Achieving Mission & Profit with Freemium Apps: Sub Club Podcast

0:00hello I'm your host David Barnard and my guest today are Aaron Webster Schaller VP of marketing and Paul Apollo senior VP of operations at lose it one of the first health and wellness apps on the App Store on the podcast I talked with Aaron and Paul about balancing Mission and monetization the challenges inherent to referral programs and why lose it had to abandon a big push into paid user acquisition hey Aaron thanks so much for joining me on the podcast today thanks for having me David I'm happy to be here and Paul thanks for joining me as well it's great to have two people from lose

0:35it today yeah thank you very much I'm excited yeah looking forward to having both your perspectives as operations and marketing and I know Paul you are actually in the marketing org before and then moved into operation so it's gonna be fun to have both your voices here today so I wanted to kick things off talking about lose its Mission and I know y'all are such a mission-driven company and I think it's going to be really great context for the entire conversation today so Aaron what is lucid's Mission yeah so lose it I think the best way to answer this question is to go all the way back to when we were

1:09founded we were founded in 2008 if you can think back to when the iPhone was just becoming a platform that developers were starting to build apps for our founder JJ Allaire was tracking his calories in an Excel sheet and thought well I could be doing this better on this new fancy handheld device called the iPhone and he built the very first version of lose it put it up on the App Store I think you needed an email address at that time in order to submit an app so we created an email address and that email inbox started getting flooded with people saying like this app is amazing it's helping me keep track of

1:44what I'm eating I'm losing weight kind of realized like oh I have a product I have a company here so all the way back from day one this company was built to help people lose weight and that has been a Common Thread through the entire 14 15 years that the company's been around round and it's so much a part of our DNA that for a number of years our bonuses that the company were paid out only if we met our Revenue goals and our weight loss goals so helping the world reach a healthy weight is really really ingrained in our DNA what's the actual mission statement I think I've heard

2:17this before and really enjoyed it what's the mission statement yeah our mission is to help the world achieve a healthy weight awesome that's so cool it's really interesting too to hear that bonuses are tied to people losing weight like that is so Mission driven Paul how do you think about your role in terms of that mission like how do you operate in marketing and operations with the goal of helping people achieve a healthy way I've been at lose it now for just over nine years when I've been in growth Marketing in some form the entire time and the way I've always had to think about it is our free product is always

2:55exceptional because as part of fulfilling our mission we want to make sure that there is an excellent free product available for anybody who wants access to it and it's always been my role to try to figure out how to help create a version of Premium that's worth buying even with such a strong free product and how to position it to free users so while like acquisition is part of my work now we've always been very focused on LTV and very focused on converting our free users and so my job my role has always been to like not diminish the brand not ruin the free product and still produce sustainable

3:35growth and convince people that premium is where they should be which I've got to tell you it's a challenge because the free product is really good Aaron same question like how do you think about day-to-day as VP of marketing helping people achieve a healthy weight yeah it's an interesting question I think it really shows up in the messages that we're putting out you know how we talk about the product there's a lot of gimmicks in the weight loss industry and we try to be really authentic and real with like what this product can help you do but also not oversell it not promise something that isn't realistic and just

4:08to Echo what Paul said I mean our free product is the thing that we Market the most because it's both like a really easy entry point for people to get in and experience what we have to offer but it helps us to fulfill that mission right if we can get somebody using our product even if they never pay us they're helping to you know achieve our mission of having a large user base that achieves our goals but also maybe they'll then turn around and tell their neighbor about this free app that they use to help themselves reach their goals so free users help us just as much as we

4:40can help them that's amazing I do want to step back so you talked a little bit about the founding of lose it in 2008 and funny story I launched a health and wellness app in 2008 it was called Health cubby and it bombed but I saw lose it and was impressed with it and I had already been planning to release a health and wellness hat but I just took a totally different approach that did not resonate so I've actually been keeping an eye on lose it for 15 years now I was releasing apps within the first month of the App Store so I was around back then as well so I wanted to

5:15talk a little bit about that Journey so it was founded in 2008 what was the early monetization because I know y'all switched to subscriptions in 2012 and neither of you were there back then but I'm sure you kind of have the company lore an understanding of kind of how things went but what was the early monetization and then what was it like transitioning to subscription in 2012 which was fairly early for Consumer subscriptions as well actually there never was a monetization strategy prior to purchase purchasing premium so the first few years was all about developing the base and actually they developed a pretty healthy user base and then had a

