Consumer Adoption Of Freemium Products And Services - iYogi


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Can giving away a product or service for free, actually send sales soaring? The Freemium debate is heating up and this new survey from iYogi Insights offers you a ringside view on how people are adopting Freemium.

iYogi Insights is a research initiative launched by iYogi to help understand the issues that people face with technology and how they adapt tech solutions to enhance their lives. A subscriber base that is among the largest in the tech support industry gives iYogi a unique vantage point to observe how technology is impacting people's lives and habits. Frequent interaction with this wide database of subscribers gives us a privileged peek into how people are forging a partnership with technology, sorting out the occasional issue, and on the whole, positively embracing technology to empower themselves.

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Consumer Adoption Of Freemium Products And Services - iYogi

  2. 2. Give it away for free, make money!42% customers pay for products/services after experiencing them.Key Findings1. Freemium is the way for introducing new types of products and services for communication, entertainment, music, productivity, and cloud applications.2. 100% respondents have experienced Freemium offers for at least one product or service.3. 42% users pay for products/services after experiencing them.4. Users new to the product or service provide higher conversions after using the Freemium offer. This is true for almost every category covered.5. 39% of customers have experienced a free one-on-one consultation with experts, ranging from Energy Savings, Lasix Surgery, Nutrition and Fitness, to Career and Life Coaching.6. For nearly 60% of respondents, iYogi tech support is their first experience of a Freemium one-on-one free consultation service with a technology expert.
  3. 3. 100% 42% respondents paid for of all respondents products/services after have used a Freemium experiencing them service or product First-time users more 58% experienced a first Detailed likely to convert! Increase in conversion rates for first-time users. with iYogi for a free one-on-one consultation with a technology expert FindingsFreemium is ideal foran Experience Good* 39% have experienced free 1-on-1 consultations with experts in Energy Savings, Lasix Surgery, Nutrition & Fitness, etc*Experience Good - a service or a product that needs a period of use before the customer can determine the value they can derive from it.
  4. 4. Free is the decision-maker42% customers pay for Freemium products/servicesafter experiencing themThe Internet has led to the launch of a wide range of products and services thatare pioneering in nature and scope. Consequently, a new category has emerged:The Experience Good - a service or a product that needs a period of use beforethe customer can determine the value they can derive from it.Most Internet products or services fall into this category. People dont honestlyknow they need the product or service until they try it. And asking customers topay for something they cant put a value on is a no-brainer. However, offer it tothem either for a certain period or introduce a free offering that allows them tounlock its value and youre likely to find it easy to convince them to buy. As ourresearch shows, your confidence in your product to be able to offer it for free,speaks volumes in its favor.
  5. 5. Free is the only way to scale100% of all respondents had used a Freemiumservice previouslyPioneering products have to use a Freemium model if they want to achieve largevolumes. Usage and experience is everything. The way to get a million people topay is to get a billion people to begin using your product. Then, its easy.Since Free adds another conversion step to your revenue path, you need tocreate a bigger market to have enough people who will be paying you at the endof the day.Evernote is a great example of a value-based product where the customers optto get locked in as they unlock the value of the product in their lives. Most convertin order to use the service on multiple platforms and for other premium features.
  6. 6. First-time users more likelyto become believers!Surprisingly, of those who tried the Freemium service, first-time users delivered ahigher degree of conversion. This applies to almost all the categories coveredunder this research.The difference between conversion rates for first-time users and respondentswho had already experienced the service ranged from 20% for Productivity Toolsto 10% for Security products and 9% for Cloud-based services. Back-up servicessaw up to a difference in conversion of 8%; Security experienced a difference of10%; Image-sharing saw a difference of 5%.New-age games saw more than a 100% increase in conversion for first-timeusers; Movie subscription services saw a rise of 8%; New concepts suchgenealogy services experienced an increase of 4% and VOIP services crankedup a higher conversion of 5%.
