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Consumer behavior and free trials: What makes a customer stay?

Date:
February 25, 2015
Source:
American Marketing Association
Summary:
Free trials are wildly popular, but customers attracted with these promotions behave very differently from standard customers, according to a new study.
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Free trials are wildly popular, but customers attracted with these promotions behave very differently from standard customers, according to a new study in the Journal of Marketing Research.

"Free-trial acquisition may affect the nature of a customer's relationship with the service provider," write authors Hannes Datta (Tilburg University), Bram Foubert (Maastricht University), and Harald J. van Heerde (Massey University). "The relationship in turn influences usage and retention behavior, responsiveness to marketing activities, and ultimately how long the consumer will remain with the service."

Examining household data from customers of a large European digital TV provider, the study found that people attracted by free trials formed a distinctly different association with the company compared to regular customers. Free trial customers disappeared swiftly after the trial, staying only 1/3 as long as regular customers. At the same time, free trial customers proved to be more responsive to marketing efforts and usage rates.

Usage intensity may be an important key to keeping customers in general because it reminds them about the personal value of the service. When it comes to free trial customers this effect appears to be particularly strong, suggesting it may be in a firm's interest to encourage usage among these customers.

"Because of their higher turnover rate, free trial customers are, at first glance, worth considerably less than regular customers. Companies may have to reduce profit expectations if the customer base includes a substantial share of free-trial subscribers. But this study found that free trial customers are also more "malleable" than regular customers. They have a less-developed relationship with the firm, and are less certain about the service benefits. Targeting free trial customers with marketing communication and information on their own usage behavior may have a big impact on encouraging them to retain the service," the authors conclude.


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Materials provided by American Marketing Association. Note: Content may be edited for style and length.


Journal Reference:

  1. Hannes Datta, Bram Foubert, Harald J. van Heerde. The Challenge of Retaining Customers Acquired with Free Trials. Journal of Marketing Research, 2014; 141217124247005 DOI: 10.1509/jmr.12.0160

Cite This Page:

American Marketing Association. "Consumer behavior and free trials: What makes a customer stay?." ScienceDaily. ScienceDaily, 25 February 2015. <www.sciencedaily.com/releases/2015/02/150225094329.htm>.
American Marketing Association. (2015, February 25). Consumer behavior and free trials: What makes a customer stay?. ScienceDaily. Retrieved May 27, 2017 from www.sciencedaily.com/releases/2015/02/150225094329.htm
American Marketing Association. "Consumer behavior and free trials: What makes a customer stay?." ScienceDaily. www.sciencedaily.com/releases/2015/02/150225094329.htm (accessed May 27, 2017).

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