5:49small series a to give them some like walking around money to hire a team and they built out lose it premium and I think that was in 2012. my boss was hired to help them create their monetization strategy he's our managing director now Patrick Wetherill way back in like 2013. it went from being a completely free app to being a freemium app with premium subscriptions and really was never anything else and we never even had ads in the product until the late teens we dabbled with them it was always about premium that's super cool anything to add there Aaron on that Journey I'll just say that it was a very

6:28successful strategy we became cash flow positive in 2016 and profitable in 2017 so pretty relatively quickly I'd say that that premium strategy really paid off yeah that's incredible and then it was so proud profitable that you're actually able to buy out your series a investors tell me about that so in 2020 our CEO Patrick at the time started on a path to figure out how we could buy out our series a investors and really just I think the idea there was to give the company flexibility and give us like true ownership if we wanted to eventually be acquired or become a b Corp you know I think he had a lot of

7:07ideas both him and Charles Teague our previous CEO on how they could take this business and so buying out our initial investors gave us the flexibility and the autonomy to do what we wanted and when we were acquired in 2022 by ziff Davis we were fully employee and founder owned so it was like a really cool way to exit and a really great end if you will to like that era of lose it that's so cool I know it's been an exciting Journey since joining Sif Davis we'll have to talk about that maybe in a couple years from now I know y'all are still kind of learning and exploring and

7:40kind of feeling out how it is to be part of a bigger company I wanted to dig into your freemium strategy and this is something I think so many apps struggle to get right and having started as a completely free app layering on subscriptions and then iterating on this freemium over uh decade plus there's so many lessons and I think one of the things that folks really struggle with is what are the features that are really going to drive adoption so you talked about early on you did really well monetizing these more advanced features but then over time what experiments has Lucid done to figure out like what

8:20features are going to drive that premium user base like what features have been layered on what experimentation have you done to move things behind the paywall or in front of the paywall and let's talk about that Journey from these few locked features in 2012 to now what the app looks like in 2023 as far as like which features are really driving adoption and how you speak to those features I will say we don't do a lot of testing on locking features we do it occasionally we've gotten burned in the past we ran a test just to see what would happen a while back where we tried

8:54locking all macro functions in the app and this was years ago and it was not actually worth that much money to us and it made everyone really angry um so we're a little bit once bitten twice shy there what we do do is a lot of testing around messaging for features a lot of testing around how to position things like we do position premium as the thing you do if you care about your carb intake there are free carb features but really what we tell you is that if you care about carbs you want premium and that's true because you can do a lot more with carbs once you have premium

9:32and so we do a lot of positioning testing we do a lot of messaging testing as for like new features there's a lot of market research that goes into that and then those generally will just get released and then we'll do our a b testing on messaging there which is maybe something Aaron would want to speak to more than me over the years we've kind of developed this framework for how we think about what's free and what's premium so at this point you know in 2023 we think of the free product as being enough features to lose weight primarily through calorie tracking so if you're really just focused on calories

10:08and calories out you can be very successful with our free product macronutrient tracking more advanced diets like keto or intermittent fasting calorie cycling like all of that is in premium so if you're really trying to level up from just basic calories and calories out premium's got over 40 features that can help you do that and so that's kind of how we think about today like if we're developing a new feature does it go in premium or does it go in free and over the last few years we've really added a lot of features to premium that's been our main way to justify that price continue to upsell

10:41people we try not to take free features and put them behind the paywall but if we have to we will Are there specific features that have really resonated and between the messaging and it's just being really valuable to users that have really driven adoption of the premium subscription yeah apps and devices which obviously a bunch of that's free now because like our Apple integration isn't behind the paywall or like our health kit integration but apps and devices has always been a big crowd pleaser people want the Simplicity of like dumping all their data in one place and getting a number to follow from all that without

11:16having to think about it we've made a lot of hay from that also fad diets have come and gone a lot in the last 15 years but one through theme of all of them has largely been carb intake we track all kinds of macro nutrients and some micronutrients but generally speaking we're talking about carbs because for the last 10 years that has been what people care about usually all the way back to Atkins right like yeah it's a carb diet ultimately a lot of these diets even things like keto and to a lesser extent paleo are all tracking diets so we can support them with macro

