iyogi insignts - freemium survey report

INSIGHTS

Freemium Survey ReportCONSUMER ADOPTION OF FREEMIUMPRODUCTS AND SERVICES

Give it away for free, make money! 42% customers pay for products/services after experiencing them.

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Freemium is the way for introducing new types of products and services for communication, entertainment, music, productivity, and cloud applications.

100% respondents have experienced Freemium offers for at least one product or service.

42% users pay for products/services after experiencing them.

Users new to the product or service provide higher conversions after using the Freemium offer. This is true for almost every category covered.

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.

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.

Key Findings

42%of all respondentshave used a Freemiumservice or product

experienced a firstwith iYogi for a freeone-on-one consultationwith a technology expert

respondents paid forproducts/services after

experiencing them

100%

58%

39%have experienced free 1-on-1

consultations with expertsin Energy Savings, Lasix Surgery,

Nutrition & Fitness, etc

First-time users morelikely to convert!Detailed

Findings

Freemium is ideal foran Experience Good*

*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.

Increase in conversionrates for first-time users.

Free is the decision-maker42% customers pay for Freemium products/servicesafter experiencing them

The Internet has led to the launch of a wide range of products and services that are 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 before the customer can determine the value they can derive from it.

Most Internet products or services fall into this category. People don't honestly know they need the product or service until they try it. And asking customers to pay for something they can't put a value on is a no-brainer. However, offer it to them either for a certain period or introduce a free offering that allows them to unlock its value and you're likely to find it easy to convince them to buy. As our research shows, your confidence in your product to be able to offer it for free, speaks volumes in its favor.

Free is the only way to scale100% of all respondents had used a Freemiumservice previously

Pioneering products have to use a Freemium model if they want to achieve large volumes. Usage and experience is everything. The way to get a million people to pay is to get a billion people to begin using your product. Then, it's easy.

Since Free adds another conversion step to your revenue path, you need to create a bigger market to have enough people who will be paying you at the end of the day.

Evernote is a great example of a value-based product where the customers opt to get locked in as they unlock the value of the product in their lives. Most convert in order to use the service on multiple platforms and for other premium features.

First-time users more likelyto become believers!Surprisingly, of those who tried the Freemium service, first-time users delivered a higher degree of conversion. This applies to almost all the categories covered under this research.

The difference between conversion rates for first-time users and respondents who had already experienced the service ranged from 20% for Productivity Tools to 10% for Security products and 9% for Cloud-based services. Back-up services saw up to a difference in conversion of 8%; Security experienced a difference of 10%; Image-sharing saw a difference of 5%.

New-age games saw more than a 100% increase in conversion for first-time users; Movie subscription services saw a rise of 8%; New concepts such genealogy services experienced an increase of 4% and VOIP services cranked up a higher conversion of 5%.

Currently Freemium products come in different shapes and sizes. Value-based Freemium products such as Dropbox allow customers to experience a free product and as they realise its advantages, they opt to pay for it with certain exclusive benefits added.

Characteristic-based Freemiums like LinkedIn and SlideShare offer an excellent restricted-features service for free and for high-end and intensive users, they offer a Pro version with advanced features and unrestricted access.

Free trial period based Freemiums such as CyberScrub demonstrate the powerful value of the offering through time-based trials and thus convert customers from free to paid. Cross-subsidies that offer a free product with other complementary paid-for products are yet another kind of Freemium.

An Experience Good needs the powerful persuasion of the Freemium model to convince customers and clinch the deal. No one can speak so eloquently for the product or service as the product or service itself.

Types of Freemium offerings

Nearly 40% respondents experiencedfree one-on-one consultations with experts

In fields other than Tech Support, 'Free' is catching on. 40% respondents have already experienced Freemium one-on-one consultations with experts from diverse fields such as Energy Savings, Lasix Surgery, Nutrition and Fitness, and Career 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.

A new kind of Freemiumis catching on!

Nearly 60% experienced a first with iYogi fora free one-on-one consultation with a technology expert

iYogi is the first time nearly 60% respondents have experienced this new kind of Freemium a one-on-one advice session with an expert. A clear indication that any pioneering service not only benefits from Freemium but needs it for customers to appreciate the nuances of the service. Also, the Freemium model indicates a huge self-confidence on part of the product or service that the customer is quick to latch on to. No one could survive if they gave away a sub-standard offering. And that's the catch.

The Freemium Hall of Fame is filled with exceptional products and services that genuinely offer superior value to the users. That's why they keep coming back and finally are happy to pay. Happy to pay! That's what makes Freemium much more than a marketing strategy it's a philosophy of confidence and self-belief.

Freemium experiences a first

Creating Happy-To-Pay customers across different categories!Freemium: The category expander

Entertainment is still King! An overall conversion of 57% with individual brands reaching conversions of up to 65%, means our respondents take their fun time seriously. NetFlix and Hulu were among the brands included in the survey.

Entertainment rules!

