Why We Decided To Come Back To A Freemium Model For Our Live Chat Solution
Our pricing journey has been chaotic to say the least.
Here’s what we went through during the past year: premium with 2 plans ($50 and $100) > Freemium model (Free, $5 plan and $24 plan) > Premium with 1 plan at $12 > Premium with 2 plans ($30 and $36) > Premium with 1 plan at $10 > and finally Freemium (Free and 1 plan at $10).
As you can see, we did a lot of testing.
So far, we acquired the most users through our first Freemium experiment but the most customers through our $12 plan experiment.
So why come back to Freemium?
It all started about a month ago when we got a dreaded 1-star review on WordPress. About the fact that our plugin wasn’t free and that it wasn’t clearly stated anywhere.
The review itself was 100% fair. We never intended to misguide users so we made changes the following day and clearly stated the price inside the plugin description.
But the damage was done. We saw our Wordpress signups drop from 20–30 a day to less than 10. Ouch!
Hey, it’s ok WordPress is not the only acquisition channel out there! Except it was and still is our main acquisition channel.
After the review happened our total number of signups was cut in half!
From there we decided to not jump to conclusions and started testing few hypothesis.
First hypothesis: Our average rating made our WordPress ranking sink
What we needed to do to recover: Gather positive reviews to offset the effect of the negative one.
So we asked out customers via direct personal emails and right inside the app through a popup window. We collected 5 new 5-star reviews this way and our average rating went up again.
Then, I checked if the ranking of our plugin inside WordPress changed. And it did. We went from 17th to 14th position for the “live chat” keyword. And from 20+ to 17th for the “chat” keyword.
But our downloads did not go up.
My thought is that 14th and 17th positions aren’t high enough. But we had another problem. We got very little engaged users from the signups we got.
Second hypothesis: The fact that our plugin isn’t free drives users away
More than half of people downloading the plugin just uninstalled it right away. We had our idea as to why this happened but we needed to make sure to we added a WordPress survey that shows up inside the WordPress admin when people turn off our plugin.
Out of the 110 messages we received (after deleting all useless messages like “no” “hfdvkh”…), 51 of them said they got rid of the plugin because it “wasn’t free”.
That’s almost half of users.
Chances are a lot of people also ignored the plugin all together because it was a trial version. The bad review certainly had an effect on downloads but we can’t ignore the “not free” effect as well.
Here’s what happened.
After we got the review, we changed our description to make it clear that the plugin wasn’t free.
Before that, people who saw our plugin page had almost no chances to guess this was a paid plugin. We didn’t say it was free but we didn’t say it was paid either. So people looking for free plugins signed up and then found out that it was only a trial version.
Some of them left, others stuck around and ended up buying.
The second thing is that we still appeared quite high in results for “free live chat” before we changed the description. I found out that we still had some “free” related tags and bits of text inside our description.
I didn’t get to check this but my guess is that we went down on “free live chat” after I got rid of them.
In other words, a freemium plan would give us access to a lot more exposure!
What If We End Up Attracting All The Wrong Users?
Honestly that’s the number 1 question for us and our biggest fear. Are we targeting the right users or will only get “free solutions” hunters?
There is no way to tell for now and we know offering a free plan is risky. The last time around, we grew to almost a hundred active freemium users (keep in mind that it was the very beginning). The problem is, even the most active of them, the ones who would have benefited from the premium plan, didn’t upgrade.
So we are doing things a little differently this time.
Using our free plan to gain exposure
The one thing we need and that free users can help us gain is exposure. This is a classic of the freemium model and we hope it can work for us.
Here’s our plan to make free users work for us:
- The chat window will have our logo and only Prestige users will be able to switch to theirs
- Users will be offered the option to win free days on the Prestige plan in exchange for a tweet
- We’re planning to roll out a referral program where users will be able to get months for free if they bring new users to the app
The problem? We are not sure our market is big enough for this model to work. Free users still eventually need to be supported by paying users and nothing guarantees that they will expose our solution to potential paying customers.
Giving users a compelling reason to upgrade
I’ll be honest, we are still working on this. We don’t want to offer a free plan that’s so limited that it is not usable.
But we don’t want to have users with huge amounts of chats use our free plan.
So here are the limits we are starting with:
- 1 operator only (that’s most of our user base right now)
- 1 concurrent chat (we hope this one will limit costs for us to maintain the free plan as it costs us more to process high volumes of chats)
- default logo on the chat window (This is one of these purely annoying features. You don’t NEED it but you really want it)
- limited archives (this will save some storage space for us)
- 1 active automatic chat invitation
The chat is still usable for a small business and can still bring a good ROI since they have access to all features. But it won’t be quite enough for power users.
We really want more users to actually try the app
We’ve had some really good feedback from customers about the app and we know it is superior to most solutions you can find on WordPress.
The goal of our free plan is to get rid of the first barrier and get users to actually use CustomerIcare to find out if they like it or not. If they do, they will stick around and upgrade if they need to. If they don’t, we might receive some useful feedback.
Our main problem right now is that most users will signup but never really use the app. Launching a free plan allows us to at least keep users who were looking for a free solution. If we believe the feedback we got, that’s almost 50% of users.
Any Of You Went Through This?
If you also have the freemium or not freemium conversation at your startup, we’d love to hear from you! It’s been a rocky journey for us and it would be great to know we are not alone :)
Come chat with us at customericare.com and check out our new shiny free plan! We’d honestly love to hear feedback from the Medium community.
