Marketing metrics

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Part
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Identity Protection Apps Freemium to Premium

While there is no preexisting information to fully answer your question, I used the available data to pull together key findings: I was able to estimate the industry wide standard for cost of customer acquisition for identity protection apps to be around $260. Below, you'll find an outline of our research methodology to better understand why information you've requested is publicly unavailable, as well as a deep dive into our findings.

METHODOLOGY

I conducted an exhaustive search of corporate websites, market reports, white papers and trust media sites. I also performed an X-ray searches on numerous identity protection apps, however I was unsuccessful in determining an industry wide standard. Due to the unavailability of an industry wide standard for customer acquisition cost of Identity Protection Apps, I have provided you with the cost of customer acquisition for one of the top players in this space. Since no other information was available we can assume that this would be the best estimate for an industry standard.

Determining the conversion rate of free to paid customers is complicated by several factors. First, there are no figures that directly address the rate of conversion for the identity theft protection app industry particularly. We will use figures for the Software as a Service (SaaS) industry as a whole, assuming that the identity theft app market is similar.

Second, the available figures do not distinguish between users who sign up for a free trial ("free signups") but never use it and those who actually use the software. One study puts the number of actual users of free trial software at approximately 50%. The remaining 50%, then, would be non-users and thus unavailable for conversion from free to paid customer.

KEY FINDINGS

According to the Identity Theft Resource Center (ITRC), recent years have seen breaches of personal and financial data that number over one billion. Providers of identity theft protection make apps and software that address this problem. Industry-wide figures for user acquisition cost and the percent that convert from free trial to paid services are unavailable. Using figures for one of the largest providers of identity theft protection gives a user acquisition cost of $260. Figures for conversion from free to paid vary somewhat and are complicated by the number of free trial "signups" that never use the app; however, the conversion rate for those that do so can be estimated to be between 20-25%.


Although the industry has seen a downturn in recent years, the market for identity theft protection software generates approximately $3 billion in revenue each year in the United States. Despite this, industry-wide figures for user acquisition cost are unavailable publicly. Thus, we will provide the figure for one of the most prominent firms in the industry which we take to be representative of the industry, regardless of platform (mobile, computer, etc.)

Lifelock is one of the largest providers of identity theft protection services in the United States. Recent years have seen the company's earning fall, in part due to higher customer acquisition costs. The data indicates the cost of acquiring a new customer to the company has risen to $260 in recent years.

Estimation of the conversion rate is further complicated by the varying estimates for the conversion rate for SaaS as a whole. One site claims "According to a recent survey of over 300 SaaS professionals, 80% of free trial users on average never convert to paid. Thus, the conversion rate would be 20%. Another cites a survey of over ten million users that revealed the overall conversion rate to be 26.4%. A third claims that approximately two-thirds of companies have less than a 25% conversion rate. And yet another asserts that the conversion rate for a typical SaaS company is 1-2%.

Fortunately, most of these are fairly consistent. Although we are unable to determine specifics for the identity theft protection app industry, the data indicate that the conversion rate of Freemium to wt5rPremium for customers who use free trial software for the SaaS industry as a whole is approximately 20-25% across all platforms.

CONCLUSION

Although customer acquisition costs for the identity theft protection app industry as a whole are not directly available, based on the figures reported for a large provider of these services, we put the cost at $260 per customer. And although the conversion rate of free to paid (Freemium to Premium) customer is similarly unavailable, using statistics for the Software as a Service (SaaS) industry as a whole we estimate the conversion to be approximately 20-25%.


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