How Headspace Optimized Revenue by Gating Content — Shreya Oswal and Keya Patel, Headspace

David Barnard:

Welcome to the Sub Club Podcast, a show dedicated to the best practices for building and growing app businesses. We sit down with the entrepreneurs, investors, and builders behind the most successful apps in the world to learn from their successes and failures. Sub Club is brought to you by Revenue Cat. Thousands of the world's best apps trust Revenue Cat to power in app purchases, manage customers, and grow revenue across iOS, Android, and the web. You can learn more at revenuecat.com. Let's get into the show.

Hello, I'm your host, David Barnard, and my guests today are Shreya Oswal, senior director of product management over consumer subscription growth at Headspace, and Keya Patel, a former director of product management at Headspace. On the podcast, I talk with Shreya and Keya about the evolution of Headspace's freemium model, balancing mission and monetization, and why referral programs sometimes work better without incentives.

Hey Shreya, thanks so much for joining me on the podcast today.

Shreya Oswal:

Yeah, thanks for having me. Happy to be here.

David Barnard:

And Keya, nice to have you as well.

Keya Patel:

Thanks. I'm excited to get started and chat.

David Barnard:

Yeah, so Keya, I wanted to kick things off with you. So you were there before Shreya joined. You actually didn't even overlap in your time at Headspace. But I know you and your team spent a ton of time talking about the freemium experience of Headspace, and early on it was super generous. Up to like 80% of the content was locked, but 20% was totally free. And I know I'm one of those people, I listen to the same sleep story over probably hundreds of times. So tell us a little bit about the thinking behind evolving that freemium strategy.

Keya Patel:

So you are right in that there was a lot of content that was available for free. I also had a favorite sleep story, as well, that was around a campfire. And folks could listen to that on repeat for free. We did that for a mission perspective, which was to allow people access to some of our content available for free, especially some of the most loved content and most popular content.

We got to a point, though, where we were starting to experiment more with different types of strategies around upsell and what could get folks to convert from free to paid at faster rates. And that's really when we started to play around with what we call these types of tests that were like 90% locked content, 95% locked, 99% locked. And we essentially tried out different ways of locking our content in ways that folks would convert at higher rate, but hopefully still stay around and be engaged at the same rates that we saw previously. So that was really the impetus behind why we tried some of that type of locking and moving people into a paid product a little bit faster.

David Barnard:

And how did those experiments go? What'd you learn?

Keya Patel:

Yeah, so we ultimately, not too surprisingly, found that people were more likely to convert when we did lock more content, mostly because they were hitting more paywalls or those locked icons, and they were familiar with hitting that in other products, so say within Spotify or other types of consumer products. So it wasn't really a foreign concept to customers or members that were within Headspace.

We were most afraid that we would get a lot of pushback, so our customer or member experience team would be bombarded with messages or folks were upset. And there were folks, who like you, probably lost that sleepcast, but we did try to keep one or two of the most popular items within each category. So that was a priority for us, to still have at least one or two pieces of content within the meditation category, within the sleep category, fitness category, available for free entirely, to be able to suit some of those customers. So we did see of course that lifting conversion, which was a pretty high lifting conversion, and we did not see as much of a bombardment to our member experience team as what we expected, to be able to go through with making that change at the time in 2019.

David Barnard:

When you create something valuable, people are willing to pay for it. And I think sometimes as subscription apps we feel like, oh, I want to give a lot away for free, or how are people going to react? And then you actually make the changes. It's like, oh wait, when you make something valuable actually cost money, people understand.

So it's really cool that, one, people didn't actually hassle, cause customer support issues, or leave negative reviews and that sort of thing. But then it's great to see that it actually had a positive impact on conversion. Did you track, and do you know if it decreased the experience of freemium users? So did you have fewer people sticking around, listening to that one story over and over again? And then did that impact the long-term potential for conversion?

Keya Patel:

Yeah, so when we tested this, we prioritized doing the experiment with new users. So folks who would not have really known about the freemium product, or if they did when they entered the app for the first time, they've maybe only heard about it word of mouth from friends or through an ad. And at this point, they don't really have strong expectations of what is available for free or paid for Headspace.

So in those initial experiments we were in a way a little bit safe because this was their first time entering Headspace and understanding what it was like. It was more for those who were existing members living on this freemium state forever, that we had a lot more challenges internally on how we would think about their rollout plan to the 99% locked. And it actually took us a fair amount of time to get to the state of feeling comfortable around that, rolling them out.

