We wanted to use the Beta phase of ChurnIQ to get your feedback on how different aspects of our analytics could be improved. A hot topic in this feedback was the Trial step of the Retention Journey. We got some great suggestions on what we could show on this dashboard, and in this article I will explain how these improvements work.
The two big changes you need to know are how the free trial conversion logic has changed, and how you can now put a monetary value on each new trial signup you generate.
Trial Conversion Rates - Old vs. New calculation
A key change we have made is in the calculation of trial conversion rates. From now on, you will see a much more recent view of your conversion performance, and you will no longer see your conversion rate trend downwards for recent days or weeks when you use a relative date range (like 'past 3 months').
To illustrate how this change works, let's take the following simple scenario with 4 basic facts:
- Date range is last 2 months
- Free trials started = 100
- Converted trials so far (from this 100) = 20
- Trials that ended in this date range overall = 70 (50 converted/20 churned)
Whereas the previous logic focused primarily on facts 2 & 3, our new logic is going to focus on fact 4.
Old conversion rate
The old conversion rate logic focused only on trials that started in your defined date range. If trials converted in this period, but started earlier, they were not included in your conversion rate.
So in the given scenario, your conversion rate would be calculated like this:
Old conversion rate = 20 (trials converted from start group) / 100 (trials started overall)
The problem with this calculation is that 20% does not truly reflect the rate at which you are converting trial subscribers to paying subscribers, simply because many of the trials have not finished yet. All you know is that 20% of the trials have converted so far. If a trial started yesterday, well we don't know what happened at the end of that trial yet.
So for historical analysis, this method works fine. Because eventually all the trials will end one way or another. But for recent analysis, like 'past 3 months', this method is problematic. Simply because unfinished trials are treated as unconverted trials, artificially deflating your conversion rate.
New conversion rate
The new calculation of your trial conversion rate takes a different approach. In contrast to the old logic, it calculates your conversion rate based on trials that ended in the defined date range. Let's take our scenario again:
New conversion rate = 50 (trials converted in this date range) / 70 (trials ending in this date range)
So you can see that there's a big difference in your conversion rate, but you now see the real rate at which you are converting at all times.
It's important to remember that for any period of time where you have complete data, ie. all trials have ended, both methods of calculating your conversion rate would give you the same result. It is all based on whether or not trials converted. With the new method, however, the time lag has been removed.
Getting a Value Estimate For Each New Trial Signup
Another great suggestion we received was changing how free trial ROI was presented. Previously, we presented the total revenue generated by free trial signups from any period. However, this information was not so useful if you had free trials in place for each of your offers. As it was more of less the same as your Offer revenue analytics.
What was universally useful was a measure of what an average free trial was worth in revenue terms. Not just converted trials, but free trials generally. In other words, if a free trial signup costs you an average of 0.50c to generate, what is your return on that investment?
So we have added a new metric that tells you exactly that: 'Average Revenue Per Trial'.
Here are some ways that you can use this metric:
- For your all time free trial ROI, set date range to 'any time'
- For your 12 month ROI, set the date range to the corresponding week (or month) 12 months ago, like this:
- For your immediate ROI, your date range will depend on the length of your trial. So if your trial is 1 month long, set your end date to 1 month ago, and your start date to 2 months ago:
These different queries each give you a sense of the value of a trial signup over different timeframes. The most relevant timeframe for you depends on how long your average subscriber lifecycle is. If your subscribers typically stay for 6 months, then the best valuation of a new free trial will be found by looking at a timeframe from 6 months ago.
This metric is very useful for making decisions about your subscriber acquisition spend. The higher value a free trial generates on average, the more investment you can justify in generating more of them.