How Headspace Optimized Revenue by Gating Content — Shreya Oswal and Keya Patel, Headspace
Sub Club by RevenueCat
Introduction
The host interviews Shreya Oswald and Kaya Patel from Headspace as they talk about the growth of Headspace's freemium model, their strategies to increase conversions, and the reasoning behind offering free content.
On this episode: The evolution of Headspace’s freemium model, balancing mission and monetization, and why referral programs sometimes work better without incentives.
Top Takeaways
💰 Don’t be afraid to experiment with gating 100% of your content. Not only can this result in a significant lift in paid users, in cases where an app requires some effort from the user (such as with meditation), getting them committed with a free trial early on can boost engagement levels versus free users.
⚠️ Promoting your strongest performing plan at the expense of your others doesn’t always have a positive effect. Let’s say your annual plan might display the best performance in terms of revenue or retention, giving it too much prominence can cause lower intent users to sign-up for it, leading to fewer trial-to-paid conversions. In these cases, giving users choice could produce the best results.
👪 Users on family plans can show the strongest retention rates. When users subscribe to your app as part of a family or group, there’s a degree of accountability involved: if one member is using it, then the others are less likely to want to cancel as a result.
🗣️ When designing onboarding experiences, think about the product and lifecycle messaging together. Having the option of communicating with users both in and out of the app means you can get more creative with your onboarding — for instance, offering a “prize” for completing the first month, and using email to remind users when they’re lagging behind.
💬 Some apps will benefit from referral schemes that are less transactional. Rather than receive some monetary reward, some apps’ users are more motivated by the intrinsic reward of being helpful. But you can experiment with more unique benefits for being a top referrer, such as exclusive content or in-person events****
About Shreya Oswal and Keya Patel
👨💻 Shreya is Senior Director of Product Management, Membership at Headspace, and Keya is the former Director of Product Management, Growth.
💡 Shreya: “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.”
💡 Keya: “Experimenting with the extreme of what happens if you condense onboarding as much as possible and ask for a conversion moment or an upsell [works] from a data perspective. So it wasn't necessarily a failure.”
👋 Shreya on LinkedIn | Twitter
Links & Resources
‣ How Freemium Can Outperform Free Trials – Shaun Steingold, Momentum Labs
‣ Connect with Shreya on LinkedIn
‣ Connect with Keya on LinkedIn
Episode Highlights
[1:53] 80/20 rule: Keya talks about Headspace’s evolving freemium strategy where 80% of their content was locked behind a paywall. They tested the effect of locking even more content — with a positive impact on conversion.
[6:26] Big shoes to fill: Shreya’s follow-up experimentation involved locking 100% of content, with a high double-digit lift. To attract long-term users to switch, they offered a 75% discount.
[8:22] Costco sample strategy: Headspace wants to continue to experiment by giving users a taste of what they can benefit from.
[10:58] Freemium do’s and don’ts: Building habits and engagement comes from commitment and early skin in the game.
[13:04] Price testing: Keya dives into the experiments and results of Headspace’s price testing efforts.
[16:18] Annual versus monthly: Where Keya left off with annual subscription efforts, Shreya picked it up from a net new, lower-intent monthly angle.
[20:55] Package experimentation: The ideal length of time for a free trial isn’t immediately clear when switching from free content with a paywall and no trial.
[24:24] Propensity model: Shreya breaks down what a propensity model is and how to build it.
[26:18] Student and family rollouts: Not everyone necessarily had the same access or ability to pay for Headspace — while revenue matters, so does company mission.
[30:47] Onboarding failures and wins: Additional questions in testing led to lower drop-off rates — from single-select to multiselect reasons. Both very short and very long onboarding failed.
[35:08] Product and lifecycle interactions: Keya explains how communication outside the app opened doors for incentivization within the app.
[37:44] Referral revamp: Headspace found intrinsic, less transactional referrals to be more effective in the long run.
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