⚙️ Case Study #10: Patreon

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Happy Sunday Operators ⚙️

Everybody's got a thing.

That random hobby you thought no one knew about? I bet there is a creator for it. And I bet that creator has checked out Patreon to monetize their following.

Thousands of creators rely on Patreon to help connect with their audience (and get paid to do it!)

But what happens when Patreon fails the creators they are supposed to support?

In the waning days of 2019, Patreon found itself in the eye of a storm. Not once but three times.

The platform announced a minor change to its fee structure. Yet, this subtle shift set off a maelstrom of discontent that rippled through its network of creators and patrons alike.

Dubbed the "Fee-asco," the uproar was merciless. Creators, who had long trusted Patreon as a steadfast partner in their art, felt blindsided.

The new fee model proposed shifting transaction costs onto the patrons, a move that struck at the heart of the community ethos Patreon had nurtured. The platform's forums, social media, and inboxes overflowed with outrage.

But the troubles didn't end there. Shortly after, the platform experienced significant payment service outages. Creators who relied on Patreon for their livelihoods could not access their funds. The outage wasn't just a technical glitch; it was a breach of trust.

The final blow came when Patreon took a stand on content moderation, removing several controversial creators from the platform. The intent was to maintain a safe and respectful environment.

But the lack of clear communication and perceived arbitrariness of the decisions led to an outcry. Creators questioned Patreon's integrity, wondering if the platform valued the community it served.

For many creators, Patreon felt like a sanctuary where creators could survive without the ad-driven fickleness of mainstream platforms.

Patrons, on the other hand, cherished the sense of direct connection.

As the backlash grew, it became clear that the issue was about trust. Patreon's leadership, including CEO Jack Conte, faced a critical juncture. The trust that had taken years to build was eroding, and the path forward was uncertain.

Each of these incidents, in isolation, was a challenge.

Together, they formed a crisis.

A crisis of trust.

This was a pivotal moment for a platform that prided itself on being a more trustworthy alternative to big tech companies.

Patreon had to act, not to remedy the immediate issues but to rebuild the very trust that was the cornerstone of its relationship with millions of creators and patrons worldwide.  

What is Patreon?

Let’s take a step back to understand what Patreon stands for.

Patreon emerged from a need identified by musician Jack Conte.

Despite having a massive online following, Jack found the financial returns from his content dismal. This discrepancy between popularity and profitability sparked an idea.

Teaming up with his friend Sam Yam, they birthed Patreon.

Patreon would be a platform designed to connect creators with their most ardent supporters. The tool enables creators to receive funding from their fans on a per-piece or subscription basis.

This direct funding feature sidesteps the unpredictable nature of ad-based revenue models. This, in turn, provides a more reliable income stream for creators.

This model benefits creators and rewards patrons with exclusive content, behind-the-scenes experiences, and a closer relationship with the creators they admire.

This clear mission has propelled the platform. The growth metrics don't lie. With over 250,000 active creators and 8 million+ patrons, the platform has facilitated an ecosystem where over $3.5 billion has been paid out.

Trust is the linchpin of this creator-community relationship. Creators trust their patrons to support their endeavors. Meanwhile patrons trust creators to deliver quality content and maintain transparency about their creative processes.

Patreon's mission, growth, and business model are linked. Each element reinforces the others to create a platform that stands as a testament to the power of community-supported creativity.

So what happens to the business when you break that trust?

Why should you care?

How Patreon Plays the Dating Game Without Buying You Dinner First

Patreon's got a unique twist on snagging new creators. They don't toss cash at ads. Nope, they're all about the organic growth.

Here's the deal: creators promote their Patreon pages to fans, who then might become creators themselves.

This wild, self-feeding loop is where one creator's fan base becomes the seed for another's Patreon venture.

It's slick.

If you need a comparison, it's like how viral content spreads on social media but without the hefty price tag of a classic SaaS marketing blitz.

This method saves costs and strengthens the community bond.

How does Patreon lock in those top creators (you know, the ones raking in over a grand a month) once they join the ecosystem?

Patreon holds onto the credit card info of the patrons. If creators want, they can grab a file with their patrons' contact details, but they can't get their hands on the payment info.

SVP of Product Wyatt Jenkins noted:

This is why even if a creator tries convincing their fans to switch to another platform, chances are a lot of them won't bother switching their payment details. And let's not forget, a good chunk of Patreon's income is set aside to handle the costs of processing all those payments.

They take care of all the messy issues like expired cards, potential fraud, and double billing, so creators can focus on making great content.

Patreon also has a neat trick for reducing the fees paid to payment processors like Stripe or PayPal.

Imagine you're supporting five different creators with $3 each per month.

Instead of charging your card five separate times, Patreon groups the charges into one $15 charge at the start of the month and then distributes the cash to the creators.

The way Patreon handles processing fees is pretty straightforward – they deduct them from what the creators make, not from what patrons pay. Think about it: many patrons toss in just a buck every month.

