Strava's new subscription

I would call myself a pretty casual Strava user, recently I’ve increased my activity, running 4-5 times per week and about 5-10KM per run. The only features I really use are the run records and the matched runs functionality. On Friday morning I recorded my run as I usually do and went to check on how it compared to my previous efforts to find this:

Hm, looks like they changed their premium subscription model. I don’t have much experience with other running apps but this seems like a pretty basic feature. I wonder how people are reacting to this…

Oh.. not too well apparently.

Alongside this matched runs feature, there’s a fair few other previously free features that they’ve put behind a paywall:

• Overall segment leaderboards (Top 10 view is still free)
• Comparing, filtering and analyzing segment efforts
• Route planning on Strava.com, with better maps and support for segments
• Training log on Android and Strava.com
• Monthly activity trends and comparisons

They can’t have taken this decision lightly, and indeed this subscription change comes with this “message from the founders”. They say ‘Our plans puts subscription at the center of Strava’ - which hasn’t always been the case. Their subscription product felt like an afterthought for a long time, barely visible in communications and not accessible to buy via the App Store or Google Play. In their blog they retain a commitment to the free version of Strava, but I wonder, could they have handled this transition better? I want to propose a different subscription model for Strava that addresses their diverse user base in a more direct way, but doesn’t shy away from their business challenges.

Just so we're clear, I’m not affiliated with Strava in anyway, and I don’t have any insight into their internal workings, so please see this as just an interesting thought exercise.

Strava have this handy infographic that tells you what is now available in their two choices:

So what could they have done differently? Let's first discuss the situation Strava is in...

Strava's Situation

Strava launched in 2009, and according to Strava, they now have over 50 million users, with another million coming every month. No doubt they’ve also benefited from a surge since gyms closed due to coronavirus in recent months too.

But in spite of this huge customer base, so far they’ve failed to turn a profit. They need to monetise their user base better to become a sustainable business.

Strava's Response

Strava’s response is to provide two modes within the app - free, or subscription. At ￡47.99 a year, it’s competitive, with Adidas’ Runtastic coming in at ￡44.99 per year.

Alternative Proposal

Here’s what Strava’s subscription could have been:

Three subscription models

‘Amateur athlete': ￡20-25 a year - all the free features, plus matched runs, monthly activity trends and monthly activity trends and comparisons.

'Intermediate athlete': ￡30-35 a year - all the free features, everything for amateur athletes, plus connected device support, comparing, filtering and analyzing effort

'Pro athlete': ￡47.99 a year - the full suite of Strava features

Why structure Strava’s subscriptions like this?

Let me explain:

For any service, the user base usually segments into a number of different use cases, which people usually call ‘personas’. They are heuristics to group users into appropriate general categories. The subscription model I propose is based on the use cases of these three personas. These are usually informed by user data, reviews and surveys, but we’ll take some liberties here as only Strava has that data.

For Strava, you can imagine the user base breaks down somewhat like this:

Casual users - occasional usage, shorter runs, not training for competitions. Generally likes the social element and the feeling of improvement

Intermediate users - more regular usage, maybe is training for a marathon or has a very active lifestyle

Professional users - gets a great deal of usage out of Strava, tracks, measures and seeks to improve their own data, constantly exercising and consuming the data Strava provides. In mobile gaming, these users are typically called ‘Whales’

The user base typically breaks down like so - the majority of users fitting into the ‘amateur’group, a smaller subset fitting into the ‘intermediate’ group, and a small sliver fitting into the ‘professional’ group.

For each group of users, there are a set of features you can build that appeal to them. Amateurs have no use for detailed run segment breakdowns, or leaderboards for example. As a result, they are also willing to pay less for such functionalities, because the features they desire are worth less to them

As far as how accurate this segmentation of users is, it's possible that I am mistaken, and that Strava's users skew more professional and intermediate than I have here. However it's important to note that Strava has mass appeal it is not just an app for professionals. It is currently the #1 Health & Fitness app in the UK App Store currently, indicating its broad spectrum of support.

In the graph below, I provide an example of how Strava's new subscription proposal sits within their demand curve. We are optimising to capture the largest area under that demand curve. As you can see, whilst they capture some of the demand curve with their current subscription price, they're missing out on a bunch of users who would pay if the app was only a little bit cheaper. This includes users who fall into the amateur and intermediate athlete brackets I defined earlier.

But look what happens when you provide alternative pricing options for users. You're able to capture a larger area under the demand curve and sell more subscriptions.

Haven’t we seen this before?

Strava’s had a tiered subscription package like this before, which actually replaced their existing subscription back in 2018. A quick look at the wayback machine gives a bit more information into what this tiered subscription looked like.

Three subscription packs, targeting three use cases: training, safety and analysis with a bunch of associated featur. They used to cost ￡18.99 each, or you can buy them all together for ￡47.99, the same cost as the new subscription.

