Quick question: how do you think startups should approaching cohorting the right users for these promos > avoid canalization of standard purchase behavior at standard prices?
Anywhere from 70-90% of your purchases/trial starts) likely come during onboarding or the first session. (If that's not the case you are the exception :) )
Based on that, I'd say anytime after the first few days you should try discounting. Most of these users are likely lost anywhere, so there is less risk.
You should try different discount levels to find the right balance of conversion vs revenue. A lot of times 50% off provides such a large CVR boost that it outweighs the larger discount.
You can see that a lot of Fabulous' strategy is offering a longer trial to entice you, so they're not discounting too much. And then they insert offers like $0.99 for the first month, this is tricky because it's essentially the same as starting a trial, but it feels different.
To be honest, there isn't one right answer. Keep trying different offer levels and use A/B testing to understand which gives you the larger revenue increase.
You can also figure out how to model out renewal rates with discounted subscriptions, if only the first month or first year is discounted, you'll likely see lower renewal rates, so you can't use your standard renewal projections to model out Y2 revenue. Ideally, you can aim for revenue increases in the first few months vs making decisions based off of longer-term revenue. It's makes your feedback loop too long for easy optimization.
Love it!!! Another great post 👏
Quick question: how do you think startups should approaching cohorting the right users for these promos > avoid canalization of standard purchase behavior at standard prices?
Thanks, Seth!
Anywhere from 70-90% of your purchases/trial starts) likely come during onboarding or the first session. (If that's not the case you are the exception :) )
Based on that, I'd say anytime after the first few days you should try discounting. Most of these users are likely lost anywhere, so there is less risk.
You should try different discount levels to find the right balance of conversion vs revenue. A lot of times 50% off provides such a large CVR boost that it outweighs the larger discount.
You can see that a lot of Fabulous' strategy is offering a longer trial to entice you, so they're not discounting too much. And then they insert offers like $0.99 for the first month, this is tricky because it's essentially the same as starting a trial, but it feels different.
To be honest, there isn't one right answer. Keep trying different offer levels and use A/B testing to understand which gives you the larger revenue increase.
You can also figure out how to model out renewal rates with discounted subscriptions, if only the first month or first year is discounted, you'll likely see lower renewal rates, so you can't use your standard renewal projections to model out Y2 revenue. Ideally, you can aim for revenue increases in the first few months vs making decisions based off of longer-term revenue. It's makes your feedback loop too long for easy optimization.