11:52features and so we talk about those a lot and we have a lot of adoption with them the other message that resonates very heavily with our audience is the discount messaging so when we talk about how much money somebody is saving or all the value that you get for a very low premium price as much as I would love to say that talking about our features is the better performer it's not talking about a discount you know our audience is very price sensitive and so that is a message that we lean pretty heavily into I was actually going through the onboarding yesterday and was super impressed I don't know if this is an

12:24experiment or this something you experimented with with the past and like everybody sees it now but I went through and I set up all my goals and everything like that and I've actually lost 65 pounds over the last decade so I've been on a weight loss Journey used various apps off and on along this Journeys and I still have a little ways to go you know I was going through it as like okay I still have some weight I want to lose and some fitness goals and I got all set up and then the paywall came up and it said you know join premium I hit the X

12:52and then I answered a few more questions and then it said hey these two features that you configured I think it was like intermittent tossing and you know one other feature that I set up in onboarding it said hey these are part of the Premium plan do you want to continue with the basic and not use these or do you want to subscribe to premium to get access to all the features and I thought that was a really brilliant upsell I don't know if either of you specifically worked on that if it's still a test but tell me the story of that because it's really smart yeah so the idea of

13:23introducing loss aversion as part of onboarding is kind of uh evolution of our longboarding strategy which we've been engaged in since like 2018 so to start and actually for most of the history of the company we have to onboard because there's some information we need to know about you in order to set your budget right like if you calorie budget we need your age up until pretty recently we needed your gender we need your height all that kind of stuff and your weight and your weight goal our philosophy for a very long time was to make that process as quick and painless as possible as friction free as possible

13:57get people into the app get them using it and we'll use contextual promos pop-ups to convert them we noticed a trend especially in the health and wellness space but throughout the App Store back in 2018 that was like these onboardings are getting longer and they're getting longer in a way that is kind of maybe inexplicable like there are questions being asked that there's no way they're being used as part of like product setup so what we started testing was all right what happens if we just ask people more questions we don't necessarily care what the answers are we just make onboarding longer and we found huge success from that like internal

14:35nomenclature I think we call trial start rates trial take rates our trial take rates went up double digits as onboarding got longer and we basically just kept making it longer and longer and longer until we got diminishing returns which is how we got where we are now so that was largely a marketing play but the promise of it was always that we could use this information to customize the product it just took engineering resources and I'm sure you can imagine that a 40 person company those are tight but eventually a few years ago we introduced a feature we called the Weekender which is calorie recycling feature and we allowed people to set

15:09that up in onboarding and we found that if we ask people hey do you want more calories on the weekend and they say yes they convert more we've spent a long time since and like you saw the eventual output of it finding features that people can set up during onboarding because it really introduces this idea of loss aversion especially after you've spent like 10 minutes taking a survey right um getting into a headspace where you're ready to invest in yourself or maybe you're excited about getting started I mean for free for seven days I totally want to get the entire thing I just set up yeah and actually that was one of the

15:44features I was really excited about I mean I've read about how calorie cycling is actually really helpful and I've kind of naturally done that since I had never really went super hardcore you know it took me 10 years to lose the weight I never did like a crash diet or anything so I've just naturally like done color Recycling and so when I saw that I was like oh that's super cool coloring cycle is something I want to actually do and the app is set up to do it and then I got to that final thing and it was like oh no I'm not going to get to use it

16:11unless I start to free trial so it's super effective I was impressed with the strategy and so folks can go download the app and go through the onboarding and kind of get to experience that and then you know again I think it resonated even more with me as somebody who has lost weight and thinks about all these kind of things so folks who maybe aren't on that Journey might not resonate as deeply with but I think there's lessons to learn from some of the things you're all doing in there that's great one thing I will say about that is we have tried adding a bunch of Premium features

16:37to onboarding and a lot of times it doesn't work and it doesn't drive increased conversions onboarding is big and complex and we do not touch it without running a b tests because it's so high leverage and we have found that a bunch of the types of features we've tried to add like actually are gumming up the flow and causing pain so like if you're going to employ this strategy it's not a silver bullet you have to really think about what makes sense to set up at the beginning of your journey and what's going to have like immediate resonance like having a carb chart set up for you as like your immediate