If Patreon started tacking on extra fees for each small donation, folks might think twice before chipping in. Even though these little donations don't seem like much, they mean a lot to creators.

Especially those who rely on a sea of $1 contributions.

Patreon considered passing these fees over to the patrons with a 2.9% + $0.35 charge per transaction.

But, when creators raised their voices against it, Patreon ditched that idea, sticking to their original plan of taking fees out of creators' total earnings. Hence the name "Fee-asco".

Digging into the business impact of trust reveals whats at stake.

An analysis by The Economist magazine found that a company's value can drop by 30% if it loses the trust of its customers.

On the flip side, brands that earn high trust scores from their customers are three times more likely to keep those customers, even after making a mistake. In fact, 88% of those customers say they'd buy from the brand again, while 62% are likely to stick almost only to that brand.

If your primary acquisition strategy was to get users through word of mouth, imagine the business impact you would face if you lost the trust of your hardcore users.

So how did Patreon bounce back to regain their user’s trust?

How did they do this?

Vanessa Van Schyndel was the Head of UX Research at Patreon, where she led the creation of the Trust Score.

When mapping out how to move forward, Vanessa said:

Back in 2019, it turns out there was already a ton of research out there on trust—years and years of it. Among the experts in the field were Dr. Linda Childers Hon and Dr. James E. Grunig, who really delved into how communication shapes trust.

These two came up with what they call the Grunig Trust Dimensions, three key ingredients for trust:

• Competence: Can you actually do what you claim you can do?

• Dependability: Are you reliable and consistent in what you do?

• Integrity: Are you honest and fair in your dealings?

So how do you measure these three metrics?

The approach the team settled on was a longitudinal survey.

This monthly survey contained trust questions derived from the three elements of trust, service category questions (communications, content policy, payments, support, etc.), and open text questions.

It used a 1 to 5 “agreement” score for each question. If you answered a 4 or a 5 you agreed with the statement; below that you did not.

Here are some examples of statements about trust:

• Patreon treats creators like me fairly and justly.

• Whenever Patreon makes an important decision, I know they will be concerned about creators like me.

• Patreon can be relied on to keep their promises.

• I believe that Patreon takes the opinions of creators like me into account when making decisions.

• I feel very confident in the Patreon team’s skills.

• Patreon has the ability to accomplish what they say they will do.

• Sound principles seem to guide Patreon’s behavior.

• Patreon does not mislead creators like me.

• I am very willing to let Patreon make decisions for creators like me.

• I think it’s important to watch Patreon closely so that they don’t take advantage of creator’s like me.

• Patreon is known to be successful at the things they try to do.

• Patreon delivers on the expectations that they set.

The team decided it wasn't sufficient to just look at the responses as a whole; they also wanted to break down the results by how much creators were earning.

It turned out that creators had very different perceptions of the platform and its communication, depending on their income levels from the platform.

The survey they conducted helped them establish a "Trust Score" that could be monitored over time. This score provided detailed insights, allowing them to identify which aspects of trust were improving or deteriorating.

They shared these data and findings, along with qualitative feedback, during their Monthly Business Review.

Over several months, they observed various trends. Here are some key observations they made:

• Over-communication: When they revised their pricing structure, they put a strong emphasis on reaching out to creators early. This strategy significantly boosted their communication score.

• By increasing their support team, they managed to decrease both the waiting time and the queue length, which in turn, positively impacted their support dimension score.

• Introducing new features seemed to have little or no effect on trust levels.

• However, when they faced challenges or had to deliver unfavorable news, focusing on transparency helped improve their communication scores. Nonetheless, their dependability score suffered if the issue at hand was critical to the creators' ability to operate effectively on the platform.

As they dug deeper into the data, the folks at Patreon uncovered some intriguing insights about trust. It turns out that users who got cozy in online communities or had their very own account rep felt a whole lot more trusty-feely towards Patreon. Who would've thought?

This trust score is pretty handy, better than NPS for sure, but it's got its own bag of quirks:

1. Subjectivity: Trust is like pizza preferences—everyone's got their own take. So, this Trust Score might not catch all the nuances of how folks feel, especially when they slice and dice the audience into smaller groups.

2. Quantitative Overload: In their quest to turn trust into a number, some of the human, squishy bits might get lost. They did snag some open-ended feedback, but didn't go full detective on it. And let's not forget, this score's all about the here and now, not keeping tabs on the departed souls who've left Patreon behind.

3. The Score Temptation: When you've got a shiny metric, there's a sneaky temptation to game it rather than tackling the real messy issues. The Patreon team's aware of this metric minefield and is trying not to get too score-happy, focusing instead on using it as a compass rather than the whole map.

Patreon has opted not to set specific targets for the trust score. Instead, they utilized it to inform their broader strategy and decision-making processes as they continue to refine and enhance their platform and offerings.

After months of tireless work, quotes about the platform went from:

to this instead:

Notice the difference? Who would’ve thought that listening to your community would result in higher trust?