How to keep your customers forever: A lesson from LogMeIn
For several years, I have used LogMeIn for my businesses. For all of those years, the service has been free with an option to use their paid version. As of Jan 21, 2014, the free tier of LogMeIn is no longer available.
I used the LogMeIn’s free version. Now I can’t.
To say I’m upset is an understatement. But as I always preach, I’m choosing not to get angry. I’m choosing to laugh. Not at myself. But I’m choosing to laugh at LogMeIn for this decision. A decision that gives me a perfect opportunity to teach about business and life.
LogMeIn Free vs Logme in Pro
Quick background on LogMeIn, first. LogMeIn is a web-based software application that allows you to “access, manage and support computers remotely.” For me, I used it to jump onto my businesses computers while remaining location independent. Read: doing work from the beach.
LogMeIn operated their business on a “free and paid version” model. iPhone apps do this all the time. Think Angry Birds.
With LogMeIn Free and Pro available, people had the choice. Use a simple version for free or get the feature-rich version for a price. LogMeIn has always operated on this model.
Free versions vs Paid versions
The “free and paid version” model of software is often used because it works so well.
Most people, probably 90% of the user base, choose the free version. Of those 90%, maybe 5% will upgrade to the paid version.
The free version essentially acts like a lead-generation funnel. And with many similar models, free users still can drive revenue, either directly via advertising or indirectly through referring friends into the service.
The paid version costs money and is feature-rich. The profit margins on these users is huge.
The bottom line: When structured correctly, 90% of free users and 10% paid users can be very profitable. Just like Angry Birds.
User Expectations with Free & Paid Versions
Users of software or apps distributed through the free & paid model are happy users. They eventually fall in love with the brand.
- Free users feel loyal to the company for all the value they’re getting.
- Paid users love the brand’s service and opportunity to be elite, ad-free, and feature-rich users.
Everyone is happy.
But users of the free & paid version model expect it to stay that way.
Taking away the free option is like a punch to the gut. Betrayal. Free users no longer get their free service. And paid users are no longer treated any differently.
Imagine if your free version of Angry Birds suddenly wouldn’t open. And upon trying, you got a message saying:
“Your free Angry Birds game is no longer available. We have eliminated the free version. To obtain your scores and records, you must download the paid app. As a loyal customer, we’re offering special introductory pricing. For you, now through Friday, it’s just 49 cents to get the app.”
What would you do? 49 cents is nothing. But you’d still be an angry bird (pun intended). And most likely, you’d feel compelled to do what I want to do: Flip LogMeIn the bird (pun intended, again!). Then, you’d simply look for another app to get the job done.
Note: There is nothing wrong with a paid-only model. Using Lyft is not free and never has been. And I’m happy to pay because the service is great. And, here’s the key, it was never free.
The Result of LogMeIn Eliminating the Free Version
Lots of stuff will be a direct effect of this decision. Of course, I’m not in their board room to see their thought process. Perhaps they want to cut marketing expenses (AKA their free version, debatably) so they are a more attractive target for acquisition. But I’m not so sure Google, the king of free products, will still be interested after this move.
Either way, as a result of eliminating LogMeIn Free, I see LogMeIn:
- Losing their entire marketing funnel (the free version).
- Losing credibility among rival software firms.
- Losing loyalty and trust from customers who, like me, constantly used and touted Logmein and their other products like Join.me.
Can the damage be repaired?
It’s hard to say if LogMeIn will recover from stopping their free offering. They still have Join.me which is similar, but not a perfect substitute. I feel like LogMeIn stabbed me in the back, punched me in the gut and then spat in my face.
It hurts when a person or organization wrongs you.
Yes, you have to free yourself by forgiving. Seeking revenge forever brings you down as much or more than you could ever do to them. So you should forgive, but never forget.
Your relationship with your customers is precious. It takes years to build trust and loyalty. Despite not appearing on the balance sheet, your relationship with your customers is an asset.
Protect that asset like any other. You wouldn’t throw gasoline and a lit match on a pile of cash, right?
Keep your promises to keep your customers forever.
CTA: Share this if you know someone with customers. Perhaps they can be saved from making the same mistake as LogMeIn.