17:08feature maybe isn't something you care about on day one and so saying set a carb goal obviously with nutrition plans we've gotten more sophisticated about that but back in the day we're like set a carb goal as part of onboarding and it lost quite badly so it takes off odd it takes fit yeah I appreciate you taking this direction because yeah you don't see all the failures that lead to success but internally you've seen all those failures and so you have the context of like oh this works but it works because this feature really resonates not because it's a silver bullet so thanks for following up that

17:40was great Aaron it looks like you had something to add as well yeah I think the only other thing I'd say on that the topic of onboarding is getting in the headspace of our users most people who come to our app this is not their first time trying to lose weight and so they have tried and failed probably many times before they download lose it and so part of what onboarding I think gets at with our user base is like helping them to get into the right headspace to actually like stick around and commit to their weight loss goals and so I think for us it was a huge unlock like when we

18:11did all the testing that Paul just talked about like lengthening the flow what we uncovered like the real learning there was that people need some help getting into the right mind frame to be successful and actually stick around with the product a little longer so you know works for our app because I think we're in a very unique industry of weight loss that really requires you to be pretty committed to stick around for a few days but something else to add on top of just the mindset of our users really matters here I think an important piece of supporting evidence for that too Aaron is we actually improved

18:42retention for free users who went through that flow as well it wasn't just a monetization strategy right it's if people touched this experience and actually thought about it and felt like this was being customized for them they just did better which we thought was like a nice little bonus it obviously was not the primary reason we were doing it but we track it because if it ruins the free experience like that's a big problem we don't want to do it but turns out it helped yeah and it's great that you can align your mission to both the monetization and keeping the free experience really good and so a lot of

19:15folks end up choosing monetization over the free experience in a way that wouldn't align with the mission and so it's great to hear that you're able to balance it us to and I just keep hearing this over and over again on the most recent podcast with headspace we were talking about that how like when people have more buy-in they just engage more and so whether that's a really short onboarding and then right into a free trial because there's High intent or whether it's building up intentionality with this longer onboarding either way some level of investment actually leads to more engagement which seems counter-intuitive but it makes sense

19:51once you kind of like explained it that way so really fascinating and really interesting to hear how it played out at least hit I did want to take a step back and talk marketing more broadly so Aaron what is the mix and what has been the mix of paid marketing App Store search like how did that build 8 million users by 2012 and then I imagine it's quite a bit larger today what does marketing look like at lose it yeah I think at this point we've had over 50 million users who've lost over 135 million pounds so the impact is pretty staggering when you look at the

20:27cumulative numbers over the years but all the way back I mean from day one this app grew through word of mouth and organic acquisition and that's been another theme you know that stayed consistent over the last 15 years our paid marketing is a very very small part of our overall marketing mix and so when we think about marketing it's really trying to drive people to that free experience and then you know we kind of hand it off to Paul and his team to monetize once they're in the product so we really are focusing on App Store optimization obviously that's a huge lever for us on both the App Store and

21:01the Play store and then leveraging other organic and word-of-mouth channels as much as we can back in 2019 our big strategic Initiative for the year was to try to get off this organic user flow as our like primary source of income users we went big with a big budget on paid acquisition and it was basically impossible to make the economics work out obviously we were still cash flow positive because the organic base was subsidizing these folks but economically it was just setting money on fire we were seeing row as like when we tried to scale obviously current marketing is a lot more efficient because we keep it

21:39humble but when we tried to scale we were seeing row as is as low as like 10 and at that point like what are you doing and that's tough when you were going after cold audiences with a freemium app because we actually generated a fair number of users they were just free we weren't monetizing them wow that's quite a story ten percent you were measuring that at like day 30 for the roads yeah so what we were doing is trying to create row as curves which our user base is actually pretty predictable and if we apply curves to the first 10 days we get to within a pretty good confidence where

22:17your eventual LTD is going to end up and so 10 of the predicted LTV not 10 of no yeah it was the 10 day it wasn't it wasn't observed LTD if you went back and looked at those cohorts now they'd probably be like 0.3 or 0.4 but that's still like over a five-year timeline not great but anyway I mean whatever it was something we had to try right like everyone was doing it so we had to see is this possible for us because obviously being attached to our organic user stream is both potentially dangerous and it can inhibit your growth because you can't make more users if all

