Recently online radio broadcast service Spotify went public. When it did, analysts discussed their business models. The service offers two services, ad-supported and paid. One analyst stated that Spotify could convert all of its ad supported users to paid users. While this is a nice thought for a company it is unrealistic. The truth is some people will never buy.
Once you hook customers in with a free or ad supported product, history has shown that only a small percentage convert to a paid product. This was a problem that many newspapers faced when they debuted their online versions. They started as free access sites that relied on ads. When ad revenues failed to meet expectations, they tried to put news behind a paywall. They found that very few of the people reading the free version were convinced to buy subscriptions.
If you have a free service, there will always be a group of people who are happy with it and see no reason to pay for more. Efforts to convert this group is waste of your time and effort. Identify them the best you can. While you focus your sales efforts on customers that are interested in your paid offerings, work to turn this audience into brand evangelists. They may not want to buy, but if they like your product enough, they can turn into a great way to get the word out about your product or service, build word-of-mouth, and provide referrals of people who may buy higher priced offerings.
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