We did offer an incentive and spending about six months, eight months before we made that change to move them over, which was more of our concern and alluding more to what your question was, which is how would we handle kind of that in between freemium state of folks who are living on the freemium product for as long as possible. And that was, again, a pretty difficult decision for us internally, to figure out how do we think about the life cycle, incentives around it, still allowing them to see Headspace the way they wanted, versus these new users, which was a lot easier for us to roll out that experiment decision.

David Barnard:

That makes a lot of sense. And then Shreya, after you came on board, after Keya had left and done a lot of these experiments, I know you kicked off a lot of experiments that took things even further. So tell me about what you did next to evolve that freemium experience.

Shreya Oswal:

Yeah, so building off the great work that Keya and team had done, we did find that there were some users, as Keya alluded to, that would find a piece of content that they really liked and keep coming back to that. Wouldn't necessarily be seeing any upsells and didn't necessarily understand the value of a paid subscription, relative to what they were getting for free.

And so the team ended up testing, making the content library a hundred percent locked, so both for new users as well as existing users. And so again, similar to what Keya said, the experience for new users was a bit easier in some sense. People didn't necessarily come in with preconceived notions of what the product was. And so it was a much cleaner story, and we did see a high double digit lift in paid subscribers.

The interesting thing was actually that in the A/B test, we actually saw higher levels of content engagement from those free trials. There's something about paying and committing and really getting serious about Headspace and your meditation habit that also caused folks to explore the library and explore Headspace more deeply, which I think was kind of encouraging.

David Barnard:

Yeah, that's something I just keep hearing over and over from developers. It's that when people have skin in the game, whether it's starting a free trial or actually becoming a subscriber, they have better engagement. They're just more incentivized to actually get the value that they're paying for. So it's really cool to hear that you saw that play out in the numbers.

Shreya Oswal:

Definitely. And then for the more tenured folks who'd been on Headspace for a while, we did a couple things. One was offer a very generous transition incentive, all the way up to 75% off a year. And then we also published some of our most popular content on YouTube. So not necessarily available for free in the app, but just from a mission perspective we did want to make sure that some of it was still available through other channels, in addition to partnerships like Netflix and other places where we offer some of our content for free.

David Barnard:

That's great. And then was that the end state, or did some of the content end up going back free? What have the experiments been since then?

Shreya Oswal:

So haven't experimented a lot with it since then, but I would definitely say that it's an area where we want to continue experimentation. We know that when people come in, I call it the Costco sample strategy, they're often looking for a little bit of a taste of what Headspace has to offer, and we are thinking about other features that we might be able to offer for free or even potentially a content sample.

Our team recently rolled out content sharing, which allows any Headspace user, whether free or a subscriber, to share a 30 to 60 second clip of any piece of content in the Headspace library and share that with a friend. So we're increasingly excited about that as a way for people to at least get a taste of the breadth of what our content library offers and build a little bit more excitement and an understanding of the product before they make that decision to start a free trial.

David Barnard:

So currently in the app today, is there any free content or pretty much everything is locked?

Shreya Oswal:

Pretty much everything is locked, I think with the exception of some of the educational content that explains how Headspace works. So for example, our how to use Headspace content is unlocked and there may be a few other educational videos along those lines that we decide to make free, but for the most part I would say it's a hundred percent locked.

David Barnard:

Wow. For those of you who listen to every episode, this directly contradicts what we talked about with Shaun Steingold in a recent podcast episode, where he was saying that he's never seen free trials work well. And I think he's got a very unique perspective and has worked on very specific apps where it hasn't. But this is a really great example, that you've ran the numbers, you've done very sophisticated A/B testing, and figured out that for Headspace, actually that people come in with enough value perception that starting a free trial makes sense.

And I think you what you alluded to earlier, people have gotten used to free trials. They know what that experience is going to be like. They know, okay, I'm going to get additional value for having started this free trial. And then especially on Apple and Google's platform, they've made it so easy to turn off auto-renew.

So with Revenue Cat, we've even seen data where people are turning off auto-renew almost instantly. So they start the free trial, turn off auto-renew, just so they don't forget. So it's like people feel in control. And so I think there are times when the free trial actually does make a ton of sense, and so it's really cool to see that you've proved it out at Headspace through a lot of experimentation, that a free trial with most of the content locked behind the paywall can actually be a really effective strategy.

Do you have any other thoughts as we wrap up the freemium? I know you've thought a ton about where freemium does work and it doesn't work and why it works and doesn't work. Any other nuggets to share there?

