A (3:46)

I love that you brought this up and maybe some people are listening like, well, why did revenuecat then do a whole section of their report on ltv? But I think that's actually kind of key to properly contextualizing what LTV is. So even though you don't think of it in terms of ltv, you are measuring payback period. At revenuecat, we have a chart and you probably look at this day X realized LTV is kind of what we call it. So you can check into different points, like 30 days, you know how much revenue you've realized from that cohort.

B (4:17)

Yeah, like we are looking at that and that is payback period. Right. The end of month one, at the end of month three, at the end of month six at the end of the year, how much has been recouped? Are you profitable on that user, that unit? So we are certainly staring at that lifetime value in terms of what is that customer worth over the three years that they've been a member. We have a estimate and a number there, but it's just not doesn't give us the ability to make any decisions around it. So it's just not practical from a day to day management of the business. We do spend a ridiculous amount of time kind of understanding retention at various points in our customer's journey. And it all starts with who's coming into the app. We spend a lot of time defining at a very granular level who are the relevant Personas for Ladder and the programs that we have we call them teams. Teams are led by a coach. Each one of those teams represents a unique Persona, a unique workout style that we are speaking to directly in creative that's aimed at that particular audience. So we're very, very focused on speaking to the right user. Users that we know are more likely to find success and long term success with Ladder even before they're in the app. And we use the quiz which we talked about in the last podcast, which collects a handful of questions to understand the fitness profile of a lead coming through, how many workouts they're doing, what modalities they like, what equipment they train with, where they want to work out. And we have a really good sense in real time who's coming through our funnel. And we cater to multiple Personas and we can see that in real time. On one side of the spectrum we have Pilates influenced at home with a dumbbell with a lot of women who are newer to strength. On the other side we have advanced gym goers, full access to equipment and machines. They know what they're doing when they show up and they're looking for an easier way to plan the workout itself. So very, very different Personas that we're speaking to uniquely in different creatives on social platforms. So step one is getting to the right people and really making sure that you understand the pain points and how our solution addresses those pain points at the Persona level and the quiz and our marketing is all geared towards that. In the app itself, we have a seven day free trial. We intentionally don't ask for a credit card up front, which we didn't know was unique when we launched. Turns out it's pretty unique. We just had a hunch that as a consumer oriented team, it's a better experience. We launched the business in the middle of COVID There was an app being built every single day in our space. It was very hard to stand out to the capital markets, it was very hard to get the consumer's attention. And we knew we had a superior product from very early on in our life cycle as a business. So we wanted to create a entry point into the app with little to no friction, like let's use the product to move people through the funnel, to do the selling, to work people through one or two workouts. Then ultimately if that happens, the likelihood to pay is very high. So we use the product to convince not getting them to pay and then hoping that something happens after the fact. So we spent a ton of time and continue to spend time iterating on that experience of what happens when you come into the app, what's the first thing you see? How do we get you through the first workout in the right program as quickly as possible? How do we get you through a second workout? How do we introduce these features that aren't typical in fitness apps? We have chats and social oriented experiences that are in other apps like us. So we have to figure out the right moments to introduce these experiences and to make sure that we don't overwhelm our members who's coming in with some context but not committed yet on ladder as a solution for them. So the trial is really, really important and we can, we can pretty accurately predict what will happen from a conversion perspective. A week one workouts perspective, month long retention perspective based on how the trial starts, the level of engagements, the number of workouts that they're completing, and that continues on into the, into the membership. Week one is an incredibly important kind of fork in the road for us. You know, we're solving for three workouts per week per member and most of the iteration is happening around that first week. If you're hitting that metric in the first week, the odds of doing it again the second week are exponentially higher. The odds of retaining at the end of one month if you're a monthly member are very high. And so we use workout completions, both in activation and first week and then beyond to understand the retention profile of our members and to understand the retention profile of cohorts of users that are coming in over time.

A (8:56)

In that first week, you've already collected a ton of data to understand kind of what Persona you have. And then you start seeing kind of the early signals of potentially being a good fit. How deep does this like segmentation and customization go? Are you showing different paywalls? Are you showing different offers? How deep do you go with that segmentation to get people to that place where they are going to start paying?

B (9:19)

Not on the happy path. So if you come in off the quiz, you download the app, you start a trial, you start completing workouts. We're not really trying to optimize or configure the paywall against what's happening. Most of our happy path conversions are happening in the first two weeks post trial expiration. Where we do segment on workouts and offers is if folks don't commit and don't convert right after the trial. And we do have a significant number of people in any one cohort that will convert down the road. Because fitness is very personal and just because it wasn't relevant today doesn't mean you won't have a need come spring, summer, fall, or the following January. So we have lots of shots at bat with our leads to convert them over time. And we'll think about offers and coupons and the right mix of urgency levers based on the number of workouts that they completed in trial as a proxy for how much context they have coming in. If you haven't completed a first workout, you really don't understand what ladder is. You don't understand the concept of a team, that it's programming, that it's progressive overload training, that it's not a library of workouts. You're on a team. You don't know if it's the right team or not. So we have to both configure that experience when they do pay to someone who has very little context. But even before that, we need to market to that user, knowing that they're not sold yet on the core value prop itself.