22:53you're getting are the ones who are coming in for free yeah the scalability of marketing channels is tough and it's interesting too I mean I think paid marketing maybe part of why it didn't work for lose it is that you are so Mission driven it's that the companies that are making paid work have to make certain compromises in the product in the price in the freemium experience in order to get that return on ad spend in a reasonable time frame and so it kind of makes sense and this is where everybody's got to run their own business it's like you can learn things that you know I talked to y'all I talk

23:27to all sorts of folks on the podcast but so many of the Dynamics at play only apply to this very unique position that loses in where it's in the health and wellness space for this High intent but you've got such a dynamic user base coming in and as the app evolves and as you do different marketing channels people perform differently and like you've got to start evolving the business so yeah it's fascinating to hear that you did a big marketing push and just couldn't make it work but then you look back and it's like oh well that actually kind of makes sense no and we pivoted and I think we're quite a bit

23:57cheaper than other players from the space yeah and I think a big part of that reason is because we're not historically trying to make paid work right we tested to where we are extensively but again we are testing on this organic base right if it's like you need to make Facebook work I imagine our price point would be very different yeah I mean look at noon 400 Weight Watchers is like super expensive so yeah it's like a totally different business when you're charging that and then you know an app like Noom it even has a hard paywall you can't even use the app there's no freemium it's like 400 a year

24:32it's crazy but that's just a totally different business driven by different Mission different Dynamics different everything so well yeah even our closest parody competitor is my fitness pal and they're double our sticker price and again I think it's because they have to make paid marketing work Aaron you talked a lot about Word of Mouth Are there specific things y'all have done to incentivize that to encourage that to like find ways to it is a marketing channel but it's a tough marketing channel to scale like what experiments have you done and how do you push Word of Mouth we have run some experiments on how do we get people to spread the good

25:12word about lose it more and one of the things that we've learned over you know the years is in weight loss right in this industry you don't want to talk about it until you've seen success talking about like oh I'm trying to lose weight there's a whole bunch of psychology around why you might not want to but when you find successes you start losing 5 10 15 whatever 50 pounds people are noticing now you're going to scream from the rooftops right like look at what I've accomplished even if you have more weight to lose and so the way we structure this part of our marketing engine is targeting people after they've

25:45lost some significant weight and that starts at five pounds because for some people that's like their first initial Milestone and so we've got programmatic emails that go out at a few weight loss Milestones asking people to tell us their story you know know just the series of questions they can send us photos if they want but just the ACT I think of seeing that we're celebrating them and what they just accomplished and then the act of responding to that survey giving us their information we haven't run an actual experiment to prove that like that person's brand relationship is stronger but it would make sense that it is right like if you

26:18take 20 minutes to type out a story like your story to us I think you're going to feel more strongly about the brand and we use a lot of those stories in our marketing so if you check out our social channels or even in our emails and in-app messages we put our Members First very frequently like their successes is a huge part of our marketing Communications so that is something that we've learned over the years of like targeting these messages when somebody's feeling really good about what they've accomplished really helps us to drive that word of mouth flywheel a little bit more yeah and then I know y'all

26:49experimented with a referral program I talked to so many developers this is like the Magic Bullet it's like you know they've got a hundred users coming into the app you're like oh if I can just get a referral program set up you know my users are going to be driving you know if I can incentivize them it's going to totally remake my marketing so y'all have had tens of millions of people to experiment with this referral program how did it go we were trying it during a time when we were really trying to ramp up our premium subscription so the referral program was set up so that you

27:20got a 10 gift card if the person you referred upgraded to premium so back to that connect to LTV ratio that Paul was talking about earlier we're essentially paying ten dollars for a premium subscription and I think the economics worked for us but it just didn't scale as much as we were hoping it would it was fine it was making money it was breaking even but it wasn't really driving this massive influx of Premium users that we were hoping for and we didn't do as much experimentation it was clunky to run we were using a third party system and didn't really have a lot of internal support to keep

