Read a case Study Example | Topics and Well Written Essays - 750 words

Read a - Case Study Example The objective was to encourage as many people as possible to refer their friends and family such that they could have a significant number of free customers. They were hoping that since on average 20 percent of free customers turn premium, they could increase the potential customer base. The method was immensely successful in and in 2010; there was an increase 2.8 users who were referred by the 4 million paying customers. It is approximated that the Dropbox accounts each yielded a 12% referral rate, which was likely understated given the fact that many people target even non-acquaintances. In 2013, the company’s conversion from free to premise rose from 1.4 to 4%, which boosted the revenue to between $200 and $240 million dollars of annual income. The success rate was so high that other internet firms began to copy the freemium model as a way to get new clients without significant cost in their marketing budget. Another positive impact of the strategy was that it was copied by other firms outside the cloud storage business with the 100 top rating apps in Apple store using it in 2013. While there are no precise figures for how many of the firms using the technology were successful, there is no doubt that many of those that did have substantively grown their cu stomer base. In fact, the model was so successful that some firms like Spotify, an online radio channel had a conversion rate of 20%. There were nevertheless some disadvantage to this strategy; some of the companies that tried to model it ended up going bankrupt since the bulk of their clients did not convert to the premium service. In addition, given that Dropbox’s clients were mostly free, it means that much of their attention had to go to them while they may have been better off servicing the paying ones. Moving forward, it is hard to determine if the company can expect to make any more progress from the method since the firm is already a market giant and