Shreya Oswal:

Yeah, I would say there's some products that are naturally very, very easy to use. It doesn't require a ton of motivation or commitment or hard work, I would say. Watching Netflix, you don't have to really think about it, you just do it. Other habits, like going to the gym or sitting down to meditate, as much as we've tried, our team has done an amazing job of creating lean back content, content that's easier to engage in, it's still something that you have to set aside time for.

It's not as natural as scrolling TikTok videos. It's not something that you can actually kind of get addicted to. And so I think having people commit to and get skin in the game earlier on, I think tends to work more effectively for us versus areas where you're actually just going to keep engaging ongoing and have a lot more time to see that value before.

Keya Patel:

And the thing I'll add to what Shreya just said that I thought about a lot with the team at Headspace was if we do move more into a 99% locked state, or even as Shreya and team have done, a hundred percent locked, how do we actually show the value to users if they are on the fence about going forward with the free trial and fully diving in?

And for me during that time, that meant having an onboarding that was a little bit more animated and in the style of what Headspace's characters and personality is, so that people felt attracted enough. But there are other examples of this, most notably if you think of Noom, for example, which is still in the health and wellness space. They, after their onboarding, where people do buy in and set goals and can see what their future might look like in terms of their weight loss journey or their health journey, they then immediately show or hit them with a free trial, versus being able to experience the app for free. So that's another example where I don't think it's apples to apples, but it is still showing people a little bit of what the app or product can offer before going to a 99% or a hundred percent type of locked state.

David Barnard:

Yeah. I really want to dig into the onboarding, but let's hold off on that. And before we go there, I wanted to talk about price testing. And Keya, I know during your time at Headspace you did a ton of price testing. So tell me about what kind of experiments you did and what results you saw in doing that price testing.

Keya Patel:

Yeah, so let me back up and give a little bit of context. So I started in late 2017, and right before I started, in the summer Headspace had brought in a consultant that worked through a lot of price testing from a quantitative and qualitative perspective and mostly did it by testing prospective audience or members. And it was across different demographics, students, different types of categories we might go into. And again, that was mostly from a qualitative perspective.

And then as I started, we had a few different price tests running from when we worked with that consultant and then added on a layer of additional price tests across iOS and Android, across different target markets that we were interested in, which were US, UK, Canada, Australia, and then even other geographies in Europe, in Southeast Asia, Asia, and then even in other territories. So it was very, very nuanced in terms of how we ran it, given that we probably, if I was to do it again, would've scaled that back in some way and really focused more on our higher level audiences, which we then did subsequently.

So some of the learnings, essentially what we were doing is price testing almost every six months or so and running a test with multiple different variations. So we were getting quite a bit of data and by the time we were running that for the second or third time, we did have audience sizes or new member sizes each day or each week that allowed us to run these tests fairly quickly. Whereas the first time I was running this test with the team, we had to wait over a month for enough data. So you can imagine how much that even was a toll on the team or on getting results and making an efficient pricing decision.

Ultimately what we decided were a few different things. So when I started we had three products, our monthly product, which was at a 9.99 per month subscription product, an annual product, which was closer to $99 a year, again, an annual subscription, and then a lifetime product, which was at a pretty high price point, wasn't a subscription product, was a one-time product. Through this price testing, we ended up over the course of almost two years, by the end of 2019, getting to a state where our monthly product, we only had two products, monthly and annual. Our monthly product moved from 9.99 to 12.99 and our annual product dropped from that about $99 price point to 69.99.

So you can see with that what we did was a few different things. In shifting the monthly product from 9.99 to 12.99, we were really trying to make our annual product look a bit more attractive and have it at a lower price point, which was closer to our competitors and even others in the health and wellness space, at the almost $70 price point. And we tested that 69 across different areas. So I think we went almost all the way down to 49, up to 99. So 49, 59, 69, 79, 89, 99, and ran that as different variations. And ultimately, the 69 price point was where from a conversion perspective it made the most sense, and also from a shorter term retention or first time renewal perspective it made sense.

David Barnard:

How did that end up working out? Did it push more people toward the annual subscription? Was it successful in adjusting that split between the two?

Keya Patel:

Yeah, exactly. So we decided to roll it out because of a few different markers. The first was ultimately getting more overall revenue, which was one of our biggest benchmarks there, and an increase in our conversion rate across both of those products. And in both of those situations, it did win out and it did also skew more towards or help to skew more towards annual, which was a different bet we were making at the time for the company around having folks who retained for longer, which our annual product would immediately do as a subscription product. So it did also shift people into that annual.