27:54experimenting with it and so we killed it after like a year but I'm really curious to try to test something that's more incentivized on like just installation or back to the headspace conversation you had a few weeks ago like trying to do more of a sweepstakes idea like the top 10 referrers get the meeting with our or like a month of dietitian consulting or something like that like kind of trying some different ways of incentivizing not about premium purchase but just about getting a volume like how many people could you invite we know that Community helps you with weight loss like if you're on a weight

28:28loss Journey alone you're less likely to be successful and so it's in our best interest as well to try to incentivize people to get their friends joining in because we know that it'll help them be more successful in their own Journey so there's a lot we still can try there for that referral program I think the reason it ended up getting killed Erin scalability issues were the primary concern but the issue we had with it was the same issue you have when you pay for like branded searches it's really hard to know what's incremental and how much are you paying for stuff you would have gotten anyway and the issue we were

28:59having too was people who were exposed to the treatment for this particular referral program had lower LTV than people who weren't and so depending on how much of it was incremental we may or may not have been breaking even ish but given how difficult it was to run the program given that it wasn't a slam dunk given that we might be losing money probably not a lot but we felt about it the same way we felt back in the day about in-app Network ads like it's not that much money and it is such a pain to manage that it's just not worth our time when we're like a 30 person program I

29:34mean I've heard that from a lot of folks is that you ramp up this referral program and you start to realize well the people who were going to share would have shared anyway and now we're giving them money to do something they would have done anyway like what are we doing here so yeah it's interesting to hear that and apps eventually figure out ways to make it work and it sounds like you'll still have some experimentation to do and maybe it will play out in the long run to be a worth while Endeavor but it's just not that silver bullet that I think a lot of people think it is

30:03it's a lot of work very few apps are going to make it a double-digit percentage of their user acquisition even with a massive freemium base it's just a numbers game like how many people can you expose to it and then the typical conversion rates apply like if you put it in front of a million people how many are going to take action five percent maybe less than five percent and then those people who take action and share it how many people they share to are going to take action five percent less than five percent like the funnel gets smaller and smaller even when you start with millions or tens of millions

30:33of users so yeah I prefer a program such an interesting topic so thanks for sharing your lessons there so Paul you talked earlier about life cycle messaging and we've kind of it's been this thread throughout the whole conversation of like how you over time encourage users starting all the way from onboarding to sending follow-up emails of exposing this freemium base to the premium and keeping those premium users engaged so let's just start with a high level like how does lose it think about life cycle messaging and then we can get into some of these more tactical things that you're doing the way we think about our users day-to-day

31:11marketing is you're either new you're reactivated or your base new users have just signed up for the first time reactivated users have come back from a long absence and the base is everyone else which is in a given day more than 90 of our daus but not actually that much of our money so firstly we focus on the segments that make us the most money and we spend most of our time there and we try to hit them while they're in those segments and we usually do that generally with Iams with sales so we try to make sure we're hitting people while they're still in the app knowing what our attrition curve

31:44looks like but we also look at things like base users who have been using the app for 30 days and they haven't converted and we've done their research to know that they're not going to convert now the only way we have a prayer that they convert is if they leave and then come back so for users like that we'll offer steeper and steeper discounts so until like okay you don't want to give us forty dollars will you give us five dollars and there are some people who won't but it allows us to take cohorts that otherwise we're just not monetizing and make something and we feel philosophically good about

32:16it because like we're rewarding people who have stuck with the program for a long time and we're giving them like an exclusive discount that is actually an exclusive discount to them while at the same time monetizing users we probably wouldn't have monitor guys like they have a very very small chance of ever getting us money at that point that's so fascinating so in all the analyzes you've done of the freemium base because this is kind of the promise of the freemium base and I've talked up this promise on the podcast in the past if like you build up this freemium base and they convert over time but you've found

32:47that if they haven't converted within 30 days they're just single digit percentage likely to convert anytime in the future yes and not only that if they convert it'll be because they leave and come back and we hit them as a reactivated user which is kind of they operate if you look at their stats somewhere between new and reactivated users the thing to remember for us though is we are in the weight loss space and weight loss just as an industry has a brutal attrition curve users don't stick around or if they do stick around it's because the product is working for them right if you're 30 days

