Sub Club by RevenueCat
How Headspace Optimized Revenue by Gating Content — Shreya Oswal and Keya Patel, Headspace
Wed Jun 14 2023HeadspaceFreemium ModelContent LockingPrice TestingUser EngagementOnboarding OptimizationReferral ProgramsPartnerships
Description
Headspace's freemium model, content locking strategies, price testing, user engagement tactics, onboarding optimization, referral program revamp, and recent partnerships are discussed in this comprehensive summary.
Insights
Content Locking Boosts Conversion Rates
Locking more content increased conversion rates without significant negative customer reactions.
Free Trials Drive Engagement
Introducing free trials resulted in higher content engagement and double-digit conversion lift.
Price Testing Improves Revenue
Price testing led to increased revenue and conversion rates for both monthly and annual subscriptions.
Personalization and Segmented Plans
Personalization based on user needs and the introduction of student and family plans improved engagement, retention, and accessibility.
Optimizing Onboarding and Referral Programs
Onboarding tests helped improve conversion and engagement, while revamped referral programs with unique incentives increased visibility and participation.
Partnerships for Integrated Mental Health Solution
The recent merger with Ginger allows Headspace to offer an integrated mental health solution with access to coaching and therapy.
Chapters
- Headspace's Freemium Model
- Content Locking and Free Trials
- Price Testing and Subscription Options
- User Engagement and Personalization
- Optimizing Onboarding and Referral Programs
- Partnerships and Additional Features
Summary
Transcript
Headspace's Freemium Model
00:01 - 07:11
- Headspace initially offered 20% of its content for free as part of its freemium model.
- They experimented with locking more content to increase conversion rates, and found that people were more likely to convert when more content was locked.
- Despite concerns about negative customer reactions, the change had a positive impact on conversion rates and did not result in significant customer support issues or negative reviews.
- The experiments were primarily conducted with new users who had no strong expectations of what was available for free or paid.
- It took a while for the team to feel comfortable rolling out the changes to existing freemium users, but they eventually moved them over after offering an incentive.
- After Shreya joined, they tested making the entire content library locked for both new and existing users, resulting in a high double-digit lift in paid subscribers.
Content Locking and Free Trials
06:49 - 13:01
- New users had an easier experience and saw a high double-digit lift in paid subscribers.
- Free trialists showed higher levels of content engagement.
- Tenured users were offered a generous transition and popular content was published on YouTube.
- The team is considering offering more features or content samples for free to attract new users.
- Most of the content in the app is locked, except for some educational videos.
- Free trials can be effective when people perceive value and have control over auto-renewal.
- Products that require commitment benefit from having users with skin in the game earlier on.
- Showing value to users who are on the fence about a free trial is important.
- Price testing was conducted at Headspace with various experiments and results.
Price Testing and Subscription Options
12:43 - 19:34
- Headspace conducted extensive price testing, both quantitative and qualitative, across different demographics and target markets.
- Initially, they had three products: monthly ($9.99), annual ($99), and lifetime (high price point).
- Through price testing, the monthly product increased to $12.99 while the annual product dropped to $69.99.
- The goal was to make the annual product more attractive and competitive in the market.
- The pricing experiments resulted in increased overall revenue and conversion rates for both products.
- Design elements like highlighting the benefits of the annual subscription and using an animated character helped drive conversions.
- After Kia left, Shreya focused on attracting a lower intent audience with a lower-priced monthly plan.
- They tested eight different price points for the monthly plan but found it to be revenue negative due to low conversion rates.
- They then shifted focus back to promoting the annual subscription through a paygate that highlighted its benefits.
- Quantifying dollar value didn't help; simply stating 'best value' performed better.
- Offering both annual and monthly options performed best initially, but many customers who chose annual did not stick around after the free trial.
User Engagement and Personalization
19:11 - 26:04
- People were willing to spend a certain amount of money on the app, regardless of the pricing plan.
- Monthly subscription serves as a reminder for users to engage with the app.
- HeadSpace experimented with introducing free trials and different trial durations.
- The introduction of free trials resulted in a double-digit conversion lift.
- LinkedIn used propensity models to determine the likelihood of subscribing to different subscriptions.
- Simplicity and transparency in offering one SKU for each subscription type proved effective.
- Building sophisticated models requires a good data team and significant effort.
- The student and family plans were rolled out at Headspace as a result of their mission to make the app accessible to different audience segments.
- Initially, the student plan was introduced as a test to understand its revenue potential and its impact on subscription numbers. It was found that while the revenue value was small compared to the overall consumer product and B2B side, it still contributed positively.
- The family plan was introduced with the hypothesis that it would improve retention due to accountability within families. This hypothesis was supported by data, showing that the family plan had the best retention rates.
- The student plan saw high demand internationally, leading to its expansion in more countries.
- Onboarding tests at Headspace have included adding additional questions about users' goals and needs, which resulted in higher engagement and conversion rates.
- Multiple reasons bring people to Headspace, and personalization is used to serve up content based on individual needs.
Optimizing Onboarding and Referral Programs
25:37 - 32:15
- People have multiple reasons for using Headspace, and the app can help with all of them.
- Onboarding tests were conducted to optimize the onboarding flow.
- Different versions of onboarding had varying effects on engagement and conversion rates.
- Longer onboarding flows increased engagement but reduced conversions.
- Shorter onboarding flows led to immediate upsells but lacked personalization.
- The product team worked closely with the lifecycle team to improve conversion and engagement.
- Incentives were used during the first month to encourage users to stay and convert.
- Referral programs were revamped to increase visibility and provide meaningful incentives.
- Intrinsic referrals are more effective than transactional ones.
- Unique and special incentives, like a one-on-one meditation session, strengthen the relationship with the app and its teachers.
- The referral program offers an extended free trial of 30 days instead of the standard 14 days.
- The extended free trial is performing well with good engagement and conversion rates.
Partnerships and Additional Features
38:11 - 43:41
- Headspace recently merged with Ginger to offer an integrated mental health solution including access to behavioral health coaching and therapy.
- Headspace is constantly posting new job roles on their site.