And we did do things around the design of that upsell page, to also encourage that. So highlighting that annual was at a better price point, try to break that down into the monthly cost to show the benefits of that, and even have a little banner on it with an animated character that was kind of pointing towards that, to make it more attractive. Her name was Conversion Connie, the animated character at the time.

David Barnard:

That's awesome. And then Shreya, so you picked up where Keya left off and started working in the opposite direction, seeing if you could get the monthly going. So tell me about your experiments on pricing after Keya had left.

Shreya Oswal:

Yeah, so again, working off of Keya and team's great learnings, we actually [inaudible 00:17:33] the opposite hypothesis. So seeing if we could attract net new, more of like a later adopter and potentially lower intent audience with monthly. Because monthly is less of a commitment. So we hypothesize and we're hoping maybe you attract a new audience with that by actually lowering the monthly price. Because we knew that the monthly price looked less compelling compared to annual. We were trying to nudge people towards annual previously.

So we tried that out, actually tested out eight different price points on monthly, and found that ultimately while we were able to drive some folks towards monthly, ultimately the experiment was revenue negative because of more people then choosing monthly, not enough of a lift in free to paid conversion. So ultimately we decided not to ramp that experiment, despite trying out those eight different price points.

And so then we swung the pendulum in the other direction. We're like, okay, so we know that annual works, we know that that's where we actually do want to lead people, if our goal is to focus on revenue optimization. And so we then tried out a pay gate that really focused on the annual subscription and highlighted the benefits of that. A couple things. A, we found that quantifying the dollar value didn't necessarily help. Just actually saying best value and keeping it a really simple heuristic actually performed better.

And then in the version where we focused on annual but then still allowed monthly as an option actually performed the best. And initially we were really excited, but then found that while we were able to nudge more people towards annual, they didn't necessarily stick around after the free trial. I think for us, the learning there was you could make UI tweaks and you could nudge people more towards one plan versus another, but ultimately you may be capturing folks who are potentially lower intent, wouldn't have picked that plan otherwise. And so you then see that reflected in the free to paid conversion.

David Barnard:

Yeah, pricing elasticity is so fascinating. I was talking to one developer a few years back where he had a weekly, a monthly, and an annual plan, and when he ran the numbers, he had the exact same LTV across all the plans. So people were willing to spend a certain amount of money on his app and that's all they were willing to spend, whether they were on a monthly, an annual, or a weekly.

It's like consumers ultimately are in groups more rationally and perform in ways that just make sense statistically, even if we think we can nudge in one direction or another. So it's fascinating that you've done all the work to experiment with that and then just found that yeah, you can nudge in one direction or the other, but ultimately they're going to spend what they spend. So what ended up being the ultimate winning, and what's in the app today?

Shreya Oswal:

So ultimately it's still monthly and annual, both skews given equal prominence, equal choice. And I think what we found is a lot of folks really like the monthly subscription as a way to remind them on a monthly basis that they are paying for Headspace, they are engaging with it. It keeps them honest on a monthly basis. Hey, am I using this? Am I liking it? It's almost like a reminder to them. And so we do definitely have some loyalists to that monthly plan, even though the economics of the annual plan are better.

David Barnard:

So back to you, Keya. I know you had done some experimentation where early on Headspace didn't even have a free trial, back when 20% of the content was totally free. So what was it like transitioning from that hard paywall where there was no free trial, but there was a lot of free content, to then introducing the free content and student fit and family plans? I know you've done a lot of experimentation around all this packaging, so tell me about that.

Keya Patel:

Yeah, for sure. So even though we started the conversation talking about 99% locked, in mid 2019, we knew eventually we would want to play around with how much content was available for free or not. And knowing that we would lock up more content potentially, that also was an opportunity to understand if we should introduce a free trial, which again, many other folks in the consumer and subscription space had already done and were kind of light years ahead of Headspace in terms of doing, so we decided to start to experiment with that in the summer of 2019.

And essentially what that looked like was moving more from direct purchase, where people would make a payment transaction immediately on our website or with the app store or play store, to having a free trial, which could either be seven days, 14 days, 30 days. And we, similar to the price testing we just chatted about, we did a lot of tests around that, as well, to figure out what the ideal amount of time is.

We resulted in having our monthly subscription be tied to a seven day free trial and our annual subscription be tied to a 14 day free trial. So as I touched on earlier, we were trying to figure out even ways then of how to make the annual product look even more attractive. And this was another way that we did that, by having a little bit more of a differentiation with the seven and 14 days of a difference with the free trial period.

