D2C Summit: How Strava built a subscription business within a social platform

Strava is a social platform for athletes, the largest of its kind which connects over 85 million athletes from all over the world. On the second day of the FIPP D2C Summit, David Lorsch, Chief Revenue Officer, Strava spoke with Robbie Baxter, author, speaker, trainer and advisor, Peninsula Strategies about how Strava built subscriptions into its platform from the beginning.

Lorsch began by explaining Strava’s philosophy, which is to define athleticism very broadly. “What we say is, ‘if you sweat, you’re an athlete’,” he said. “We connect active people every day, and give people fun ways to stay motivated – which means competing against yourself as well as others.”

Strava is designed for all kinds of sports and all kinds of devices, coming together as both a platform and an entire digital fitness ecosystem to connect athletes with what motivates them best. 

Freemium model with athletes at the centre 

Unlike other social platforms or networks which are primarily ad-based, Strava used subscriptions as its main business model from early on. “Our primary customer was always the athlete,” explained Lorsch. For this reason, a freemium model took shape, making it as easy as possible for people to join.

Strava has also experimented with complementary models to its subscription business, such as “Challenges with Strava” in which a sponsor or brand like Lululemon can challenge athletes to achieve a goal. As Lorsch explained, these are 100 per cent opt-in, because the aim is always to serve the athlete.

Early considerations for subscription model

Back when Strava first launched subscriptions, their paid offering included such features as “relative effort”, which tells an athlete how each activity they do impacts their overall fitness. “It is part of the subscription because it isn’t social, it’s more to do with the individual athlete,” explained Lorsch.

“However, when we asked people why they subscribed or not, they would generally tell us that it was because they love Strava – not because of some individual feature. People who didn’t subscribe said that they liked the free product so much, they didn’t see the point in subscribing.”

What became clear, then, was that Strava had a great product that was highly valued by its athletes, but the value proposition of the paid version was unclear to people. At the end of 2019, the company decided to shift its approach to the paywall to try to capture more of the most engaged customers.

“We looked at some of the models used by other apps and broke it down into different zones. There’s the add-on model (like LinkedIn). There’s the freemium model, with an obvious split between what’s free and paid (such as Spotify). Then there’s the hard-cap, limited-access model (like Dropbox or the New York Times). We didn’t feel this last one was good for Strava because it would really limit how much people could get involved, so we landed somewhere in the middle, at the freemium model.

“We realised some of our core competitive features, like segments and leaderboards, made sense to go behind the paywall. But we knew it was a risk to us because it was such a beloved feature and our athletes had actively contributed to it.”

Launching the paywall during the pandemic 

“We were very aware of the phenomenon that when something is free and you make it paid-for, it’s very different to when something is paid-for and the price increases,” said Lorsch. 

In spite of these challenges, however, Lorsch explained that they still came to the conclusion that the real value was in what Strava layered on top of the data inputted by users, and that was what they needed to talk up. In May 2020, in the heart of the global pandemic, Strava announced that they would be moving some features behind a USD$5 per month paywall and adding lots of new features as well.

“It wasn’t just moving the deckchairs around, we wanted to show subscribers that we would continue to invest in them,” said Lorsch. One example is the release of the Route feature in which people can plan a run of a specific length in an area they’re potentially unfamiliar with.

Outdoor activity plummeted during the first wave of Covid-19, but in countries like the US and the UK people were working from home and many of them were looking for ways to exercise outside with more purpose. In came an increased role for Strava, and a chance to connect with new athletes.

Success: what has changed? 

“Our product development orientation is very much towards our subscribers,” said Lorsch. “We want to show them we want to keep them around- that we will keep investing in the proposition they are paying for. We want to make it an exciting product that athletes will rave about.”

Recognising that not everyone will become a subscriber, the company continues to think about what to offer their broader network of free users as well. “They might well be the future subscribers of tomorrow, so keeping them engaged is important.”

Typically, the vast majority join the platform for free and become activated by being connected with other athletes. “We introduce people to a subscription via a free trial,” Lorsch explained. There is therefore a high focus on engaging and activating athletes throughout their free trial. “We want to get them to use the subscription features within their first 14 days of the trial. How many have they used? That’s an important metric for us, because it strongly correlates with conversions to paid subscriptions.”

Strava aims to get people, as part of their subscriber “growth life cycle”, to become ambassadors of sorts for the brand. “We want them to become evangelists,” he said. Challenges with other athletes (who must also be subscribers) are one such feature which is designed to support the kind of behaviour which will lead to subscribers promoting the value of a paid subscription to other users and friends.

Building something global out of local activities

Asked about how Strava straddles its global reach with the highly localised, individual nature of exercising, he commented: “We’ve definitely benefited from the notion that it’s better if your friends are on it. Some kind of fire is often lit by external factors. Take the UK and Brazil, two of our biggest markets – these really lit up after the Olympics, when people became excited about sport.

“We try to take that initial fire and accelerate it. Our playbook is about how we use influencers in the community, prominent (not necessarily professional) athletes who are well connected can help amplify Strava and spread the word.”

Only two or more connections with other athletes are necessary for a good level of engagement, Lorsch added. It isn’t a platform where people are following hundreds of others.

Strava also gets coverage from other outlets. At the end of the year, Strava releases information about the trends they’re seeing called The Year in Sport. This results in a lot of coverage and interesting stories about behaviour change, for example as a result of Covid-19.

“We’re moving towards a model of marketing our subscriptions according to the sports calendar at the regional level and localising our pricing,” said Lorsch. “At the moment, it’s not very localised – there are a lot of places in the world, we’re actually overpriced. So we want to look at this.” 

Sports are also highly regional. In Japan, a specific kind of relay-racing called Ekiden is a popular way to go running. It is a format that Strava could build on in Japan, but perhaps not elsewhere. 

Advice for others on subscriptions

Overall, Lorsch advises that when it comes to subscriptions, clarifying your model and ensuring you know what you are offering is important. “Also, simply because something is social in nature, it doesn’t mean it has to be free,” he added. “Make it clear that you are building things for your subscribers specifically.”

On churn, Lorsch commented: “Getting subscribers to be active and engaged with the features which we know are correlated with retention, rather than ‘intervening’ at the end, is what we focus on.

“We don’t want to make it hard for people to cancel. But we do want to know how we can win them back. Paid members don’t disappear, they still remain part of the free network. So we can always try to get them back.”

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