Pandora Targets Streaming Media’s Next Hot Segment: The Military

May 17, 2019

Tony Coray

A smiling soldier listens to Pandora. The streaming media company is acquiring loyal subscribers by marketing to the military with exclusive discounts on their premium plan.

Streaming media companies understand the power of marketing to students. Leading brands like Tidal, YouTube, SoundCloud, and now Pandora are using student discounts to attract younger customers and motivate freemium users to convert to paid subscribers.

But students aren’t the only coveted demographic in the subscription economy. Marketing to the military also has great potential. The segment has 37 million members with $1 trillion in spending power. That’s a lucrative segment for streaming media companies to tap into.

Pandora saw the opportunity—and seized it.

Discovering the Power of Gated Offers

Since it launched its platform in 2000, Pandora has pioneered the concept of automated music recommendations and has amassed a vast surplus of freemium users. But as the streaming media industry has evolved, competition for loyal, paid subscribers has become fierce.

And when SiriusXM recently acquired Pandora and declared its commitment to “delivering great content that drives usage and engagement on Pandora,” the challenge became clear. Pandora needed a new marketing strategy to capture customers who stayed for the long haul. That’s when the company turned to gated offers.

Gated offers are exclusive promotions targeting specific customer segments, and they have a powerful effect on people of all ages. According to our survey, 54% of consumers say a gated offer would make them feel rewarded; 47% would feel excited, and 35% special.

Gated offers also impact purchasing behavior. Receiving a gated offer would make four out of five consumers more likely to choose a brand, and nearly three out of five consumers make a purchase sooner.

Fifty-four percent of consumers say a gated offer would make them feel rewarded.

How Pandora Is Leveraging Gated Offers

Retailers have a long and successful track record of marketing to the military with gated offers. American Giant targeted the military with a gated offer and generated 6,000 unique new orders. And the engagement rate for Lowe’s military gated offer program was 2x – 3x higher than any other campaign.

Brands across all industries have also been marketing to students with gated offers. For example, Spotify and other subscription-based companies have been using gated offers to entice students with a discount and convert them to full price when they graduate.

But Pandora recently joined Tidal as one of the first streaming media brands to target both segments.

SiriusXM already had a gated student offer, and Pandora followed the company’s lead and launched its own program giving US college students access to Pandora Premium for $4.99/month. At a 50% savings, the deep discount is on par with the industry, and meets younger consumers’ demands for lower pricing.

It’s a smart move for Pandora. While college students are the ideal market segment for streaming music, they’re also the group with the least amount of disposable income. This makes price a deciding factor in choosing a service, and that’s good news for Pandora: 91% of students said a gated discount would make them more likely to shop with a brand.

But Pandora didn’t stop with students. The company also decided to extend a discount to the military segment. Pandora’s gated military offer gives active-duty military, veterans, and their family members access to Pandora Premium for $7.99/month—a 20% savings. It’s a move that’s guaranteed to pay off.

Marketing to the Military with Gated Offers Works

The military market votes with their dollars, making gated offers an increasingly popular strategy to acquire new customers. Ninety-five percent of military members are more likely to shop at a company that offers a military discount.

Gated offers are also a powerful way to build loyalty among the military. Members of the military strongly identify with their community, and appreciate and evangelize brands that recognize them with exclusive discounts. Seventy-six percent of the military say they learn about military discounts through word of mouth.

With this level of interest from consumers, it’s no surprise that marketing to the military with gated offers is paying off. After launching a 15% Hero Discount, subscription company Kettlebell Kitchen (KBK) saw an 83% weekly increase in new military and first responder customers, and 6x jump in subscriptions.

Ninety-five percent of military members are more likely to shop at a company that offers a military discount.

Gated Offers Need Digital Verification

To make it easy for students and military customers to confirm eligibility for the offer, Pandora uses SheerID, which has become the de facto digital verification platform for the streaming media industry.

Eligible listeners simply enter a few pieces of information, such as email and university or branch of military, and SheerID verifies them instantly. Listeners receive a unique promotional code that’s automatically applied to their account, ready to be used at checkout.

In the rare cases where more information is needed, listeners can upload proof of status, such as an active college ID or military credentials, and SheerID verifies their eligibility manually.

The process is seamless and entirely in-brand, launching the new customer relationship with a highly positive experience. And because verification is an opt-in process, Pandora can use the data it collected to nurture listener engagement and build greater loyalty—with listeners’ consent.

In addition to making marketing to the military easy, digital verification protects Pandora’s gated offers by ensuring only eligible listeners can redeem them. This prevents any losses caused by generic discount codes. When these codes get shared virally, it can lead to discount abuse rates as high as 35%.

A Proven Strategy to Acquire Subscribers and Fight Churn

Acquiring customers is expensive. By some estimates, it costs five times as much to attract a new customer as it does to keep an existing one. And churn is rampant. Zuora reported that more than one-third of media subscribers having cancelled a subscription.

Leading brands in the subscription economy are using gated offers to effectively address both issues.

Josh Volkening, KBK’s head of marketing, confirmed the success of the company’s gated offer program. “Implementing a gated offer program with SheerID has helped us acquire a record number of new customers and enabled a level of growth we never would have been able to manage manually,” he said.

Also, gated offers help subscription-based companies fight churn. Pandora’s programs demonstrate the company’s commitment to students and the military, which facilitates their loyalty. And the enduring discounts keep the value of their subscriptions high, which deepens their loyalty even further.

The numbers back this up. Streaming media companies using SheerID report that graduating students with discounted subscriptions convert to full price at rates as high as 98%. Brands that implement gated offers with SheerID consistently report a 3x increase in conversions, 2x increase in repeat purchases, and ROAS as high as 20:1.