What is the difference in product feature usage between free and paid users?
In the recent few posts, we learned how to calculate metrics that help to quantify product feature impact on user retention. This analysis is essential if we want to spot our core product value and keep product development around this value.
It’s time to touch monetization a little bit.
A lot of products are launched to build and keep customers. To do it properly often we need to invest in customer development. We spend a huge amount of time learning about customer problems, how they are trying to solve their problems, and how our product can solve their problems better even today.
In fact, by solving customer problems the product brings value to customers. For some customers, the value that the product brings to them is tiny. For others — it’s large.
There is a chance that there could be a relationship between product value (real to perceived) and customer willingness to pay.
Let’s try to segment product features based on whether
- customers use product features for free (is_paying_user = False) or
- pay for usage (is_paying_user = True)
and learn from the differences.
To quantify product value (product feature impact on retention) we will use the MCC coefficient that I introduced in the previous post.
As expected MCC coefficients are different for free and paid users that use the same product features.
What can we quickly learn from the table above?
- MCC coefficients are higher for paid users than for free ones. It’s expected as paid users are supposed to be retained better than free ones.
- [% paid users for prd] is varying from 1.4% up to 38.6%. Obviously, that 38.6% for product feature19 is an outlier. We will touch it in a few moments.
To learn real insights let’s compare product features ranking (by MCC coefficients) for two segments: free and paid users.
The easiest way to grasp ranking differences is to plot a bar chart.
Let’s unpack the insights from the chart above.
There are a lot of product features that have a limited impact on free users but have a high impact on paid ones. I will take a few of them to show several interesting cases.
— feature19 has quite a big negative impact on retention for paid users.
Let me add additional content to this product feature. This product feature is directly related to the actual payment functionality. So it turns out that if a user uses it (does an actual payment) his chances to be retained are decreasing.
How is it possible?
The answer is straightforward.
It’s just not enough value for this particular product feature to keep users using the product. To keep users after payment is done you need to push them to use other product features that bring actual value to them.
— feature7. This product feature has the biggest positive impact on retention for paid users.
I would like to mention that this product feature is related to the communication set of product features. It helps users to chat while they receive the main value from the product.
So, the first thing that I would like to emphasize is that supporting product features like this can amplify the main value of the product. It’s advisable to learn deeply how to design such scenarios as smoothly as possible to bring synergy to the product features.
The second thing that I would like to mention is that communication plays an important role for users who pay for product usage. This could help a product manager to prioritize the development of a few more communication features and to demonstrate that they are valuable to paid customers.
— feature40. This product feature has quite a strong positive impact on retention for paid users.
This product feature is rather technical. It’s directionally signaling to us that users who used the side menu in that app are retained better.
It means that we put some really valuable product features inside the side menu and only paid users are aware of them and use them. Probably we need to build a flow chart and learn which product features are used by paid users after they opened the side menu in the app.
As we can see free and paid users behave quite differently and often rely on the different product feature sets. That’s why comparing them is a very insightful task that helps product managers better understand:
- what are the product features that bring the most value to free users?
- what are the product features that bring the most value to paid users?
- what to teach free users about the product to smoothly convert them to paid ones?
