How many people retain their subscription after the free trial?

Be a bit wary about raw conversion of free-to-paid as an absolute metric. Driving it up will certain increase revenues in the short term. But perhaps not in the long term.

In companies I’ve worked with or invested in, I’ve seen the numbers range from 2% to 30%+. That’s a huge range. And …

30% sounds better. But is it?

  • Not if you want to maximize the number of folks exposed to your product. Few folks are trying and not buying. Are you sure that’s good?
  • Not if you want to maximize the ability of your free users to spread the word. With fewer of them, you’ll have fewer ambassadors.
  • Not if it deters folks from even trying in the first place. A variant of the first point. If the “choke” is so tight that 30% of folks convert to paid, it is likely scaring some folks away from trying in the first place. E.g., forcing folks to enter a credit card before even trying is a classic trade-off here.
  • It can let marketing off the hook for brand and awareness growth, so raw new user grow may slow. If you make conversion % a top goal for marketing, well then now marketing’s job is not as much to drive the raw number of top-of-the-funnel users. So that’s where they will focus. Not #1 on getting more folks just trying the product.

The more you try to push up the % conversions, in isolation, the more you’ll push people away from trying in the first place. At least, in many cases.

Is that what you want? Especially, in the early and middle days? Are you sure you don’t want the maximum number of users and potential buyers at least trying your product? Are you sure you don’t want that, rather than them trying someone else’s product?

It is complicated. Working to improve conversions of course, in isolation is good. But be aware of the trade-offs to focusing on this as your core KPI on a free trial / freemium funnel.

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Published on August 5, 2019

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