Effects of freemium, money back guarantees, and free trials

Two conversion articles I read this weekend have stuck with me through the day on Monday.

First, Indy mobile app developer Shevub Hussain describes how moving from a paid-only model to freemium for his (really handy looking) Comfy Read app killed his revenues.

He made the mistake to think that his users were all power users. He had a great conversion rate on the paid app, and though he increased it significantly with the freemium version, he got almost no in-app conversions (people to actually pay him).

He gave away way too much with the free version and he didn’t properly understand his audience. There are valuable lessons to be learned here for WordPress product makers.

The second article is by Neil Patel, who sells a course on his popular content marketing blog. Neil tested a handful of variations of refund policies and free trials.

  • To sell the Traffic System for $197 with no free trial and no money back guarantee.
  • To sell the Traffic System for $197 with a 30-day money back guarantee.
  • To sell the Traffic System for $197 with a 7-day free trial and requirement of a credit card upfront.
  • To sell the Traffic System for $197 with a 7-day free trial, requirement of a credit card upfront and offer of a 30-day money back guarantee.

The 30-day money back guarantee predictably outperformed the no trial / no guarantee option. And the 7-day trial outperformed the guarantee. But the combination of the trial and guarantee didn’t really matter.

These results didn’t shock me, though I stupidly haven’t really done anything like it on my own site. What I liked is that Neil also shared some stuff he would do with additional rounds of testing, and some are good ideas you might want to steal to test yourself:

  1. I would test a $1 trial (versus a $0 free trial)ย as that could potentially decrease the failure rate of credit cards going through.
  2. I would create an email drip sequence that would go out to all of the people whose card didnโ€™t go through on the free trial as that could potentially help increase revenue.
  3. I would survey all of the people who asked for their money back or cancelled their trial to find out why and see if I could modify the Traffic System to increase their overall satisfaction with the product.
  4. I quickly learned that a lot of my buyers are people in international countries like India, so I would test payment plans instead of just charging people $197 upfront. This should help increase the number of people signing up as well as continuing the trial.
  5. If you give your customers everything they need before the free trial is over, there is no need for them to continue the trial. In the future, I would like to test giving people half of the Traffic System during the trial and second half after the trial is over. Or I would test giving them the full system on day one but providing bonuses over the next 30 days to entice them to continue to stay on. I think this would decrease cancellations and refunds.

These could obviously have various implications, but perhaps you can use one or more of these in your own website.

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