And that free trial test itself, even though we're not getting cash immediately, it did result in a conversion lift that was in the double digits. So we knew from that, combined with some of the price testing that we were doing, that we were facing pretty good tailwinds from these types of tests that we were doing. And ultimately that resulted in many of them being rolled out at the end of 2019, including this free trial one.

David Barnard:

Got you. And then Shreya, I know you have some experience in that as well, from your time at LinkedIn.

Shreya Oswal:

Yeah, so I was at LinkedIn from about 2011 to 2016, and at the time I joined, I started working in the job seeker premium subscription. And at the time LinkedIn was sending out emails to different members with offers for the job seeker premium subscription, as well as regular LinkedIn premium. And then at one point LinkedIn sales navigator and Recruiter Lite, so the self-serve SMB options of those two products. And worked really well for a while. We had propensity models and we tried to tune those and grow our audience and figure out who were the best folks to send this offer to would be, and then started layering in, okay, if you're on the sales navigator list and you're also on the job seeker list and you're also on the premium list, how do we decide which offer we're sending you and who gets to target that number?

And because free trials were so compelling, folks would often take the free trial that they were offered, whether or not they actually were a job seeker or were a salesperson or were a recruiter. And so what we ultimately tried then later on was bringing free trials online. So rather than saying, hey, you have to actually get an offer through email and be targeted with this, we made it much more transparent.

We put it online, and we designed a subscription chooser, after doing a lot of research on what are the right price points, what's the right way to present this, what are the right features that really get people to self-select into the right subscription based on sales specific features, job search specific features, recruiting specific features. But ultimately bringing that free trial online and letting users choose for themselves was a big win for the business and a big win for members in terms of picking the right product for them.

David Barnard:

You mentioned propensity model. What is a propensity model? How do you build a propensity model?

Shreya Oswal:

Yeah, so it's essentially looking at a series of actions that the member takes on LinkedIn. So LinkedIn, you can do all sorts of things. You can connect to people, you can look at jobs, you can connect with others, you can research companies, join groups. And so it's a series of looking at those different actions they take and trying to determine your likelihood to subscribe to a given subscription. And then in addition, figuring out, okay, based on your score for each of these models, we had a different model for each of the subscriptions, what's the best offer to send you?

David Barnard:

Very cool. And so with those models, was that used whether or not you showed a specific person the monthly and the annual, or showed a bigger discount, or what all did it impact?

Shreya Oswal:

Yeah, great question. It impacted all of the above, so monthly or annual, and which flavor of subscription that we were sending you. But I think the big learning here ultimately was that simplicity. So picking just one skew for each of those four flavors of subscription and the transparency of allowing free trial for everyone and actually not spending too much effort trying to predict which type of member you were or what your use case was, but really trying to create more differentiated value and the right price point for each of those four use cases ultimately ended up being much more effective.

David Barnard:

Very cool. I think a lot of folks listening, myself included, will mostly just be jealous that you've been able to work at places like LinkedIn and Headspace, where you have the team size and the level of sophistication to be able to build out those kind of models, because it can be incredibly powerful to help drive those business results, but it takes a good data team and it takes a lot of work to build that out, to test it, and then to roll it out across a wider user base.

Keya, I wanted to get back to your time at Headspace and rolling out the student and family plans. Tell me about why you did that and what impact those had on the business.

Keya Patel:

We started thinking about the student and family plans and even other types of plans, so plans for educators or veterans or whatnot, as a result of our mission and being able to think about other audience members or segments that might not have the same ability to access or pay for Headspace. So we were thinking of it a little bit more honestly from even a discounting strategy perspective initially.

And what it ended up resulting in was actually doing tests around a student plan where we introduced a student plan, targeted it towards folks who were students, to understand if there was enough volume there that would be additive in terms of revenue and in terms of the total percentage of folks who would fall within the subscription. And ultimately at the time we did see that there was revenue value to it, but it would be pretty minuscule compared to our overall revenue from our consumer product and B2B side.

And we ultimately decided to roll out with it, both because we were seeing a bit of that revenue lift, but also more from a mission perspective as well. And we were taking a bet on if those folks start with Headspace as students or as college students or graduate students or whatever type of student status they were, they would hopefully stay with us long term as they continue to be a young professional or continue in their careers and then even maybe when they had families. So that was also a longer term type of journey that we were thinking about in terms of our members and where we might want to start with them. Since then, I'm sure Shreya can talk about this a little bit more, but there's even been more targeting that's been done with folks who are younger than students, from what I've seen and folks that I've kept in contact with.