  7. 7. Types of Freemium offeringsCurrently Freemium products come in different shapes and sizes. Value-basedFreemium products such as Dropbox allow customers to experience a freeproduct and as they realise its advantages, they opt to pay for it with certainexclusive benefits added.Characteristic-based Freemiums like LinkedIn and SlideShare offer an excellentrestricted-features service for free and for high-end and intensive users, theyoffer a Pro version with advanced features and unrestricted access.Free trial period based Freemiums such as CyberScrub demonstrate thepowerful value of the offering through time-based trials and thus convertcustomers from free to paid. Cross-subsidies that offer a free product with othercomplementary paid-for products are yet another kind of Freemium.An Experience Good needs the powerful persuasion of the Freemium model toconvince customers and clinch the deal. No one can speak so eloquently for theproduct or service as the product or service itself.
  8. 8. A new kind of Freemiumis catching on!Nearly 40% respondents experiencedfree one-on-one consultations with expertsIn fields other than Tech Support, Free is catching on. 40% respondents havealready experienced Freemium one-on-one consultations with experts fromdiverse fields such as Energy Savings, Lasix Surgery, Nutrition and Fitness, andCareer and Life Coaching.It’s only a matter of time before other one-on-one expertise and consultation-based products and services catch on to the great ‘Freeway’ that is opening up.
  9. 9. Freemium experiences a firstNearly 60% experienced a first with iYogi fora free one-on-one consultation with a technology expertiYogi is the first time nearly 60% respondents have experienced this new kind ofFreemium a one-on-one advice session with an expert. A clear indication thatany pioneering service not only benefits from Freemium but needs it forcustomers to appreciate the nuances of the service. Also, the Freemium modelindicates a huge self-confidence on part of the product or service that thecustomer is quick to latch on to. No one could survive if they gave away a sub-standard offering. And thats the catch.The Freemium Hall of Fame is filled with exceptional products and services thatgenuinely offer superior value to the users. Thats why they keep coming backand finally are happy to pay. Happy to pay! Thats what makes Freemium muchmore than a marketing strategy its a philosophy of confidence and self-belief.
  10. 10. Creating Happy-To-Pay customers across different categories! Freemium: The category expander Entertainment rules!Movies/Video experienced the highestnumber of conversion of up to 65%Entertainment is still King! An overall conversion of 57% withindividual brands reaching conversions of up to 65%, means ourrespondents take their fun time seriously. NetFlix and Hulu wereamong the brands included in the survey.
  11. 11. Creating Happy-To-Pay customers across different categories! Freemium: The category expander Cloud has a bright future!41% conversion for Cloud-based servicesThe Cloud is catching up fast. Even though its new and Cloud-based services could seem a debatable investment, the trend isclear; people are increasingly willing to pay for cloud-based serviceswith individual brands reaching highs of 45% and 56% conversionamong respondents. The advantages perceived by these adoptersare worth the fees that these services charge. MS 365 and Zohowere among the brands included in the survey.
  12. 12. Creating Happy-To-Pay customers across different categories! Freemium: The category expander Performance aids command cash34% conversion for Productivity ToolsRespondents proved that customers are willing to pay for productsthat help them optimize time and effort with an individual brandreaching a high of 91% conversion. Clearly, convenience is a prizedadvantage. Evernote and Memonic were among the brandsincluded in this survey. Evernote has a Pro offering that offer usageacross multiple platforms along with other premium features.Memonic describes itself as the worlds best clipper. It is also one ofthe few services to offer students discounts in a far-sighted strategy.
  13. 13. Creating Happy-To-Pay customers across different categories! Freemium: The category expander Security depends on the userIn the Security category, while 100% hadexperienced a Freemium security product,37% were willing to pay for it.In this age of viruses, scamsters and identity theft, people areconcerned about security. Even with excellent free products,people are still willing to pay for a better grade of security.Individual brands enjoy up to 57% conversion amongrespondents. Clearly, the days of complete reliance on standardfree offerings are a thing of the past. AVG and avast! were amongthe brands included in this survey.
  14. 14. Creating Happy-To-Pay customers across different categories! Freemium: The category expander Sweet notes of success!Music service cranks up 30% conversionMusic is the savior of our times. Fitness routines, travel, workfocus, are all enhanced by music. No wonder music servicesdrummed up an overall 19% conversion among respondents withindividual offerings reaching 30%. Pandora and Spotify wereamong the brands included in this survey. Spotify for example, hasa paid offering that starts at $4.99 per month and allowssubscribers to create playlists, share their music and videos,among other things.
