GTM Sauce

Burner · B2C · second phone number app

Phase out one-off credits so everyone goes through a subscription

Fairly high churn from short-term users; founder now thinks credits might have fit them better

Mixedpricingretention

What they did

After subscriptions launched, they slowly de-emphasized consumable credits, assuming long-intent users would retain and short-intent users would simply churn early. Credits now mostly serve as top-ups for existing subscribers (~8-10% of revenue).

What happened

Subscriptions dominate revenue but churn is reasonably high; Greg suspects keeping a front-and-center credits option for short-term users would have fit demand better and keeps retesting it.
Stage
growth

This shipped together with other changes, so the result can't be credited to this alone.

In their words

Pivots, Funding, and Building Apps That Last – Greg Cohn, Burner

Play the episode

Greg Cohn… really important dimension of our business and growth. But at that time, that was just the beginning of learning about all of that. That was, I think our first subscription offering, we had monthly and annual, that's it. And now today we have monthly one line, monthly three line, annual of both of those. And then we have that standard end premium. So, that's eight SKUs right there. And then we have the credits that are buying up on top of that.

Greg CohnBut we did slowly deprecate credits on the back of launching subscriptions because our mindset at least originally was, well, we should move all of our users through a subscription model and the ones who have longer term intent will retain and the ones who don't will leave early. And so, as a consequence of that, we have reasonably high churn. And I look back at that decision and I go, "Well, we might've been able to fit to the curve even more efficiently if we had maintained a more front and center credits model for those users with lower long-term intent, but high short-term intent. So, we're constantly re-looking at that and testing things and you never know that may resurface at some point.

David BarnardYeah. No, it's fascinating. And it's fascinating too that, and I didn't know this about Tinder, but talking to Ravi in the last episode, he said, as with you, most of the in-app purchase revenue is from subscribers because it's a force multiplier of the subscription. It's not as much a standalone, but I think it can be all things. And so, for you right now, it is mostly subscribers, but maybe there is an opportunity for non-subscriber and to add …

Get tactics like this every Monday

New tactics from the week's founder interviews, each linked to where it was said.

More from this episode

Tags: credits, consumables, churn