In plain words
An intro offer is the deal on a subscription's first order: 20% off the first box, a free gift, the first month free. Its job is to get a visitor to start. From the second order on, the regular subscription price applies.
Intro offers differ in three ways at once. They cost different amounts on the first order. They convert at different rates. And they attract different subscribers, who stay for different lengths of time. The richest intro often converts best and retains worst, so the three effects have to be weighed together.
Formula
- Value of a subscriber = first-order margin under the intro + Σ renewal margins on that intro's renewal curve
- Profit per visitor = conversion × subscriber value − cost per visitor
Worked example
Two intros for one coffee subscription, with every visitor costing $0.90 to bring. A first-order discount with a gift mug converts 3.0% and wins a subscriber worth $53.29 over a year. Plain subscribe-and-save converts 2.4%, and its subscribers, who stay longer, are worth $70.77.
The engine puts the richer intro at $0.70 per visitor and the plain one at $0.80. The intro that converts worse earns more, and the other would need 6.3% more subscribers to match it.
The example order
A $40.00 bag of coffee, shipped free, every cost counted
2 declared kinds cost nothing on this option
| Step | Grain | Amount |
|---|---|---|
| Revenue | – | $40.00 |
| Cost of goods | per unit | −$12.00 |
| Pick and pack | per order | −$1.18 |
| Packaging | per parcel | −$0.50 |
| Shipping label | per parcel | −$7.50 |
| Card fee per order | per order | −$0.30 |
| Refunds | percent | −$2.00 |
| Card processing | percent | −$1.16 |
| Contribution margin | – | $15.36 |
| 2 kinds costing nothing | – | $0.00 |
Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost.
The best-converting intro is not the best intro
An intro that brings more subscribers at a larger first-order loss, who then leave sooner, can lose to a plainer one on every measure that matters. Judge intros on profit per visitor over a fixed horizon, with each intro's own retention.
Using it
When you test intro offers, keep the test running long enough to see the first renewal. That is where intros differ most. Record which intro won each subscriber, so renewals can be credited to it months later. And cap what an intro can combine with: an intro discount on top of a sale is how first orders end up below cost.
In Offer Suite
Offer Suite's intro offer comparison gives each intro its own first-order margin, renewal curve and conversion against one cost per visitor, so an intro that converts better is credited with buying its subscribers more cheaply.
Source: Offer Suite's margin engine.