Acquisition · Household panel analysis and customer-lifetime-value modeling
The Challenge of Retaining Customers Acquired with Free Trials
Journal of Marketing Research · 2015
Summary
Average lifetime value for free-trial customers was 59% lower than for regular customers in this study.
For your marketing
Possible founder application
Track post-trial retention and value by acquisition cohort, and test onboarding or communication interventions. Do not assume free-trial signups have the same economics as organically or sales-acquired customers.
Reported result
What the study found
Average lifetime value for free-trial customers was 59% lower than for regular customers in this setting. Trial-acquired customers were more responsive to marketing communication and usage, suggesting opportunities for targeted retention activity.
Research question
What the authors investigated
How do customers acquired with free trials differ from regular customers in retention and lifetime value?
Design
The authors analyze household panel data from a digital television service and model differences in usage, marketing responsiveness and customer lifetime value.
Sample and setting
Households using one digital television service; the abstract reports a comparison between trial-acquired and regular customers.
Scope and transfer
Limitations to keep in view
One digital television service and its historical trial design. The reported CLV gap is not a benchmark for SaaS; acquisition cohorts may differ in ways specific to the service and period.
Research sources
Journal of Marketing Research abstract and accessible author manuscript; setting and headline CLV difference are reported by the publisher.