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The effect of free sampling strategies on freemium conversion rates

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  • Oliver Francis Koch

    (Darmstadt University of Technology)

  • Alexander Benlian

    (Darmstadt University of Technology)

Abstract

Freemium business models, where companies offer a free basic and a value-enhanced paid version of a product, have become ubiquitous across software, games and a broad range of web services. Despite the many benefits of freemium, most firms suffer from too few premium subscribers (3–5 %), which challenges their profitability. Although free trials have helped improve premium conversions, research hitherto has paid little attention towards what works effectively. Therefore, we examine the effect of two common free trial strategies on consumers’ conversion likelihood: Freefirst, where consumers start in the free and then opt into a trial of the premium version and Premiumfirst, where things are experienced in reverse order. Based on a contest-based online experiment with 225 subjects, our analysis reveals that in contrast to Freefirst, Premiumfirst significantly increases conversion propensity and that this positive effect is greater when the premium and the free version are more similar.

Suggested Citation

  • Oliver Francis Koch & Alexander Benlian, 2017. "The effect of free sampling strategies on freemium conversion rates," Electronic Markets, Springer;IIM University of St. Gallen, vol. 27(1), pages 67-76, February.
    • Handle: RePEc:spr:elmark:v:27:y:2017:i:1:d:10.1007_s12525-016-0236-z
    DOI: 10.1007/s12525-016-0236-z
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    References listed on IDEAS

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    2. Biraglia, Alessandro & Bowen, Karen T. & Gerrath, Maximilian H.E.E. & Musarra, Giuseppe, 2022. "How need for closure and deal proneness shape consumers’ freemium versus premium price choices," Journal of Business Research, Elsevier, vol. 143(C), pages 157-170.
    3. Cinzia Battistella & Gianluca Murgia & Fabio Nonino, 2021. "Free-driven web-based business models," Electronic Commerce Research, Springer, vol. 21(2), pages 445-486, June.
    4. Rainer Alt & Carsta Militzer-Horstmann, 2017. "Electronic Markets on the media industry," Electronic Markets, Springer;IIM University of St. Gallen, vol. 27(1), pages 1-5, February.
    5. Xiaoyan Chen & Wei Geng, 2022. "Enroll now, pay later: optimal pricing and nudge efforts for massive-online-open-courses providers," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 1003-1018, June.
    6. Wallbach, Sören, 2020. "Assimilation and Diffusion of Multi-Sided Platforms in Dynamic B2B Networks: Inhibiting Factors and Their Consequences," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 123277, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    7. Martin Adam & Konstantin Roethke & Alexander Benlian, 2022. "Gamblified digital product offerings: an experimental study of loot box menu designs," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 971-986, June.
    8. Kang Li & Jingwei Zhang & Lunchuan Zhang, 2021. "Optimal Software Feature-Limited Freemium Model Design: A New Consumer Learning Theoretical Framework," Mathematics, MDPI, vol. 9(9), pages 1-24, April.
    9. Matti Mäntymäki & Sami Hyrynsalmi & Antti Koskenvoima, 2020. "How Do Small and Medium-Sized Game Companies Use Analytics? An Attention-Based View of Game Analytics," Information Systems Frontiers, Springer, vol. 22(5), pages 1163-1178, October.
    10. Wallbach, Sören & Lehner, Roland & Röthke, Konstantin & Elbert, Ralf & Benlian, Alexander, 2020. "Trust-Building Effects of Blockchain Features – An Empirical Analysis of Immutability, Traceability and Anonymity," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 120705, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    11. Danckwerts, Sebastian & Meißner, Lasse & Krampe, Caspar, 2019. "Examining User Experience of Conversational Agents in Hedonic Digital Services – Antecedents and the Role of Psychological Ownership," SMR - Journal of Service Management Research, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 3(3), pages 111-125.
    12. Philipp Brüggemann & Nina Lehmann-Zschunke, 2023. "How to reduce termination on freemium platforms—literature review and empirical analysis," Journal of Marketing Analytics, Palgrave Macmillan, vol. 11(4), pages 707-721, December.
    13. Falko Lucht, 2019. "The Success of the Freemium Business Model. How Riot Games flourishes with a free to play game," Manager Journal, Faculty of Business and Administration, University of Bucharest, vol. 29(1), pages 114-124, December.
    14. Zhang, Mingli & Zhang, Yan & Zhao, Lu & Li, Xiaoyong, 2020. "What drives online course sales? Signaling effects of user-generated information in the paid knowledge market," Journal of Business Research, Elsevier, vol. 118(C), pages 389-397.

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