4 ms·

It sounds like the freemium experiment was a success (11% conversion rate), and the failure was your lack of preparedness to scale to support the extra load it

It sounds like the freemium experiment was a success (11% conversion rate), and the failure was your lack of preparedness to scale to support the extra load it brought with it. The 60 customers that were lost during that time period - were they pre-existing customers from before the freemium switch, or new customers? Did they leave because the technical issues or because they saw the freemium version and decided they didn't want to pay any more?

jakejake 11y ago
My company has spent weeks agonizing over price changes and different features for different subscription levels (including a free level). We run all kinds of numbers and projections but at the end of the day you don't always know for sure until you flip the switch. You can do all kinds of surveys and talk to your customers. But you just don't know exactly how may people are going downgrade, upgrade, sign up, or even care about your changes. The author was certainly a victim of their own success, as their conversion rates are pretty good. They just need to find limitations for the free account that doesn't consumer more resources than they can support.
nickbauman 11y ago
Agree: 11% is a enviable conversion rate! Very impressed with this!! They were emailing Nk users and tweeting Nk more. So let's say you reached (Nk + Nk) + .25 users. Consider a response rate of .3 and you come up with a few thousand more users. Can your process handle a few thousand more? You can test for that. You can also calculate the cost of that increase overall to your company. Seems pretty straightforward.
Shpigford 11y ago
Pre-existing and they left because of tech/service issues. We interview all outgoing customers. And I agree our lack of preparedness to scale was part of this, but it's shortsighted to only look at a simple conversation rate for determining success. "Success" is relative and we define it on a higher level than just conversion. The fact is, software isn't infinitely scalable...or rather it takes orders of magnitude more resources for it to approach that level. There's a certain inflection point where the time spent "getting prepared" simply outweighs the potential benefits. We could have spent years "getting prepared" but there was a point where we just had to say "ship it"...and that's what we did.
- encoderer 11y ago
  Can you share your experience on getting this feedback during a cancelation? We have mixed success getting users to share. It's about 50/50 for us. We have even lower response rates from users who have finished their trial without conversion.
  - Shpigford 11y ago
    At the crux of it is not allowing self-serve cancellation. I know, boo, hiss, burn us at the stake. ;) We wrote a little bit about that here: https://baremetrics.com/blog/how-we-reduced-churn https://baremetrics.com/blog/how-we-reduced-churn But ultimately we exchange at least a few emails with every cancellation and try to understand exactly why we were no longer addressing their need. 99% of people are extremely willing to help out here. Also, Exit Interviews: http://www.extendslogic.com/business/jobs-to-be-done-cancel-interviews/ http://www.extendslogic.com/business/jobs-to-be-done-cancel-...
    - encoderer 11y ago
      Thank you. We're on the same page wrt emailing us to cancel. A quarter of our churn is actually users who have their cc declined and do not fix it, despite nag emails, in two weeks. I don't think we've ever heard back from a single one of these users. For the other 75% I guess we should just be asking more questions before servicing their request.
      - mattm 11y ago
        For the cc declined customers, you may want to look into http://churnbuster.io/ http://churnbuster.io/
      - aculver 11y ago
        Hey, I used to run a SaaS product that solved the failed payment problem very specifically (http://churnbuster.io http://churnbuster.io) and I'd recommend you extend that 2 week period out to something like 4 to 6 weeks. Some of our most successful customers were sending out 7-8 emails over a 6 week period. Every business is different, so YMMV, but it might help. A bunch of other thoughts on the subject that may be helpful to you here: https://www.quora.com/What-are-the-industry-average-rates-for-involuntary-churn-on-credit-card-subscriptions https://www.quora.com/What-are-the-industry-average-rates-fo... .

jakejake 11y ago

My company has spent weeks agonizing over price changes and different features for different subscription levels (including a free level). We run all kinds of numbers and projections but at the end of the day you don't always know for sure until you flip the switch. You can do all kinds of surveys and talk to your customers. But you just don't know exactly how may people are going downgrade, upgrade, sign up, or even care about your changes. The author was certainly a victim of their own success, as their conversion rates are pretty good. They just need to find limitations for the free account that doesn't consumer more resources than they can support.

nickbauman 11y ago

Agree: 11% is a enviable conversion rate! Very impressed with this!! They were emailing Nk users and tweeting Nk more. So let's say you reached (Nk + Nk) + .25 users. Consider a response rate of .3 and you come up with a few thousand more users. Can your process handle a few thousand more? You can test for that. You can also calculate the cost of that increase overall to your company. Seems pretty straightforward.

Shpigford 11y ago

Pre-existing and they left because of tech/service issues. We interview all outgoing customers. And I agree our lack of preparedness to scale was part of this, but it's shortsighted to only look at a simple conversation rate for determining success. "Success" is relative and we define it on a higher level than just conversion. The fact is, software isn't infinitely scalable...or rather it takes orders of magnitude more resources for it to approach that level. There's a certain inflection point where the time spent "getting prepared" simply outweighs the potential benefits. We could have spent years "getting prepared" but there was a point where we just had to say "ship it"...and that's what we did.

encoderer 11y ago
Can you share your experience on getting this feedback during a cancelation? We have mixed success getting users to share. It's about 50/50 for us. We have even lower response rates from users who have finished their trial without conversion.
- Shpigford 11y ago
  At the crux of it is not allowing self-serve cancellation. I know, boo, hiss, burn us at the stake. ;) We wrote a little bit about that here: https://baremetrics.com/blog/how-we-reduced-churn https://baremetrics.com/blog/how-we-reduced-churn But ultimately we exchange at least a few emails with every cancellation and try to understand exactly why we were no longer addressing their need. 99% of people are extremely willing to help out here. Also, Exit Interviews: http://www.extendslogic.com/business/jobs-to-be-done-cancel-interviews/ http://www.extendslogic.com/business/jobs-to-be-done-cancel-...
  - encoderer 11y ago
    Thank you. We're on the same page wrt emailing us to cancel. A quarter of our churn is actually users who have their cc declined and do not fix it, despite nag emails, in two weeks. I don't think we've ever heard back from a single one of these users. For the other 75% I guess we should just be asking more questions before servicing their request.
    - mattm 11y ago
      For the cc declined customers, you may want to look into http://churnbuster.io/ http://churnbuster.io/
    - aculver 11y ago
      Hey, I used to run a SaaS product that solved the failed payment problem very specifically (http://churnbuster.io http://churnbuster.io) and I'd recommend you extend that 2 week period out to something like 4 to 6 weeks. Some of our most successful customers were sending out 7-8 emails over a 6 week period. Every business is different, so YMMV, but it might help. A bunch of other thoughts on the subject that may be helpful to you here: https://www.quora.com/What-are-the-industry-average-rates-for-involuntary-churn-on-credit-card-subscriptions https://www.quora.com/What-are-the-industry-average-rates-fo... .