A major challenge for many SaaS businesses is to provide continuous value, so that the users are compelled to continue using the service.
There’s a risk of opportunism if the user can achieve his goals with one-time use; he then either uses the free trial version, or only subscribes for one month.
For example, some SEO tools enable data download, so why should I stick around after downloading the data?
This is especially pertinent if my decision making cycle is not frequent, so I don’t really need monthly data.
Potential ways to counter this effect:
- develop automatic insights that continuously tell the user something they didn’t know, without him having to log into a system
- include different tiers for one-time users (e.g., one-time report feature with the cost of xxxx USD)
- understand the decision making cycles of different users, and make sure your business model is adapted to them
- put previously free features behind a subscription plan
- raise the monthly price so increase CLV even for those users that drop after a month
The latter I’ve seen applied by many startups, e.g. SurveyMonkey that raised its prices substantially. At the same time, though, they lost me as a customer – that’s the risk, and it can only work if they have more high-value customers not to care about my business.
Number four was applied by Trello that decreased the number of PoweUps to one – essentially forcing you to pay if you want to use any of them (because “Calendar” is already a PowerUp). Often, the application of these upselling tactics take place after the startup has been sold or there are new investors that wish to capture a larger share of value produced by the service. Obviously, this comes at the cost of free users who previously had a great deal (=large share of value provided by the startup), now reduced to “good” or “decent” deal depending on their tolerance level.