33:21into a weight loss Journey maybe you've hit your goal weight or if you haven't you're sticking around something is working for you and you've decided you don't need to be on premium right and again we have the mixed blessing of having a very strong very featured free product and so there's going to be a subset of folks that just don't need premium or it's impossible to measure obviously but there's this like group of folks who just want the best thing and it's not even a feature thing for them it's like I just want whatever the best version of lose it is and some people don't need the features and they don't

33:54need the best version and just being a regular user is fine but maybe you've lost 30 pounds and even if you don't think you need it you'd be willing to give us five bucks not 40. that's so fascinating any other lessons from like user research and surveys and other things to understand the psychology of those users I mean I've heard people say you know when I tell them I work at Revenue cat and I build subscription like I've run a app business for 15 years now and then they just tell me to my face like oh yeah I don't pay for apps there's like just a psychology of

34:24like digital things are worthless or they're worth something but I'm not going to actually pay money for them are there lessons like that you've learned in talking to users I think we've talked about most of it right like some people just don't pay for apps or some people are that's why they came to lose it because they knew that they could lose weight for free you know I think that's maybe one of the detriments of our brand is that everybody knows that there's a pretty good free offering but I think just like what we said earlier is like if you're finding success with the free product why upgrade um if it's giving

34:53you what you need then there's not a ton of incentive to upgrade further on in your journey we try to build premium products that are really good for new and reactivated users just knowing how our attrition curve looks and so I think it's a strategy we could take in the future if we wanted to build premium products that would be really great for folks who have used the free product for 30 days we could take that tactic but we haven't really focused on that just based on you know the numbers that Paul just took us through it's really interesting that you segment into these two things so either new 30 days or

35:25reactivated 30 days you're mentioning Paul that there are specific leverage points that help convert folks to premium in that early life cycle how have you worked to discover those kind of Leverage points and then do you have some examples of then how you leverage them and encourage people to cross that line and become a subscriber yeah it's been a big growth data science joint project to try to identify those things and dumb things like stuff I'll do in a spreadsheet like if people do this are they worth more money to very Advanced machine learning models from data science the big problem we have there is what I dub the like good things are good

36:06problem which is the greatest sign of future success is Success so like if you're trying to predict a user who's going to convert you're going to be like oh it's a user who actually uses the app but we have been able to identify some leverage points using those items like for instance we offer streak sales so when users are on like a 30-day streak which isn't a big cohort we call them efficiency plays because most people don't like I've never had a 30-day streak and I've been trying to lose weight for a decade we offer you a very discounted piece of Premium there and again it's a small cohort but we've

36:40massively improved the efficiency of that cohort by catering something to them and that was like I like that because that was like a Soup To Nuts data science identified that it was a potential leverage point with a model growth came up with an experiment to see if we could hit that and we ran an A B test and it worked we're not going to retire on that money because it's a small cohort but but a bunch of small wins like that are ways in which we've tried to improve the base monetization which has improved steadily over the years I don't want to make it sound like

37:09we don't care about monetizing our base because they're an important segment but we do spend like 80 percent of our time on new and reactivated users just because you know if you're going to get a five percent win you'd rather do it on the users who are already 50 of your bookings you kind of touched on this earlier Paul but I think it's fascinating how you found in-app messaging to be so much more powerful than push or email so yeah I'd love to hear the strategies the successes and failures that led you to focus more on in-app messaging and you actually used the acronym earlier so I'll clear it up

37:41for our listeners IAM in-app messages which I hadn't heard that acronym before but I was like oh yeah that makes sense so how do y'all think about in-app messaging and what experiments did you run over the years that told you that was just such a more more powerful point of Leverage so in the very earliest days when we were going to send an email blast we sent in-app messages instead with basically the same offer shorter form the same content and we saw oh wow the people who see these are worth just way more and the way we used to run those tests too would be we'd take an

38:14entire segment of the user population that existed not was like in the app but existed and we would give 50 one treatment and 50 the other and in this case we'd send emails or now we were sending in at messages and so even though only a small subset of those people were actually seeing the messages the denominator was the cohort of folks who were eligible for them and we were saying that like oh man when we do exactly the same thing and change the format we're making 10 times more money and so that was how we migrated into being an in-app message first app prior to that we knew that the app was

