Freemium Economics: Leveraging Analytics and User Segmentation to Drive Revenue

310 Pages·2014·3.18 MB·English

by  Eric Benjamin Seufert

Freemium Economics
Leveraging Analytics and User
Segmentation to Drive Revenue
Eric Benjamin Seufert
The Savvy Manager’s Guide
Table of Contents
Cover image
Title page
Copyright
Dedication
In praise of Freemium Economics: Leveraging Analytics and User Segmentation
to Drive Revenue
Acknowledgments
Author Biography
Introduction
Chapter 1. The Freemium Business Model
Commerce at a price point of $0
Components of the freemium business model
Freemium economics
Freemium product case studies
Chapter 2. Analytics and Freemium Products
Insight as the foundation of freemium product development
Analytics
Designing an analytics platform for freemium product development
Data-driven design
Chapter 3. Quantitative Methods for Product Management
Data analysis
Descriptive statistics
A/B testing
Regression analysis
User segmentation
Chapter 4. Freemium Metrics
Instrumenting freemium products
Minimum viable metrics
Retention
Monetization
Engagement
Virality
Using metrics in the freemium model
Chapter 5. Lifetime Customer Value
Lifetime customer value
Lifetime customer value and the freemium model
The spreadsheet approach
The analytics method
Making decisions with LTV
Chapter 6. Freemium Monetization
The continuous monetization curve
Choice, preference, and spending
Data products in the freemium model
Downstream marketing
Chapter 7. Virality
The viral product
What is virality?
Quantified virality
Engineering virality
Chapter 8. Growth
Facilitating a large user base
Strategic growth
Mobile user acquisition
Alternative user acquisition
References
Index
Copyright
Acquiring Editor: Andrea Dierna
Editorial Project Manager: Kaitlin Herbert
Project Manager: Malathi Samayan
Designer: Matthew Limbert
Morgan Kaufmann is an imprint of Elsevier 225 Wyman Street, Waltham, MA
02451, USA Copyright © 2014 Elsevier Inc. All rights reserved No part of this
publication may be reproduced or transmitted in any form or by any means,
electronic or mechanical, including photocopying, recording, or any information
storage and retrieval system, without permission in writing from the publisher.
Details on how to seek permission, further information about the Publisher’s
permissions policies and our arrangements with organizations such as the
Copyright Clearance Center and the Copyright Licensing Agency, can be found
at our website: www.elsevier.com/permissions.
This book and the individual contributions contained in it are protected under
copyright by the Publisher (other than as may be noted herein).
Notices
Knowledge and best practice in this field are constantly changing.
As new research and experience broaden our understanding,
changes in research methods or professional practices, may become
necessary. Practitioners and researchers must always rely on their
own experience and knowledge in evaluating and using any
information or methods described here in. In using such information
or methods they should be mindful of their own safety and the
safety of others, including parties for whom they have a professional
responsibility.
To the fullest extent of the law, neither the Publisher nor the authors,
contributors, or editors, assume any liability for any injury and/or
damage to persons or property as a matter of products liability,
negligence or otherwise, or from any use or operation of any
methods, products, instructions, or ideas contained in the material
herein.
Library of Congress Cataloging-in-Publication Data
Seufert, Eric Benjamin.
Freemium economics : leveraging analytics and user segmentation to drive
revenue / Eric Benjamin Seufert.
pages cm
Includes bibliographical references and index.
ISBN 978-0-12416690-5 (alk. paper)
1. Pricing. 2. Bundling (Marketing) 3. Marketing. 4. Demand (Economic theory)
5. Consumption (Economics) 6. Computer software industry—Case studies. I.
Title.
HF5416.5.S48 2014
658.8′16—dc23
2013037659
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library ISBN: 978-
0-12416690-5
Printed and bound in the United States of America 14 15 16 17 18 11 10 9 8 7 6
5 4 3 2 1
For information on all MK publications, visit our website at
www.mkp.com or www.elsevierdirect.com

Dedication
For my mother
In praise of Freemium Economics:
Leveraging Analytics and User
Segmentation to Drive Revenue
“Eric Seufert provides comprehensive, analytical insight into the what, why,
and how of building a successful freemium business. Whether you’re
building a free-to-play game or freeware SaaS product, Freemium
Economics is an excellent resource to increase chances of success.”
—Ryan Hoover, PlayHaven
“Eric Seufert’s Freemium Economics covers every aspect of freemium
software design and development, from the core concepts of “freemium
economics” to marketing. This book is a must read for anyone developing
freemium products.”
—Michail Katkoff (“The Deconstructor of Fun”), Scopely