How We Launched Alarmy's Subscription Model
Paying a monthly fee for an alarm app?
Many people still react this way today, but when we first launched the subscription model for Alarmy, this was pretty much everyone's reaction.
We first started thinking about a subscription business model (BM) back in 2018. At the time, the only services you paid a monthly subscription fee for were music streaming or OTT platforms like Melon and Netflix. It was especially rare to see a utility app with a monthly subscription model.
Our vague thoughts at the time
"Using Alarmy helped me fix a habit I couldn't break my whole life."
Seeing users like this made us think: For these people, isn't Alarmy actually a more essential service than Melon or Netflix?
With the idea that we could get them to subscribe if we offered a targeted package that definitively solved their problems, the subscription model project was born.
Let's quickly gauge the potential
Even at a glance, launching a subscription model was going to take a lot of resources, and we needed at least a simple validation to commit those resources with more confidence. To figure this out quickly, we started a test to explore the potential using minimal resources.
How many people would actually be willing to subscribe monthly?
Before developing the features for the package, we just designed the purchase page first and ran a quick purchase intent test.
We added a premium upgrade button in the app and popped up a purchase page explaining the (yet-to-be-developed) premium features.
We displayed the actual monthly subscription price and a description of the subscription package.
We observed how many people tried to subscribe.
When users actually clicked the subscribe button to make a purchase, we showed them an email input field along with a message saying they would receive benefits after launch.
So, what percentage was actually willing to buy?
Which package would sell the best?
Paying a monthly fee meant the product had to be a Pain killer (absolutely essential for me) rather than just a Vitamin (nice to have).
Because of this, the most debated topic internally was 'Which premium package will get the best response?' In the end, we came up with a list of over 30 features, grouped them by selling points into six packages, and ran A/B testing to see the conversion rate for each package.
Which package showed the highest conversion rate?
Conclusion/Lessons Learned
The purchase conversion rate came out to about 2% to 5%.
(Measuring all the way to the final funnel of entering an email)
In a business simulation we ran beforehand, our analysis showed it would be profitable if we could hit around a 5% conversion rate. Fortunately, we managed to find a package that crossed that 5% mark.
Which package showed the highest conversion rate?
Out of the six different packages—which included one with diverse ringtones, one that analyzed sleep patterns, and one that guaranteed you'd wake up—the package with the highest conversion rate was the 'Guaranteed Wake-Up Package.'
Come to think of it, this makes total sense. People who desperately need Alarmy are those who can't wake up easily to regular alarms, and for them, a guaranteed wake-up wasn't a Vitamin, it was a Pain killer.
Lesson: A package worth spending money on is closer to a pain killer than a vitamin.
Improving the package through surveys + interviews
We conducted additional surveys and user interviews with those who left their email addresses indicating purchase intent, which allowed us to hear their detailed thoughts on each package.
We figured out what factors influenced them to subscribe, which features they felt were unnecessary, and what was most appealing about the package.
Through this process, we learned more detailed reasons behind everything from features people found unappealing to the ones they loved the most, and this information helped us improve the package. For example, the 'Random Playlist' feature, which changed the ringtone every day, was actually removed from the package based on survey feedback.
Lesson: User interviews can fill in the gaps you might miss quantitatively.
And now...
Since launch, subscription revenue has steadily grown through expanding to new countries, enhancing packages, testing pricing, and continuous improvements. Fortunately, as of 2021, subscription revenue grew to account for 25% of total revenue (about 3.3 billion KRW), and it is still growing continuously today.
Going forward, solving the question "Who pays a monthly fee for an alarm app?" is still our homework, and we believe the better we solve this problem, the greater the value we deliver to our users.
If you're interested in solving this problem with us?! Check below 👇👇👇👇