Sramana Mitra: Can you talk about how you are operating in that premium scenario with a good visual example? When does Aria kick in? Does anybody who tries to use OpenShift, for example, get into the Aria systems right away, or do they only get into it when premium services kick in?
Tom Dibble: I would not be comfortable divulging some of those strategies that Red Hat is doing. Many of these companies, Red Hat among them, view their strategy on pricing, packaging, and bundling and how they are leveraging the Aria platform to do customer acquisition and monetization as their key competitive advantages.
In broader terms, what we are seeing at a high level with these platforms is that companies are offering services that may be free or premium services to consumer or a business, and then they want to launch them into a premium platform and sometimes into a premium service offering. The spectrum of where you are in that continuum is enabled by Aria. To answer your previous question, we kick in immediately – whether it is a free service, a free premium service, or a premium service. And whether that is context, instances of Amazon Web Services, a cloud service or telco services. You don’t necessarily have to be generating a bill or a charge to be viewed by Aria as a recurrent customer. Many customers are not paying a bill on a regular basis. Irrespective of that monetization model, whether it is open source, premium or proprietary, that entire customer base is covered. We have customers that do that today on a free basis all the way through to a premium basis.
SM: My question is about converting free users or subscribers to paying users or subscribers. What do you see in the industry across your customers? What insights can you offer to the audience?
TD: It varies greatly by target market. Most people associate premium with a consumer service. That is just not the case anymore. We are seeing more and more of our customers who are offering premium services to enterprises.
SM: I think there is an enormous B2B SaaS category that operates on premium. Our audience is very familiar with that.
TD: What we have seen in regard to conversion rates – and we monitor that very closely – is a model that doesn’t require payment upfront, gets some log in credentials, gets them to do the test drive, and gets a critical mass of users internally at a company.
If you start asking for payment information up front, attrition rates skyrocket. Our recommendation on that as far as trying to get an upfront credential in terms of a credit card or anything similar has been proven to be very ineffective. If you believe in your product, the footprint will start to expand naturally and growth will come very quickly. There are also things that our system automates around the activity behavior around a free or premium subscriber. If they sign up for a free trial, that trial is about to expire and the user has not given any indication of renewing or putting down a payment, it automatically generates a coupon that goes out to that person saying, “Do you want to sign up now and save 40% off the initial price you were given? Do you want to extend your service for another two weeks or try it again?” All these things are automated at Aria, and those even driven notifications go based on an action or inaction of a customer. It drives the conversion rate. Once customers are converted, it is about retaining them.