pretty appealing:
- One year, free. Plus, your year doesn’t start when you purchase a qualifying device. Your year starts when you sign up, and you have three months from purchase date to redeem the offer and start your clock.
- You can share your free trial. Like a paid Apple TV Plus subscription, you can share with up to five family members in your “Family Sharing” group.
- You can view up to six simultaneous streams. Meaning you won’t have to kick one of your kids off if you want to watch something.
Just keep in mind you only get to redeem one free trial per Family Sharing group or Apple user ID. If you include your daughter in your free trial and she later purchases a new iPad…she can’t redeem the offer, too.
Longer trials can be the key to long-term subscription service success. One week? That’s hardly long enough for users to actually use a service, much less start to understand its value. One month? Better…but still: If I like See, that doesn’t mean I’ll commit to paying for it. Some shows take a number of episodes to hook viewers.
Like HBO’s Succession, I got bored after two episodes. Stopped watching. Came back around months later…and realized it’s great.
But I had to still be an HBO subscriber in order to realize that.
For business owners, it’s tempting to offer short free trials, especially when cash flow is tight. But if you believe in your products, and believe they are worthy of creating long-term customer relationships…opt for longer, not shorter.
On a macro level, that’s clearly what Apple is doing
And on a micro level, if you decide to take advantage of the Apple TV Plus offer…
Just Don’t Do This
Some years ago, I signed up for a free month of Amazon Prime. I kept it for two weeks.
Then I canceled it. I didn’t want to end up automatically paying for a full year. (This was back when you had to sign up for Prime for a year, rather than on a monthly basis.)
But I should have waited until a day or two before my free trial ended, especially since I ended up placing a few more orders and could have gotten free shipping on those, too.
Why didn’t I? I didn’t think I would need it…and more importantly, I didn’t want to forget to cancel it.
Which you may be tempted to do with your Apple TV Plus subscription. Maybe you’ll check out Apple-only content like The Morning Show. Or For All Mankind.
And then you might browse around and decide there’s nothing else you really want to see–especially since you already have Netflix and Prime Video and Hulu and who knows what other streaming services–and decide to bail early.
Seems like a smart decision: Why risk paying for something down the road that you don’t use?
After all, research shows 62 percent of respondents have paid for unwanted subscriptions because they failed to cancel an auto-renewal. Over half couldn’t name all their current subscriptions. (One respondent later discovered almost $1,200 in annual subscriptions she wasn’t using.)
But then again, what if you cancel early…and then Apple TV releases a show you or someone in your Family Group, really want to see? Then you’ll have to pay.
So do this, with your free trial of Apple TV Plus and with any auto-renewing free trial: Simply set a calendar alert for two days before the trial ends and the payments kick in.
That way you won’t forget. And you won’t miss out on potential benefits, especially those you can’t foresee. (Win-win.)
Then, go through your credit card and bank statements to make sure you aren’t currently paying for any subscriptions you no longer use.
That’s what I did before I wrote this. Even though I figured it would be a waste of time; the process of canceling my NYT subscription a few years ago was so irritating, I swore I would never let that happen again.
Nope: I’ve been paying for Dropbox…even though I haven’t used it for over a year. Oops.
Fortunately, canceling was easy.
Which raises another key point about free trials: Make sure users can cancel just as easily as they can sign up.
That way, they may someday return.
But if you make it hard–if you make your last impression a terrible one–they will probably never return.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.