When Adobe introduced its Creative Cloud subscription service in April 2012, it was unclear how consumers would respond. Would they really adopt Adobe's new online service over the traditional boxed product?
Following its release, Adobe's average transaction value dropped from $93 in March 2012 to $40 one year later, reflecting the introduction of the lower-priced offering.
But within a year of the launch, customers had grown 244%, resulting in 50% growth in revenue.
Most importantly, these new customers were sticking around.
As we see in the cohort analysis above:
- There was an immediate boost to retention.
- +76% in month 1 retention between April and May 2012 cohorts
- This boost persisted as these cohorts aged.
- Month 2-12 retention increased an average of 125% each month
- Across cohorts, retention increased in month 12 when customers renew their annual subscriptions, though the effect has been weaker for month 24.
- Some cohorts are stronger than others (e.g., Nov-Dec 2013).
- More recent cohorts have even stronger retention.
With this boost in revenue and healthy customer retention, it's no wonder Adobe decided to scrap its shrink-wrapped product business altogether and go all-in on Creative Cloud.
To see how long customers need to retain in order to make up for lower initial values, request a demo.
Note: Data reflects consumer spending and is not representative of business spending.
A customer is "new" once - when he/she make the first payment - and "returning" after he/she has made made the first payment. ↩︎
We calculate retention as the percentage of the cohort that makes a payment n months later. ↩︎
This roughly corresponds to the first promotion end dates for Adobe's Photoshop Photography Program ($9.99/mo with a 1 year commitment). Adobe extended their offer a few more times before phasing out the program in favor of their Creative Cloud Photography plan. ↩︎