Freemium company YouSendIt is known for its service that sends files too large to move through email. More recently, it’s pushed into other service areas such as storing and synching files among a user’s different computers and providing digital signatures, to expand its offerings.
But most people don’t realize the amount of effort that YouSendIt puts into testing offers and pricing. Why? Because the results help make the marketing more effective and increase the revenue of the company. What it has learned about testing marketing can help you too.
1. Always test
Telling a company to test its marketing might seem obvious, but many entrepreneurs don’t, or they fail to do the level of testing they should. That’s too bad, because what you learn through testing can radically improve your results and bottom line.
According to vice president of product and business strategy Brian Curry, YouSendIt has learned to improve its business remarkably through testing. The expansion beyond sending large files is a great example. Those who use the additional tools are 75 percent more active on the site than the average customer.
“If we look at last year when we didn’t have [the additional services] in place, the number of engagement events or touches on the service was about an average of 4,” Curry says. For the group trying the new services, the average is about 7. “If I can get them to use the new things other than just send, I get a much higher degree of engagement.”
That’s still access to free services, but look deeper as YouSendIt does and you see that every contact is another chance to potentially interest the customer in a paid subscription. And the conversion rate to paid customer increased by 40 percent.
2. Critical points of interaction
It’s not enough to know that people are experiencing your marketing (for freemium companies, providing the free services is how they market). You also should know how they behave differently over time.
YouSendIt is particularly interested in retention rates—how long customers keep using the site. The longer they use it, the more they use it, and that means additional opportunities to convert free customers into people who pay.
The critical window for the company is 60 days. That’s the point at which there is significant churn in the freemium customers. Lose the customer at that point and you’ve lost a chance to gain a paid subscription. The additional services have increased retention rates by 20 percent.
Even if there wasn’t an immediate lift in customer conversion, for YouSendIt, increasing retention could be enough to cost-justify the additional services. The specifics are probably different for your company, but look enough and you’ll see the critical points and aspects of your customers’ interactions.
3. Find the right discount
To assume that you can only attract customers through discounts is to turn your business into a commodity provider, lowering your margins and increasing your cost of acquiring customers. As YouSendIt did, you might learn that discounting to attract a customer might become less necessary.
“Our other thesis was as we add more value, we have permission to not necessarily raise our price point, but achieve the same growth we were achieving before but without discounting,” Curry says. It turned out that the discount they offered was more than necessary with the new services. “We’re discounting less often and we’re discounting less when we do.” Without testing, the company never would have known.
4. Segment customers
For a similar reason, YouSendIt now offers trials of the premium services to many more users. Part of the marketing process is seeing how to best group these people. The company will see how long someone has used its services at all and examine any possible clues for the vertical industry a given person might be in.
Some segments can have a higher correlation with different marketing programs. Those who have been using YouSendIt for longer often respond most favorably to a higher promotional discounts. Learn to separate people into appropriate groups by experimentation and you can find how to make your marketing more efficient.
5. Don’t over-test
Testing is important, but “just because you can test everything doesn’t mean you should,” Curry says. “It can really slow you down.”
Instead, start with a hypothesis—maybe it’s that customers are more likely to buy product B after they already own product A—and then get data from the offers to come to a conclusion. Also, don’t make wholesale changes across the board. Make tests too complicated, and you might find it difficult to come to conclusions.
The more effectively you begin to test your marketing, the greater success your business will see.