Once the experiment began, the researchers applied one of four conditions to almost 2 million existing app users in 99 cities. Two of the conditions involved a soft-landing approach and two, a hard landing. The approaches were further segmented into paid users who received an exclusive bonus offering (namely a fancier version of the personalization feature), and those who received no extra offering. Prices in all cases were the same, as was the main content.
The hard-landing approaches resulted in a higher conversion rate among users: this strategy led to 124 percent more subscriptions than the soft-landing versions.
The groups reacted differently to the souped-up personalization feature, however. Given the option to access this with a paid subscription, fewer users in the hard-landing group subscribed. The offer may have prompted them to devalue the existing offerings, the researchers suggest. But in the soft-landing group, the offer of extra features nudged a few more to subscribe.
In an industry with an already low conversion rate, even small differences like these can lead to big revenue swings, the researchers write. This particular company stood to gain 102 percent more revenue—just shy of ¥11.9 million (US$1.8 million)—by taking the hard-landing, instead of the soft-landing, approach.
“There are so many apps being created every day and each is coming to the table with its own prior beliefs about what is right and what is wrong,” says Chintagunta, who notes that researchers need to gather evidence about all types of monetization strategies, including advertising-based models. However, for the subset of app developers who hope to make money without ads, the findings suggest a clear path forward to monetization.