Movies/Video experienced the highest number of conversion of up to 65%


The Cloud is catching up fast. Even though it's new and Cloud-based services could seem a debatable investment, the trend is clear; people are increasingly willing to pay for cloud-based services with individual brands reaching highs of 45% and 56% conversion among respondents. The advantages perceived by these adopters are worth the fees that these services charge. MS 365 and Zoho were among the brands included in the survey.

Cloud has a bright future!

41% conversion for Cloud-based services


Performance aids command cash

Respondents proved that customers are willing to pay for products that help them optimize time and effort with an individual brand reaching a high of 91% conversion. Clearly, convenience is a prized advantage. Evernote and Memonic were among the brands included in this survey. Evernote has a Pro offering that offer usage across multiple platforms along with other premium features. Memonic describes itself as the world's best clipper. It is also one of the few services to offer students discounts in a far-sighted strategy.

34% conversion for Productivity Tools

Security depends on the user


In the Security category, while 100% had experienced a Freemium security product, 37% were willing to pay for it.In this age of viruses, scamsters and identity theft, people are concerned 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 among respondents. Clearly, the days of complete reliance on standard free offerings are a thing of the past. AVG and avast! were among the brands included in this survey.

Sweet notes of success!


Music is the savior of our times. Fitness routines, travel, work focus, are all enhanced by music. No wonder music services drummed up an overall 19% conversion among respondents with individual offerings reaching 30%. Pandora and Spotify were among the brands included in this survey. Spotify for example, has a paid offering that starts at $4.99 per month and allows subscribers to create playlists, share their music and videos, among other things.

Music service cranks up 30% conversion

Communication is always in!


VOIP services experienced up to 41% conversionCommunication is becoming critical for work and at home as businesses expand and people move across the globe for better career opportunities. Clearly voice and video conferencing caters to a need that isn't going away. Especialy with businesses taking advantage of technology to expand their footprint across geographies and time zones. Skype and Vonage were among the brands included in this survey.

Innovation stays ahead!


New concepts flourish on fillips from Freemium. The free model allows customers to appreciate the value they offer. Genealogy pioneer, Ancestry is a great example of a successful new-age service, with an offering that starts at $12.95, and goes up to $35 per month. Experience Goods such as Ancestry and LinkedIn were among the brands included in this survey.

Pioneering services enjoy 44% conversion

Data is prized!


Back-up services attract up to 46% conversion It's the era of Big Data. People want to keep all data and information safe and secure. 35% of respondents are willing to pay to keep it so, on an average with individual brands reaching highs of 42% and 46%. Mozy and Carbonite were among the brands included in this survey. Carbonite offers plans starting at $59, going up to $229 per year. Mozy starts at $5.99 and goes up to $9.99 per month.

Games convert more than one in every four


Games achieve a conversion of up to 26%.New gen smartphones, iPads, tablets and netbooks have given rise to a new kind of gamer. Expectedly, new-age games attracted 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 brands included in this survey.

Image and videos sharing convert nearly one-fourth users


24% conversion for image and video sharing services

Fuelled by digital, the click-happy gen rules! A whole new tribe of shutterbugs are avid patrons of image galleries and video sharing sites. Little surprise then, that these services drew a conversion of 24% among respondents. Flickr and Shutterfly are among the brands included in this survey.

Freemium, here to stay!If it can't 'sell' for free, can it ever sell at all? Freemium will probably become the new means of benchmarking products and services.

Freemium has all the hallmarks of a new marketing religion - 'conversion' of customers into believers and a mystical doctrine that actually advocates giving away the product or service for free to see sales go through the roof and fill the pews to bursting!

Brands such as Dropbox, Evernote, Ancestry, SlideShare, CyberScrub and iYogi, among a host of others, actually re-invent the Freemium model by adapting it to the needs of their customers and to their industry, service and offering.

From online publishing to musical bands, different products and services have taken to Freemium and are experiencing its benefits.

Authors and gurus like Seth Godin and Paulo Coelho swear by 'Free' and bands like Nine Inch Nails have experienced its largesse, ensuring that it spreads across categories, to offline from online, and across media and geographies.

MethodologyThe rise of the Internet combined with pioneering technology innovations is bringing a new kind of product and service into our lives.

The rise of the Internet combined with pioneering technology innovations is bringing newer kinds of products and services into our lives. These are the kind of services that are difficult to appreciate without some degree of actual usage, in order to understand the value they are able to offer their users.

The more radical these goods and services are, the more they need to be experienced in order to be understood by users. Called Experience Goods, such goods and services have given rise to a new marketing pricing strategy called Freemium.

This iYogi Insights survey of Consumer Adoption of Freemium Goods and

Services seeks to understand how the average American uses and relates to new-age technologies. The survey was conducted on iYogi subscribers through an online form following their support sessions.

A total of 2002 respondents filled the online survey form consisting of 5 detailed questions regarding previous experience of Freemium offers, usage of Freemium products/services under different categories, Freemium experience details and their choosing to opt for the paid version or not.

The data collected was then collated, analyzed and compared to identify, assess and quantify trends and patterns.

“Affiliation of any third party organization is not implied, unless expressly stated.”

iyogi insignts - freemium survey report

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