Stop Relying on Discounts: Ad Content That Builds Subscribers and Reduces Churn

Dr. Raphael Thomadsen, Professor of Marketing and Chair of the Marketing Area at Olin Business School, Washington University in St. Louis, shares insights from his research study, “The Impact of Advertising Content on Customer Acquisition and Retention for Subscriptions of Physical Goods: Insights from a Field Experiment.” Dr. Raphael Thomadsen (Olin Business School, Washington University in St. Louis) explains why many physical-goods subscription programs lean heavily on costly discounts, and why that approach may attract the wrong customers for long-term growth. Drawing on a large-scale field experiment with a major pet products retailer (8M+ customers over four weeks of randomized email campaigns), his research tests whether non-price messages tied to real customer motivations such as convenience (“let us do the heavy lifting”) and reminders (“set it and forget it”). can outperform price-only appeals in both acquisition and retention. The findings show that motivation-based messaging beats discount framing, partly because it “matches” the product to customers who genuinely value subscription benefits and therefore stay longer, while price-focused messaging tends to recruit more price-sensitive subscribers who are quicker to cancel after the initial deal ends. This podcast is brought to you by Global Management Consultancy. For more information, please visit www.globalmanagementconsultancy.com. Disclaimer: A. The background music incorporated in this video is the intellectual property of its respective developer and is protected under applicable copyright laws. Notwithstanding that it is a free-to-use version, Business Talk, Global Management Consultancy, and Deepak Bhatt do not own, and expressly do not claim, any rights, title, or interest in or to this music. B. Dr. Raphael Thomadsen shared insightful perspectives from his research, “The Impact of Advertising Content on Customer Acquisition and Retention for Subscriptions of Physical Goods: Insights from a Field Experiment”, during his conversation on the Business Talk podcast channel. The uploaded video contains copyrighted content, so changing any graphics, music, or on-screen appearance of the author or host is not allowed.