Acquisition Rate/Cost for Freemium Personal Financial Management Products
While the average customer acquisition cost of companies offering freemium personal financial management products is not readily available in the public domain, the respective customer acquisition costs of Mint, MoneyLion, and Acorns indicate that the average cost could be in the range of $1 to $5. All three companies operate in the personal financial management space. Both Mint and MoneyLion offer a free app with advanced features that can be accessed for a fee, while Acorns offers an app that can be accessed by college students for free and by other users at a premium.
Based on the following information I have gathered during research, it appears the customer acquisition cost of companies offering freemium personal financial management (PFM) products is more or less in the range of $1 to $5. Neither the average customer acquisition cost of companies in the freemium personal financial management space nor the respective customer acquisition costs of Digit, Clarity Money, and Qapital could be located in the public domain, but the customer acquisition costs of Mint, MoneyLion, and Acorns give us an idea of what the range is.
In an article published in 2016 by marketing marketplace YellowBulbs, it was reported that PFM service provider Mint was able to bring down its customer acquisition cost to $1 through a content-oriented strategy. At the center of this strategy is the blog MintLife where the company shares tips, infographics, and videos relating to personal finance. Content on this blog, which was launched in 2007, became very popular and was frequently mentioned on news aggregators Reddit and Digg. Mint's creation of the online badge "I want Mint" also helped in the company's user acquisition efforts, as the badge, which users embedded on their blogs and pages, essentially served as free advertising. Intuit acquired Mint in 2009 for $170 million.
While the app offered by California-based Mint is free, Mint has credit monitoring alerts that users can subscribe to for a fee. According to Investopedia, this service costs $16.99 a month.
According to an article published in 2017 by finance publication Tearsheet, the customer acquisition cost at New York-based personal finance platform provider MoneyLion is around $5 or less. At the time of the article's publication, MoneyLion, which was launched in 2013, already had around 1.5 million customers. Over 30% of its customers are acquired through word-of-mouth.
The MoneyLion app is free, but MoneyLion Plus, which offers a "better way to borrow, save, and invest" is not. MoneyLion Plus membership costs $29 a month, but members can get it for free if they log in frequently to the MoneyLion app. Users get a $1-cashback each day they log in to the app.
Based on an article published in 2017 by technology market intelligence provider CB Insights, personal finance service provider Acorns has a customer acquisition cost of $4.50 in Australia. The company was able to achieve this relatively low customer acquisition cost by making the most of social sharing. It has a strong referral program where active users see $5 get deposited to their Acorns account for every new customer they refer. The user interface for referrals is also designed in a way that user experience is optimized. In just a period of three years, Acorns was able to grow its active user base to 2 million.
The Acorns app is "free for college students with a valid .edu address for up to four years from date of registration." To use the app, other types of users will have to pay $1 a month or 0.25% a year depending on the amount of money they hold in their accounts. Those with accounts holding at least $5,000 will need to pay a fee of 0.25% a year, while those with accounts holding less than $5,000 will only need to shell out $1 a month. Acorns' headquarters is in California.
In the course of my research, I came across the average customer acquisition costs in the B2C and banking & insurance industries. I decided to present them here to highlight how low the customer acquisition cost of companies in the freemium PFM space is. According to an article published in 2017 by enterprise call tracking service provider Convirza, the B2C and banking & insurance industries have an average customer acquisition cost of $149 and $303, respectively.
Based on the Tearsheet article mentioned above, on the other hand, large retail banking businesses might spend $1,500 to $2,000 to acquire a customer, and for startups in the financial services industry, the cost could range from $5 to around $300.
Even though there is no pre-compiled information in the public domain that indicates the average customer acquisition cost of companies offering freemium personal financial management products, the corresponding customer acquisition costs of Mint, MoneyLion, and Acorns suggest that the typical cost could be somewhere between $1 and $5. The three companies are all players in the personal financial management arena. Both Mint and MoneyLion provide basic features for free and advanced features at a premium, while Acorns offers pricing that varies from free to 0.25% a year depending on the type of user.