And then on the family side, that was actually very interesting because we had a hypothesis that the family plan would help with accountability and retention of folks. So imagine you're on a family plan with your grandparents or with your parents or whoever it might be, or roommates or housemates, and you really don't want to quit it because your grandma is continuing to use it or brings it up during holiday time periods or whatever it might be.

And that was kind of our key hypothesis, that because families use it as maybe like a unifying type of talking point or they feel accountable to one another in some way or the other, even if it is their spouse that's making them mad or whatever it might be, that might be the reason why folks choose to stay with it instead of kill that subscription or don't renew. And we did ultimately find that during my time there that the family plan was the best in terms of retention, both on the monthly side and the annual side, somewhat pointing towards that hypothesis.

And we also saw there that we were trying to bring in net new folks to Headspace. So in some of the survey, in being able to match folks to see if they had an existing account or not, we saw that we were bringing in folks who were net new to Headspace, meaning they hadn't had an account or they were living in that free state for a very long time. So we were getting them to convert and contribute a little bit more towards annual revenue and the overall average revenue per user, as well. But Shreya, I'm sure you also have takeaways there from the student and family side too.

Shreya Oswal:

Yeah. One of the things that we saw was that there was so much demand for the student plan internationally. So I think initially maybe the focus was on the US. We have an amazing member support team and they bring us a lot of really rich member feedback. One of the top ticket drivers was actually requests for international support for that student plan.

So building off of that foundation and that initial launch, last year the team launched it to far more countries. I think we focused on the top seven to 10 we were getting the most requests, and that's done really well. We've seen a lot of member love from that, a lot of adoption. But I think that thesis is the really strong one, that if you build that habit or that access early on at a more accessible price point, hopefully you see that continuation down the line and more long-term habit with Headspace.

David Barnard:

Yeah, that's so fascinating. The family part is so interesting, and just that concept of accountability. And it's just another great example too of you come up with a hypothesis and you try it, and you don't always know if your hypothesis is exactly why it worked or not, but you give it a shot and if it moves business results, it was a good thing to try.

I didn't prepare any questions around failed tests, but if either of you think of any failed tests while we're going to move on and talk about onboarding, but those are always fun, when you come up with a hypothesis and then it's just like, oh wow, no, that did not work.

I did want to move on and talk about onboarding. So Shreya, I know you've spent a ton of time thinking about and working and testing onboarding. I'd love to hear what you learned.

Shreya Oswal:

So speaking of failed tests, we have lots of failures and lots of wins when it comes to onboarding. So our team is constantly testing out, do we remove screens, add screens, what's the right order of screens? So one of the interesting tests that we ran recently was actually adding in some additional onboarding questions and finding that the drop-off was relatively low. The best practice typically says, okay, you don't want to add in too many screens because you're going to see some drop off on each screen, and you also want to make sure you reduce cognitive load, so the simpler, the better.

We recently ran a test where you ask people why they came to Headspace, what's their goal, what's their need, what are they trying to achieve? Do they want to sleep better? Do they want to tackle anxiety or stress, feel calmer? And we turned that from a single select to a multi-select question, and that actually gave us a pretty significant lift. Fewer people dropping off that question, more people continuing down the flow and ultimately starting a free trial, which is surprising because that's such a small change.

But I think the hypothesis there was that allowing that nuance and that feedback allowed people to feel more listened to, give us richer input on why they were here. And it is a multifaceted reason. The majority of people do choose multiple reasons. It's not just one reason that they come in. And the good news is that Headspace can help with all of them. So it really helps our content team and our personalization team then take those inputs and then figure out how to serve up the best content.

David Barnard:

Awesome. And then Keya, I know you did a lot of onboarding tests as well during your time preceding Shreya's work. What kind of experiments did you do, and what'd you learn along that journey?

Keya Patel:

Yeah, so it's really fun hearing some of what Shreya and others have done because I think we tested versions of that or trying to expand out reasons, and it didn't quite play out the same way for us. So I feel like there's also a more meta-level learning of every three to six months our customers to Headspace have changed and will continue to change in terms of what onboarding should look like to them.

