What One Company Learned From Giving Its
Product Away For Free
By Miro Kazakoff
Last month, my company Testive announced that we are dropping
the pay wall on our online SAT prep product. No limits. No locked content. No
ads. Don’t be confused — we did this to grow our business, not shrink it. So
far it’s working, and here’s what we’ve learned so far.
You have more levers to make money than you think.
Testive helps students improve their scores on major exams like
the SAT through a combination of an adaptive online learning platform
and a coaching service. Our technology helps students increase
their test scores faster, and our coaches make sure students stay on
track and stick to their plan.
Prior to our announcement, you could get an account on the website
and a few free questions every day. We had a pay wall for access to
unlimited questions or unlimited questions plus a personal coach. However, the
students who saw consistent increases were the ones who had coaching,
because they were more likely to create and stick to their study plan.
We decided we wanted to make our money from the part of our
offering that drives the most value. We believed that getting more students
using our service would highlight the importance of our coaching and drive
sales, rather than diminish them.
What your customers think of you is important.
We are in an industry where customers have many options. So we
have to excel.
Some online tools offer a functionality you just can’t get
anywhere else. In those cases, simple access to that functionality may be
enough to grow. For example, enterprise software is notoriously hard to use
because there just aren’t better options out there.
In our case, there are lots of ways to improve your SAT score.
Even if the other options are more expensive, less convenient and less
effective; customers know they have options. What they don’t have is time to
test these other options. Most would rather risk buying something less
effective but known.
As a result, in our industry customers can’t just like you. They
have to love you. We also face negative referrals. A bad customer experience
doesn’t just die away, parents will actively warn others about bad
educational services.
Since we are driven by referrals, we wanted to create an
experience that was as easy as possible for customers to promote to their
friends. The biggest complaint about our online product had always been the
question cap. Notably, no one ever complained that we sold coaching services or
about the price of coaching. We decided that maximizing the happiness of the
most customers was our best path to growth, even if we left some
short-term money on the table.
Going free means losing control of important parts of your funnel.
Like most online products, we spent many nights contemplating the
mechanics of how to get users to refer their friends. When we had question
caps, the basic way we drove referrals was to give referrers and their friends
extra questions. We tracked the data religiously and tweaked it every cycle to
maximize referral rates.
Going free certainly generated more direct traffic to our site. We
presume that most of those visitors heard about us casually from friends
offline, but now we can’t track it. As a result, it’s more challenging
to understand the exact nature of referrals and how to increase them.
It pays to look to other industries for success examples.
We are always trying to find metaphors and approaches to customers
that help us improve our offering. However, our model is so different from most
education companies that we find ourselves having to combine examples and
approaches from other industries.
Testive joins other technology-empowered services that reengineer
the service delivery model to make it more efficient via a combination of
technology and people. Companies like Retrofit (for personal
training) and Bench (for accounting) are great examples of this
approach.
Free, unlimited access is an approach we pulled from media
companies. They give away free content in order to attract large a number of
viewers. In that case, their product is the user – whose attention and/or
contact info is then sold to advertisers. We believe the same model of creating
a great user experience, in this case personalized test prep, can drive users
and word of mouth marketing to help attract new paying users.
Our difference is that we don’t sell access to our users. For
sales we look to successful B2B companies, like Hubspot or Yesware, who use
great free tools and content to help educate customers about the power of their
services.
In the end, your market and your customers will tell you the right
choice.
By the time there is enough information to make a decision with
perfect certainty, it’s well past too late. A mentor of mine, Nick
Francis at HelpScout, gave me my favorite piece of advice: “Listen
to your market, it’ll tell you the right thing to do.”
We did just that, and it turned a tough decision into an easy one
that paid off for consumers and us alike.
You’ll never have enough data to know for sure if going free is
right for you before you try it. But if you think about your users, all
the ways to make money and consider examples from beyond your own market, free
is a path that can really pay off.
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