Business

How to Transition from ‘Free’ to ‘Paid’ Without Burning Client Relationships

What can integrators learn from the Wall Street Journal and the New York Times? One newspaper transitioned from 'free' articles to 'paid' memberships without burning any bridges, and you can too.

How to Transition from ‘Free’ to ‘Paid’ Without Burning Client Relationships
The New York Times made an elegant transition from free articles to paid memberships. The Wall Street Journal ... not so much. Integrators can learn from their successes and mistakes when it comes to service revenue.

Joseph Kolchinsky · August 9, 2017

Everyone likes something for free. So it’s no wonder that many of the integrators I speak with worry about presenting their existing clients with paid service plans (what we at OneVision call Premium Memberships). After all, for many integrators, the features of these Premium Memberships are services they’ve been providing free for their clients for years. Priority access to after-hours advanced support is a great example.

The challenge of how to convert these clients to paid plans is a core component of the "Service Plans Are Easy, Execution Is Hard" workshop I’m teaching this year at CEDIA (more info at the end of this article). Here’s a sneak peek.

The Challenge

You know the drill. It’s 5:30 pm on a Saturday. You’re getting ready to throw some steaks on the grill when you receive a frantic call from a client who’s unable to operate their TV.

What do you do? If you’re like most integrators, you pull out all the stops, providing your client with the immediate service they’ve come to expect, even if it means engaging in advanced support such as remote programming, or rolling a truck to the site.

Not only is this detrimental to the work-life balance of your entire team, but today’s connected home landscape of declining margins and rising fragility make providing this advanced support 24/7 free to all your clients pretty unsustainable.

At OneVision, we believe that providing a basic level of 24/7 support is something all integrators should do. This includes services such as simple troubleshooting and device reboots. However, we also believe that transitioning your clients to a model which requires them to pay a recurring monthly fee for access to prioritized advanced support (e.g. remote programming, network configuration, and site visits) is a business necessity.

Successfully making this transition without souring client relationships requires striking a difficult balance. Interestingly, we can look to an unexpected source for examples of how to successfully bridge this gap — the newspaper industry.

A Tale of Two Papers

To examine this, let’s take a look at two rival newspapers, the Wall Street Journal (WSJ) and the New York Times (NYT).

Both newspapers, all newspapers for that matter, faced a difficult problem in years past: figuring out how to monetize web content. For years, this content was provided to their readership for free. However, as it became increasingly clear that print was a waning business, and that relying on web advertising alone was unsustainable, the newspapers knew that to ensure their long term viability they needed to begin charging for this content that their readership had come to expect to expect for free.

The WSJ tackled the problem directly by simply creating a hard paywall on the site. One day, they simply flipped a switch and, without warning, visitors who expected to be greeted with free content were met with a choice. If they wanted to read anything but the most generic news items, they were forced to subscribe.

A case study by the Harvard Business Review points out that the NYT has been one of the most successful newspapers on the planet when it comes to converting visitors into paid subscribers.

I can say from personal experience that, as a long-time reader of their web content, I was extremely put off by this abrupt transition. The WSJ had suddenly, and without warning, revoked the free access to a service I had become accustomed to. What’s interesting to note is that I am not at all opposed to the idea of paying for their product in principal. But the negative customer experience created by their failure to brace me for the change caused a visceral reaction. This left a bad taste in my mouth, causing me to avoid signing up for years, costing the WSJ many months of potential recurring revenue. 

The NYT, on the other hand, took a much more elegant approach. Knowing that their readership had surely come to expect free web content, they knew that making this transition without upsetting their audience would be a difficult task. So instead of implementing a hard paywall, the publication opted to allow visitors 10 free articles a month. A small counter in the top right corner of the screen indicates how many free articles you’ve used, and gently prompts you with a subscribe button if you’d like unlimited access.

As a long time reader, the NYT’s approach felt downright benevolent when compared to the blunt tactics of the WSJ. Not only were they continuing to allow me access to the content I expected, but these free articles allowed me to prove to myself that the publication was providing a service of value that I regularly use. It didn’t take long for me to open up my wallet, and I’ve been a paying subscriber ever since.

And I’m not the only one. A case study by the Harvard Business Review points out that the NYT has been one of the most successful newspapers on the planet when it comes to converting visitors into paid subscribers.

Applying the Lessons

The contrasting strategies of the WSJ and NYT in making this paywall transition taught me some valuable lessons about what the customer experience is like when something goes from being free to costing money.

As the NYT has proved, this transition can be made effectively, without souring relationships. We’ve incorporated lessons learned from their strategy into a “60-days to RMR” process you can read about in detail here.

The summarized version goes something like this…

1. Introduce New Terms of Service (ToS) to Your Clients

These terms should clearly outlines all service policies, including methods of contact, hours of availability, billing policies and guaranteed response times. The ToS should outline that clients on Premium Memberships receive certain benefits (e.g. faster guaranteed response times). However, the ToS should also emphasize that after-hours basic support (e.g. simple device reboots) is included free for all clients (these are your “10 free articles”).

2. Sell the Benefits

Now that your clients know they will continue to receive at least a baseline level of support, you’ve eliminated the potential feeling that something is suddenly being revoked from your client’s psyche. At this point, it becomes much easier to have a conversation about your premium options, focusing on the additional benefits they can get access to by opting-in (these are the “unlimited online articles” available to NYT subscribers).

3. Demonstrate Value

In exactly the same way that the NYT’s 10 free articles a month allowed me to prove to myself that I valued and regularly used their service, your after-hours Basic Support policy should be generous enough to allow clients to experience the exceptional service you provide. In this way, many of the clients who don’t opt-in to a Premium Membership right away will convert over time.

Providing around-the-clock, priority access to advanced support for everyone of your customers is an exhausting and unprofitable exercise, leading quickly to burnout on your team and an inability to provide an elevated level of service to clients who value it most.

Converting to a policy which creates tiered levels of service, including premium options, is the single best solution to this challenge. However, as the blunt tactics of the WSJ show us, attempting to switch your clients over “cold turkey” will likely result in frustration and poor conversion rates.

Instead, take a page from the NYT’s playbook, and consider how you can make a more elegant transition, resulting in happier clients, less employee burnout and a healthier bottom line.

Analyzing this paywall transition strategy is part of my “Service Plans Are Simple, Execution is Hard” workshop, which I’m conducting at CEDIA this year (in addition to one other course). This workshop will take place on Wednesday, September 6 at 8:00 AM. Learn more about both of my service workshops and register here. Or stop by booth #3329 to learn how OneVision can help you transform your service offerings.



  About the Author

Joseph Kolchinsky is the founder of OneVision Resources and investor of companies in the personal and home technology industry. He is also a frequent speaker on the evolving nature of supporting the connected home and related IoT. Have a suggestion or a topic you want to read more about? Email Joseph at [email protected]

Follow Joseph on social media:

Joseph also participates in these groups:
LinkedIn · Google+

View Joseph Kolchinsky's complete profile.



  Article Topics


Business · Service & Recurring Revenue · News · Blogs · OneVision · All Topics
CE Pro Magazine

Not a Magazine Subscriber?
Subscribe Today...It's FREE!!

Comments

There are no comments. Be the first to post!
There are no comments. Be the first to post!