38:49leveraged back then I spent all my time trying to convince Engineers to build contextual promos for us what in-app messages really unlocked was the ability for us to like quickly iterate and test out different messaging and inject sales as part of the offer and just Empower marketing to do marketing things instead of working on like a product time frame we still think contextual promos are super valuable but the idea is just that like if you're actually in the product you want to buy and you hit a speed bump or you get an offer and you're just in the headspace to do it it's a much lower

39:23lift to just like start the Apple subscription or the Google subscription or whatever that's part of the psychology I mean there's also just a math thing like how many people are actually going to open that email and then what is the actual funnel look like once they open that email whereas the funnel is way shorter and more direct and you're a way more qualified user if you're getting an in-app message because you're in the product it's also like completely free whereas email is nearly free in-app messages the only thing you're paying is opportunity cost and like setup fee for whatever tool you're using Aaron working on marketing what's

39:56your perspective on in-app messaging and how do you interface with the teams that do that yeah we've done a lot of testing over the years on like the Cadence of in-app messages and the actual copy itself like what are we telling the user when we interrupt their flow in the app one of the really interesting things from a number of years ago that we learned was the delivery of when we sent the message matters a lot so if we interrupt your logging flow like our app is a food tracker right you search for food you add it to your log if we deliver messages during that experience

40:26like that's obviously a pretty horrible user experience but we could see it in the experiments that we ran that people literated and they didn't upgrade but if we hit you with that message after you're finished logging or after you've marked your day complete for the day like those times are a lot more beneficial both for the user because you've just told us that you're done with the thing that you came in to do and then also for us because you're kind of on a high right you just accomplish something for that day so we hit you with a message kind of celebrating doing what you just accomplished and offering

40:56you something in return so we've experimented a lot with the timing of the messages and the actual copy itself if you're coming back as a returning user the messages that you'll get will be very celebratory welcome back like giving some context that we know why you're here we know what you went through to get back here and new user sales do really well for that audience you know like first time sale and so those are some of the things the other one is this countdown timer idea so offering a timer on the sale you've got 24 hours to take this sale a lot I think we're ingrained right now is app users

41:30to just click the X in the top right corner when you see a pop-up comes up right like we've every app is throwing pop-ups our way these days and so a few years ago we inserted this idea of a countdown timer that was persistent at the top of the log and so even if you got rid of the message you knew for the rest of that day that there was a sale going on and there was a very easy way to get that sale even if you waxed out of the in-app message immediately so those are some of the things that will over the last four or five years now

41:56we've learned with that specific Channel yeah and then speaking of getting so many messages and just being accustomed to exiting him out I know y'all experimented with an inbox how did that come about and has that worked yeah it's something a little bit newer but I think there's something to it that having a place in the app where people know to go for messages from us like notifications that you know you've got a new friend alert or there's a new article available for you or something like that like we don't really have a really good way to think about it yet but I think it's something that I'm seeing other apps

42:30doing having a notification center again as a way to just say like here's some important stuff from us check it out whenever you're ready it's a little less intrusive and maybe another channel that we could open up for some of these monetization strategies as well it's cool to see the iteration I mean this app is like 15 years old and now owned by a public company and still like figuring things out you know for the new apps out there who've just this launch like there can be a very long journey ahead to figure these things out and even some of the biggest best most storied apps on the App Store are still

43:03learning and experimenting so it's so fun talking to the two of you and I appreciate you all being such an open book about all the lessons and struggles over the years because it's been quite a journey and it's great to see the success of the app and then great to hear that about the profitability and being employee owned at the acquisition just such a fantastic story and I appreciate y'all sharing that today I know y'all are actually hiring for quite a few roles right now any specific roles you want to shout out or anything else you want to share as we wrap up yeah we're hiring for a lot of developer

43:31positions right now so our website loseit.com there's a banner at the top you can't miss it if you know anyone who is a awesome iOS Android or back-end developer send them our way we're mostly based in Boston but after the pandemic and especially being part of this new company that is remote first we're a lot more open to remote work these days so I think all of our employees are in the us all of the Lucid employees are in the US but you don't need to be in New England to work for lose it anymore but yeah it's been great David thanks for having us thank you very much for having us and

44:04I hope people can get some learnings from it awesome thank you all so much it's been so fun [Music] thanks so much for listening if you have a minute please leave a review in your favorite podcast player you can also stop by chat.subplub.com to join our private community [Music]