A (10:38)

How does that play out? I know you've been, and I think we talked about this either in person one time we were hanging out, or maybe even on the last podcast that you've been shifting a lot of your subscribers from monthly, which is what you use to kind of promote more to annual as a way to increase that ltv. So in the report we're going to be sharing like 14 day LTV and 60 day realized LTV. So how are you thinking about that kind of balance between monthly and annual and getting those payback periods reduced?

B (11:09)

Yeah, our payback periods are very, very tight. And we've over time increased the penetration of annual members in our subscriber base, which has been exciting. The first rev of that was on price and that was a bunch of testing and iteration and then we got to a place where we thought we had the right clearing price for folks that were willing to commit upfront. And then we did some experimentation around the paywall, anchoring to annual, putting incentives and added features into the annual membership to entice folks to commit on a longer timeframe. And then when we are close to the end of a trial for any user and you actually have completed a workout, we'll first introduce the annual offer as a hey, did you know there's a cheaper way on a monthly basis to purchase ladder? You get a significant discount, you get added features, and you're committing yourself to a year, which is good for for motivation and accountability. So certainly something that we've spent time on and it's now more annual members in our subscriber base than monthly. And that wasn't true the last time we talked.

A (12:11)

So in that segmentation, are you presenting the monthly to certain cohorts in the annual to others? Are you now more focused on that annual product and trying to drive as many users as possible to the annual or the fact that it is a kind of bigger one time commitment? Do you, do you have to kind of find that happy balance?

B (12:29)

Both, I would say. For folks that complete zero workouts in trial, we don't push annual. The context isn't there. We're expensive versus most apps in our space. You don't know enough on why the price is the price and why it's worth the value versus what you're solving for. So for zero workouts, we point to monthly. For those that have gotten through kind of key activation moments, first workout, second workout will introduce and socialize and lean into annual right before trial expires and right after trial expires. If that offer isn't taken or the conversion doesn't happen, then we start moving to monthly offers. But the monthly offers are all intra offers. They're just a discount on the first month that then clicks up to full price on month two. So it's to lower the hurdle to get into the product and to really experience it in the first couple weeks of membership and then it clicks up to full price after that.

A (13:23)

Are you making those same kind of offers to those folks who didn't complete a workout? I think I saw a promo. It was like $5 or $10 or something for that first month. Do those people that you offer that $5 offer to, are they less retentive than the people who were willing to kind of jump in and pay off the bat?

B (13:40)

One important point I would make is if you stacked up all the time on iteration between activation in the product and using our product and levers that we know are correlated to workout completions versus iteration on deals, it would probably be 90% product, 10% deals. So we spent a lot of time moving the needle on the percent of people that get through one workout, the percent of people that get through to workout. And the conversion rate is extremely high for folks that get through those moments. So we have a lot of atypical levers in our app versus fitness app. And I give you an anecdotal story is we have a feature where you can cheer on other folks who are working out. You open the app on the home screen, you'll see avatars on the top, you'll see a yellow vault circle and it represents how far is the workout that person is and you can send them cheers by double tapping and pick an emoji that you want to send. Seems very simple, but we correlated the number of cheers received to workout completions and long term retention. And so we realize the importance of this feature and people feeling like there are others that are doing it with them and feeling supportive that we now use that to figure out how do we incentivize and increase the number of outbound cheers that on the receiving end. You're more likely to receive a basket of cheers in your experience, especially early on in the trial. So we spent a lot of time thinking about what are the levers that we have to drive incremental workout completions that ultimately get people to the value prop of ladder of having a plan and ultimately help convert them or increase the likelihood that they'll convert. So most of our brain space has gone towards that. We do have built in kind of moments in our calendar where deals are more compelling than not. We'll spend a little bit more time thinking about the iteration side of that. We program workouts on six week cycles. We call them strength series and they become like these great entry point moments into the product where you can tell a story about urgency, saying you weren't here or it didn't make sense for you to join for the first string series. But tomorrow is day one and it's a great time to hop in. And we have a whole motion from a marketing perspective through the platform level, through our coaches in the app, all telling a story about the next series, what we're working on, what themes are at the platform level. That gives us the ability to then go into our database and tell a story on urgency and use discounting and coupon to lower the barrier to entry, to incentivize people to get in and experience the value prop. So we have moments where it's more impactful to experiment on the deal set. The $5 deal is a good, good example where folks who claim or take advantage of the $5 offer, it's only about half of those that are retained in month two and it's pretty consistent. Now this is the minority of conversions. The small basket of conversions is folks that didn't get through the product in the trial, but of that group about half are retained, but that half clicks up to full price. So they go 5 to 29.99. So in the first month it's a really nice spike in user growth and in the second month it's growth in ARR for that cohort even though it's a smaller basket of users that make it through the first month.

A (16:51)

All right, Greg, thank you so much for all those insights. Anything else you wanted to share as we're wrapping up?

B (16:56)

I would say if you want to see some of the learnings in real life that we just talked about, especially in trial and activation, I would try. Yeah, there's a no credit card trials we talked about, so very easy to get in there. I think if you get through that first workout, the odds of us seeing you as a number are very high. So would love to have everybody try the product and let us know what you think.

A (17:17)

Awesome. We're going to see a lot of like super fit subscription app folks next year. Well, Greg, thanks so much for joining me. It's a great conversation.

B (17:26)

I appreciate it. Thanks for having me.

A (17:29)

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