  15. 15. Creating Happy-To-Pay customers across different categories! Freemium: The category expander Communication is always in!VOIP services experienced up to 41%conversionCommunication is becoming critical for work and at home asbusinesses expand and people move across the globe for bettercareer opportunities. Clearly voice and video conferencing catersto a need that isnt going away. Especialy with businesses takingadvantage of technology to expand their footprint acrossgeographies and time zones. Skype and Vonage were among thebrands included in this survey.
  16. 16. Creating Happy-To-Pay customers across different categories! Freemium: The category expander Innovation stays ahead!Pioneering services enjoy 44% conversionNew concepts flourish on fillips from Freemium. The free modelallows customers to appreciate the value they offer. Genealogypioneer, Ancestry is a great example of a successful new-ageservice, with an offering that starts at $12.95, and goes up to $35per month. Experience Goods such as Ancestry and LinkedInwere among the brands included in this survey.
  17. 17. Creating Happy-To-Pay customers across different categories! Freemium: The category expander Data is prized!Back-up services attract up to 46%conversionIts the era of Big Data. People want to keep all data andinformation safe and secure. 35% of respondents are willing topay to keep it so, on an average with individual brands reachinghighs of 42% and 46%. Mozy and Carbonite were among thebrands included in this survey. Carbonite offers plans starting at$59, going up to $229 per year. Mozy starts at $5.99 and goesup to $9.99 per month.
  18. 18. Creating Happy-To-Pay customers across different categories! Freemium: The category expander Games convert more than one in every fourGames achieve a conversion of up to 26%.New gen smartphones, iPads, tablets and netbooks have givenrise to a new kind of gamer. Expectedly, new-age gamesattracted high conversion rates of 26% among respondents.All those millions of iPads and smartphones have, no doubt,fuelled this craze for Fruit Ninja, Shark Dash, and the like.Angry Birds and Words with friends were among the brandsincluded in this survey.
  19. 19. Creating Happy-To-Pay customers across different categories! Freemium: The category expander Image and videos sharing convert nearly one-fourth users24% conversion for image and videosharing servicesFuelled by digital, the click-happy gen rules! A whole new tribe ofshutterbugs are avid patrons of image galleries and video sharingsites. Little surprise then, that these services drew a conversion of24% among respondents. Flickr and Shutterfly are among thebrands included in this survey.
  20. 20. Freemium, here to stay!If it cant sell for free, can it ever sell at all? Freemium will probablybecome the new means of benchmarking products and services.Freemium has all the hallmarks of a new From online publishing to musical bands,marketing religion - conversion of different products and services havecustomers into believers and a mystical taken to Freemium and are experiencingdoctrine that actually advocates giving its benefits.away the product or service for free to Authors and gurus like Seth Godin andsee sales go through the roof and fill the Paulo Coelho swear by Free and bandspews to bursting! like Nine Inch Nails have experienced itsBrands such as Dropbox, Evernote, largesse, ensuring that it spreads acrossAncestry, SlideShare, CyberScrub and categories, to offline from online, andiYogi, among a host of others, actually re- across media and geographies.invent the Freemium model by adapting itto the needs of their customers and totheir industry, service and offering.
  21. 21. MethodologyThe rise of the Internet combined with pioneering technology innovationsis bringing a new kind of product and service into our lives.The rise of the Internet combined with Services seeks to understand how thepioneering technology innovations is average American uses and relates tobringing newer kinds of products and new-age technologies. The survey wasservices into our lives. These are the kind conducted on iYogi subscribers throughof services that are difficult to appreciate an online form following their supportwithout some degree of actual usage, in sessions.order to understand the value they areable to offer their users. A total of 2002 respondents filled the online survey form consisting of 5The more radical these goods and detailed questions regarding previousservices are, the more they need to be experience of Freemium offers, usage ofexperienced in order to be understood by Freemium products/services underusers. Called Experience Goods, such different categories, Freemiumgoods and services have given rise to a experience details and their choosing tonew marketing pricing strategy called opt for the paid version or not.Freemium. The data collected was then collated,This iYogi Insights survey of Consumer analyzed and compared to identify,Adoption of Freemium Goods and assess and quantify trends and patterns.“Affiliation of any third party organization is not implied, unless expressly stated.”