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Measuring Your Freemium Business

Measuring Your Freemium Business. Ranjith Kumaran. What you’ll learn today: Your conversion rate is not too low. Your cancellation rate is not too high . But your cost-to-serve *is* too low. and how to tie it all together.

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Measuring Your Freemium Business

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  1. Measuring Your Freemium Business Ranjith Kumaran

  2. What you’ll learn today: Your conversion rate is not too low. Your cancellation rate is not too high. But your cost-to-serve *is* too low. and how to tie it all together.

  3. Myth #1: Freemium businesses only work if conversion rates are between 5%-10%

  4. Some real conversion metrics ~900K subscribers / 1000K active registered (2006) = $1B market cap ~200K subscribers / ~20000K registered (2009) = $0.5B market cap ~180K subscribers / ~5000K active registered (2010)(does not include corporate or pay-as-you-go customers, see math on slide after next)

  5. Registered user count is a vanity metric

  6. How we measure conversion at YouSendIt individual subscribers + pay-as-you-go users + corporate deployments activity (login or file send)

  7. Conversion dashboard #1

  8. Conversion dashboard #2

  9. Conversion dashboard #3

  10. Tip: how to get 100% conversion!

  11. Myth #2: A viable subscription service can only churn at < 2%

  12. Real monthly cancellation rates Cell phone 1%-2% Netflix ~4% Virus scanning ~10% Dating sites ~15% SaaS solutions 1%-20%

  13. Cancellation dashboard

  14. Up-sells at renewal time can lead to negative churn!

  15. Tips: reducing churn

  16. Myth #3: Cost-to-serve = hosting costs

  17. Cost-to-serve dashboard hosting costs + operations headcount+ customer service headcount + depreciation + credit card / payment fees + …

  18. Tip: cost-to-serve leverage can come from scale

  19. The only number that matters? Lifetime value (> acquisition + service)

  20. Lifetime value dashboard

  21. @ranjithkumaran

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