And during my time, we went through the full gamut. When I started working on onboarding with the team, it was a longer flow, so about 10, 15 screens. We condensed that down to as little as three to four screens at one time. Expanded that out again, landed in the middle. So it was kind of like an accordion was what was happening over the course of two years there, when I was working on onboarding. I think it showed to me how much it was really unique based on were we optimizing sometimes towards free trial starts, were we optimizing towards engagement? And each of those had different implications on the onboarding flow.

Sometimes, best case scenario, it would work hand in hand, but that wasn't always the case. So it was also sometimes tough conversations with our VP of product or someone else who was working directly on an engagement metric that was one week out from conversion or something. And being able to decide which metric are we prioritizing right now, when's the next opportunity we have to test onboarding so we can try to retract some of those changes if they don't go well, and whatnot.

David Barnard:

So yeah, any big failures, any big wins? I mean, it sounds like the super long onboarding ultimately failed and the super short onboarding ultimately failed. Any specific lessons from those learnings?

Keya Patel:

Yeah, so I think on my side, for some of the long ones what we found was that did ultimately help with engagement. And at the time we were optimizing towards an engagement that was a week one engagement type of number. So after you sign up, being able to complete X number of sessions within your first week. And a longer type of onboarding did help with that engagement metric. But it reduced the number of folks who were converting because they were kind of trying to suss out the value of Headspace during that first week, weren't really feeling incentivized to create or think about pulling out their card or making a payment during that amount of time.

And then on the flip side, the shorter onboardings were ones where folks went to the app immediately and were usually shown an upsell or a free trial upsell at that point. And that to them was maybe their only option. So it wasn't fully going to the route of being deceiving, but I think it was closer to that, of not really giving folks like a full taste or being able to personalize as much as possible or have a little bit more of a give and take type of relationship during the onboarding before moving into asking for a purchasing moment.

And that was kind of experimenting with more of the extreme of what happens if you condense onboarding as much as possible and ask for a conversion moment or an upsell, which worked from a data perspective. So it wasn't necessarily a failure, but I think it was a failure from more of a mission perspective, even what Headspace stood for. So that was much harder to deal with internally. And ultimately, like I said, we ended up somewhere in the middle.

David Barnard:

And then during that time you were also working on life cycle, which I thought was really fascinating because it normally lives inside a growth team or the marketing team or separate, but in so many ways it actually makes sense for life cycle to fit under the product team, who's really making those product decisions and really making decisions on the value and delivering that value. So yeah, tell me about what it was like to run life cycle inside the product team and some lessons from that.

Keya Patel:

Let me share one example, which I think is a really good highlight of how that interaction between product and lifecycle worked, where we were trying to understand both from a conversion and an engagement standpoint what could we do to get folks to feel incentivized to convert and also stay around for their first month?

And on the product side, what that normally looked like was maybe having the upsell, tying that upsell to showing what your first month at Headspace could look like, with icons of the type of courses you could take or showing potentially modals that would guide you through your first month. But in partnering with life cycle, we were able to come up with an idea of actually having, when you sign up or when we try to get you to convert, saying that we'll give you a prize at the end of your first month.

And through life cycle, we actually created our test around that. So within that first month, being able to incentivize folks to say, are you on track? Are you not on track? Send notifications that were based on that and even create an email sequence during that first month that led them to that incentive or that prize, of being able to get a free month of Headspace or a referral code for a friend.

So having life cycle partnered with the monetization side allowed for something like that to happen, where we thought of creative ideas that were outside of just the app to test if something like this worked and if people were excited to be incentivized and see that Headspace does care and is motivating us to do week over week actions through something that's more genuine to Headspace versus an incentive that might not feel as right.

David Barnard:

Yeah, that's really cool. And you mentioned referrals in there, and I know Shreya, you've been doing a ton of work on referrals since Keya's time. Tell me about how you currently handle referrals in Headspace.

Shreya Oswal:

So I think Keya and team had also maybe experimented with the referral program at some point. So our main focus was to kind of revamp that, give it a little bit more visibility in the product, so trying to make sure that people were really aware of it, embedding it in a few different places, and with life cycle launching a series of triggered campaigns to let people know that we have this incentive, we actually thought a lot about the incentive on both sides. So our product marketing team did some amazing research on what really gets people to refer and why do they want to do it.

And in most cases, it's this desire to really be helpful to a friend or a family member in a one-on-one setting. It's different from, say, your DoorDash credits. You really just want to get more DoorDash credits in return. Give 10, get 10 is a really popular incentive. And I think we actually saw a lot more hesitation with something like that. Headspace deals with some really serious topics sometimes. We have a really rich content library and sometimes what you think of sharing can come with a little bit of vulnerability. And so people really wanted to make sure that they weren't seen as being too self-serving, and in some ways that actually was a fear or a deterrent to referring.

