Try it, you’ll like it—or will you? The perils of early free-trial promotions for high-tech service adoption

B. Foubert, Els Gijsbrechts

Research output: Contribution to journalArticleScientificpeer-review

Abstract

The proliferation of free trials for high-tech services calls for a careful study of their effectiveness, and the drivers thereof. On the one hand, free trials can generate new paying subscribers, by allowing consumers to become acquainted with the service free of charge. On the other hand, a disappointing trial experience might alienate potential customers, when they decide not to adopt the system and are lost for good. This dilemma is particularly worrisome in early periods, when service quality has not been “tried and tested” in the field, and breakdowns occur. We accommodate these phenomena in a model of consumers’ free-trial and regular adoption decisions. Among other effects, it incorporates usage- and word-of-mouth-based learning about quality in a setting where quality itself is evolving. Consumers are forward-looking in that they account for changes in quality and anticipate uncertainty reduction due to trial usage. We estimate our model and run simulations on the basis of a rich and unique data set that incorporates customers’ trial subscription, adoption, and usage behavior for an interactive digital television service. The results underscore that free trials constitute a double-edged sword, and that timing and consumers’ usage intensity during the trial are key to the effectiveness of these promotions. Implications for managers are discussed.
Original languageEnglish
Pages (from-to)810-826
JournalMarketing Science
Volume35
Issue number5
Early online dateMay 2016
DOIs
Publication statusPublished - Sep 2016

Fingerprint

High-tech
Breakdown
Uncertainty
Managers
Proliferation
Simulation
Subscription
Service quality
Word-of-mouth
Charge

Keywords

  • free-trial promotions
  • adoption behavior
  • high-tech consumer services
  • contractual services
  • learning
  • promotion effectiveness
  • promotion timing
  • usage

Cite this

@article{8d305f274c574193b9da5d3f3b7a908e,
title = "Try it, you’ll like it—or will you?: The perils of early free-trial promotions for high-tech service adoption",
abstract = "The proliferation of free trials for high-tech services calls for a careful study of their effectiveness, and the drivers thereof. On the one hand, free trials can generate new paying subscribers, by allowing consumers to become acquainted with the service free of charge. On the other hand, a disappointing trial experience might alienate potential customers, when they decide not to adopt the system and are lost for good. This dilemma is particularly worrisome in early periods, when service quality has not been “tried and tested” in the field, and breakdowns occur. We accommodate these phenomena in a model of consumers’ free-trial and regular adoption decisions. Among other effects, it incorporates usage- and word-of-mouth-based learning about quality in a setting where quality itself is evolving. Consumers are forward-looking in that they account for changes in quality and anticipate uncertainty reduction due to trial usage. We estimate our model and run simulations on the basis of a rich and unique data set that incorporates customers’ trial subscription, adoption, and usage behavior for an interactive digital television service. The results underscore that free trials constitute a double-edged sword, and that timing and consumers’ usage intensity during the trial are key to the effectiveness of these promotions. Implications for managers are discussed.",
keywords = "free-trial promotions, adoption behavior, high-tech consumer services, contractual services, learning, promotion effectiveness, promotion timing, usage",
author = "B. Foubert and Els Gijsbrechts",
year = "2016",
month = "9",
doi = "10.1287/mksc.2015.0973",
language = "English",
volume = "35",
pages = "810--826",
journal = "Marketing Science",
issn = "0732-2399",
publisher = "INFORMS Inst.for Operations Res.and the Management Sciences",
number = "5",

}

Try it, you’ll like it—or will you? The perils of early free-trial promotions for high-tech service adoption. / Foubert, B.; Gijsbrechts, Els.

In: Marketing Science, Vol. 35, No. 5, 09.2016, p. 810-826.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Try it, you’ll like it—or will you?

T2 - The perils of early free-trial promotions for high-tech service adoption

AU - Foubert, B.

AU - Gijsbrechts, Els

PY - 2016/9

Y1 - 2016/9

N2 - The proliferation of free trials for high-tech services calls for a careful study of their effectiveness, and the drivers thereof. On the one hand, free trials can generate new paying subscribers, by allowing consumers to become acquainted with the service free of charge. On the other hand, a disappointing trial experience might alienate potential customers, when they decide not to adopt the system and are lost for good. This dilemma is particularly worrisome in early periods, when service quality has not been “tried and tested” in the field, and breakdowns occur. We accommodate these phenomena in a model of consumers’ free-trial and regular adoption decisions. Among other effects, it incorporates usage- and word-of-mouth-based learning about quality in a setting where quality itself is evolving. Consumers are forward-looking in that they account for changes in quality and anticipate uncertainty reduction due to trial usage. We estimate our model and run simulations on the basis of a rich and unique data set that incorporates customers’ trial subscription, adoption, and usage behavior for an interactive digital television service. The results underscore that free trials constitute a double-edged sword, and that timing and consumers’ usage intensity during the trial are key to the effectiveness of these promotions. Implications for managers are discussed.

AB - The proliferation of free trials for high-tech services calls for a careful study of their effectiveness, and the drivers thereof. On the one hand, free trials can generate new paying subscribers, by allowing consumers to become acquainted with the service free of charge. On the other hand, a disappointing trial experience might alienate potential customers, when they decide not to adopt the system and are lost for good. This dilemma is particularly worrisome in early periods, when service quality has not been “tried and tested” in the field, and breakdowns occur. We accommodate these phenomena in a model of consumers’ free-trial and regular adoption decisions. Among other effects, it incorporates usage- and word-of-mouth-based learning about quality in a setting where quality itself is evolving. Consumers are forward-looking in that they account for changes in quality and anticipate uncertainty reduction due to trial usage. We estimate our model and run simulations on the basis of a rich and unique data set that incorporates customers’ trial subscription, adoption, and usage behavior for an interactive digital television service. The results underscore that free trials constitute a double-edged sword, and that timing and consumers’ usage intensity during the trial are key to the effectiveness of these promotions. Implications for managers are discussed.

KW - free-trial promotions

KW - adoption behavior

KW - high-tech consumer services

KW - contractual services

KW - learning

KW - promotion effectiveness

KW - promotion timing

KW - usage

U2 - 10.1287/mksc.2015.0973

DO - 10.1287/mksc.2015.0973

M3 - Article

VL - 35

SP - 810

EP - 826

JO - Marketing Science

JF - Marketing Science

SN - 0732-2399

IS - 5

ER -