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by bmcnamara82
5786 days ago
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"Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base." From Fred Wilson's mouth (he coined the term "Freemium") |
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First of all, people who don't pay are users, not customers. Secondly, how are conversion rates of less than 2% considered efficient?
In the freemium model, even if cost of customer acquisition (COCA) for a free "customer" can be considered to be zero, Life Time Value (LTV) is increasingly negative.