So I think what we realized is that the intrinsic referrals and the ones that feel a little bit less transactional are more effective. So our marketing team recently ran this great referral challenge where the prize was, if you were on the, I think one of the top five referrers, maybe it was top 10, you actually could win a one-on-one meditation session with your favorite teacher. And what I loved about that is that it's something that's more unique, it's more special. You can't even necessarily buy that or figure out the dollar value of that. And it increases and strengthens your relationship with Headspace and with the app and with our teachers. So we're trying to find more things like that. Is it early access to content or special access to certain events, as opposed to just a give to get?

David Barnard:

And what's the typical incentive for the person who's getting the referral?

Shreya Oswal:

Yeah, so our standard free trial for an annual subscription is 14 days. With the referral program, you get 30 days. So it's an extended, richer free trial, more time to play with the product and check out the full library.

David Barnard:

And how does that perform? I mean, is that enough where people are excited, like hey, I've got this secret, you get 30 days instead of 14. Does it feel like enough? Is it performing well? And have you experimented with other benefits to the referee that maybe felt more valuable?

Shreya Oswal:

We haven't done a ton of experimentation there. I think that's an area where we want to continue exploring, but it is working well. We are seeing a lot of good engagement with that feature and really good conversion and engagement on the recipient side as well. The pretty high redemption rates on that free trial from folks who receive the referral link from a friend.

Keya Patel:

I'll quickly jump in on that because what Shreya said is actually pretty similar to what I saw during Headspace, where we were unable to experiment with a two-way referral. We only did a one-way referral. But when we were chatting with folks, they honestly oftentimes did not want anything in return. And that I think is how the Headspace audience is, where they would feel so much more grateful for another 14 days of their free trial or being able to play around with the app more or feel known in their community or whatever that might mean, versus necessarily get a monetary $10, like what happens in the food delivery apps or ride sharing or whatever it might be.

So it is I think also unique in that, where a two-way referral might not be exactly right, but I remember even having the life cycle team that worked on it during my time, where they even tried doing something like a thank you note from Andy, who's the co-founder, or something like that, which was so much more meaningful to folks, versus some of the other types of solutions. So they were opting into these options that were much more creative or more based on Headspace and the brand and having one-on-one sessions with teachers, like what Shreya mentioned or whatnot, which are newer type of incentives that kind of resemble what we tried to do with Andy or with others at the time.

David Barnard:

That's a great place to wrap up. There's so much more I'd love to talk to you all about, but we do need to wrap up. Keya, Shreya, thank you so much for joining me today on the podcast. And as we wrap up, is there anything you all wanted to share? Shreya, is Headspace currently hiring? Any roles you want to shout out or anything else you want to share as we wrap up?

Shreya Oswal:

Definitely encourage folks to check out our site. We recently merged with a company called Ginger, so we now offer an integrated mental health solution and that includes access to, of course, Headspace meditation content, but also behavioral health coaching and therapy and psychiatry. So we are constantly posting new roles. Definitely encourage everyone to check that out and say hi. Thanks for having me. Had a great time.

David Barnard:

Keya, I know you've moved on from Headspace, but anything you wanted to share as we wrapped up?

Keya Patel:

Nothing major. Just that Headspace is amazing so people should download it. I'm giving a free ad for Headspace on your podcast.

David Barnard:

There you go. Hey, I've been a user for years. Like I said, I've got that one sleep meditation that just knocks me out. So it is a fantastic product, and it's always cool when subscription apps overlap with doing good in the world. And I think Headspace is a great example of that. It really, yes, you charge money, and yes, it's a business, and yes, it's part of global capitalism or whatever, VC backed and all that kind of stuff, but at the end of the day, you're really delivering value to people and doing something unique.

And Headspace does it in such a unique way and has a unique voice. So I'll do my little ad. So I think it's a fantastic product, as well. And it was so fun chatting with you all, and it's always fun too when you see a product like Headspace and then you talk to the people behind it and you're like, oh, there's some really thoughtful people who care about the mission but are also experimenting and trying new things. And so yeah, it was really fascinating to get that peek behind the curtain. So thank you all both for being on the podcast today.

Keya Patel:

Thank you.

Shreya Oswal:

Thank you.

David Barnard:

Thanks so much for listening. If you have a minute, please leave a review in your favorite podcast player. You can also stop by chat.subclub.com to join our private community.