So why didn’t this approach succeed, why did Strava feel they needed to revert back to their existing premium model after only 2 years and risk upsetting their users by making previously free features premium? Also, what’s different between this approach and my proposal above?

Why the previous tiered subscription didn't work

Again, I have no special insight into the data the people over at Strava are looking at, but here's my opinion on why this approach failed:

The approach taken by Strava here seems to be targeted towards their highest usage customers - the ‘professionals’. But in doing so they are further segmenting their smallest customer base, and providing nothing of value to the broad customer base of amateur and intermediate athletes. (there may be some functionality of interest here to intermediate users, but the point remains the same)

The new subscription model is a step forward in the sense that they are now recognising that amateur and intermediate athletes are also expected/willing to pay for functionality, but my proposal above also recognises that they are willing to pay less for the functionality they actually use.

The old Strava tiered subscription also contained some pretty high-touch features like 'Summit Support - Enjoy expedited response times from dedicated Summit experts.' that seem pretty expensive to administer and not very scalable, another reason why they might have wanted to move away from this model.

Compared to this, the subscription packages that I've proposed instead target a subsection of each of the major user groups, amateur, intermediate and professional. Meaning that overall, there's a much wider possible subscription base than before that takes advantage of Strava's broad appeal.

Seems like a no brainer! Why didn't they do this?

Well, it's not always that simple. Gating features behind different packages may introduce too much complexity in the app. Users will be annoyed if they have paid for a lower package but can't access functionality in a higher package."

This is a possible consideration, trying to communicate to users who don't have a lot of time what is and is not premium can get pretty difficult.

If you're in the same situation, you can help this by:

a) Going for two packages, not one: This will reduce your ability to sort users but you get the benefits of capturing a greater area under the curve, and reduce the complexity in explaining and displaying your subscription packages.

b) Experiment with different methods of displaying and promoting your subscription packages within the app: with an app as big as Strava, there's no shortage of people to test new things on. You can even evaluate your efforts by the total revenue the experiments are driving. So you can be sure that you're making the right decisions when you come to roll it out to everybody.

Maybe Strava knows something we don't, and are sure that users in the lower categories won't be willing to buy even a cheaper subscription. I'm not too convinced by this argument, but reading the founder's statement they place a lot of emphasis on the fact that the subscription costs 'less than the price of two energy bars a month', which is a strange comment to me. I never consume energy bars, but I would probably subscribe to Strava if it was a bit cheaper. I'd wager that a lot of Strava's amateur and intermediate athletes don't consume energy bars either, so it does feel like they've not thought much about the less intense athletes in the crafting of their premium subscription. So perhaps they believe that there is not much value targeting lower-intensity athletes within the app.

Another reason why Strava may not want to take this approach is if their demand curve is inelastic, meaning that large drops in price have relatively little effect on the number of subscriptions users purchase.

This would mean that the excess overhead caused by implementing new subscriptions wouldn't have a material effect on the number of users. Then implementing tiered subscriptions as proposed here would add a lot of complexity in the app for relatively little benefit.

Part of the testing process could involve figuring out how steep your demand curve is and what price users are willing to buy at. If Strava really did have an inelastic demand curve like this, then that would put them in a pretty difficult position for sure.

Implementation

As far as implementation of this goes, I don’t know the specifics of how Strava put this into practice, but they seem to be following best practice for implementing subscriptions:

• Adding paywalls during regular usage of the app in a way that doesn't impact the core experience.
• Providing a 'sneak peek' behind the paywall that illustrates what you might expect to see after subscribing
• Trigger a premium upsell right after a user signs up, with a subscription screen that includes testimonials

If I were them, I would have sectioned off a subset of the user base to experiment with first and kept a close eye before rolling out the change to everyone. This lets you do three things:

• Discover what the likely conversion will be when you roll out the new changes without driving bad PR.
• Experiment with different price points for the subscriptions to see what is most appealing.
• Figure out how unhappy this will make users and make appropriate tradeoffs. ?

You can even play around with where and how your subscription lock appears, making sure you have the best approach before it rolls out to everybody. With 50 million users, there’s no shortage of people for A/B testing, and you can improve conversion rate significantly like this.

Conclusion

The approach Strava have taken may still work out for them. I hope it does, since I really like the app. Nothing precludes them from now taking steps to adjust their subscriptions to target their user base differently either. Whatever the case, I wish them success, the better they can monetise, the more they can improve the app.

I have no idea whether they’ve already tested multiple subscription options and found that the approach they took is the best. But it seems that their approach is not making the best use of basic pricing economics.

Especially for social apps like Strava, the network is very important, if there’s momentum towards a new app from a pricing mistake, it’s unlikely those users will ever come back.