How to increase free trial conversions by securing early commitment with credit card info

Summary

We moved the point at which a user is asked to enter credit card information from after the free trial expired to at the beginning of the free trial. This move reduced the number of free trial sign-ups, but significantly increased the conversion rate of free trial users to paying users, resulting in a significant increase in site ARPU

Overview

Cooksmarts is a subscription-based business that provides subscribers with access to a variety of meal plans, shopping lists and recipes. A user selects a meal plan and Cooksmarts provides grocery lists and recipes for the selected meal plan. All you have to do is buy the ingredients and cook. One less thing to think about.

Cooksmarts uses a free trial model where a user is offered to sign up for a free trial, and after the trial ends, the user is upgraded to a paid plan.

Our task was to increase the ARPU metric by working with the Conversion Rate (CR) of visitors to paying users.

Research

We began the analysis by evaluating the post-signup engagement rate of free trial users. We confirmed our initial hypothesis that users with a high engagement rate during their free trial have a significantly higher propensity to convert to a paid plan after the free trial ends, compared to free trial users with a low engagement rate.

We know that one of the most effective ways to increase an engagement rate is to get a user to pay or commit to a paid plan in the future. Most people use what they pay for. The entire subscription-based, recurring-payment industry is built around this notion. So if you want users to pay for your product, first make sure they use it regularly.

Hypothesis

We reverse-engineered this user behavior and decided to increase CR to paid plans by stimulating user engagement during the free trial into a commitment to a paid plan in the future.

Our hypothesis was that by moving the point at which we ask a user for credit card information from the end of the free trial to the beginning of the free trial, we would drive engagement during the free trial and, as a result, increase the CR from free trial to paid plan. Of course, we were aware that this move would reduce the visitor-to-free trial CR, but our focus is always on increasing the actual amount of money a business makes per user (ARPU).

Reducing the free trial CR by asking for credit card information to increase user engagement is a counterintuitive strategy, but it’s a calculated risk based on user behavior data.

Solution

We created an alternate flow that asked users for credit card information at the beginning of the free trial, as opposed to the control flow that asked for credit card information at the end of the free trial.

Validation of the hypothesis

To validate this hypothesis, we conducted an experiment that measured the impact of the new UX on the visitor-to-paid plan CR.

The experiment had the following characteristics:

Type of experiment: A/B test

Traffic split: 50/50

Device: Desktop

Key metric: Visitor to paid plan CR

Number of sessions that participated in the experiment: 26,130 users

Number of conversions recorded during the experiment: 1,959 conversions

Results

As expected, the alternative's visitor to free trial CR decreased by 63%, but the free trial to paid plan CR increased by 91%. Overall, this change resulted in an 86% increase in visitor-to-paid-plan CR. Engagement metrics for free-trial alternative users, which indicate the propensity of users to convert to a paid plan, also increased: Average number of pages viewed per session: the alternative variation showed a 19.5% uplift. Average session length: the alternate variation showed a 22% lift. The result had 95% statistical significance and 0.85 power.