When Marcin Kleczynski launched his first Internet security software in 2008 at his startup firm Malwarebytes, not long after conceptualizing his business in high school, he started with a business plan intended to quickly win over customers. For a one-time fee of $25, his customers could get a perpetual license. “We called it ‘lifetime,’ and we meant it,” he says.
But after a couple of years of cranking out free software updates to his customers without being able to generate extra fees from them, Kleczynski latched onto a new product line and a new way to produce revenue. He says his initial customers bought his software for their personal computers in response to the growing threat of malicious software, or malware, that computer users unwittingly download from the Internet and that often goes undetected by commonly used anti-virus software. Malwarebytes software, he adds, isn’t meant to replace anti-virus software; it complements it. “No one security software can do it all,” he says.
Within two years, a number of Malwarebytes customers started to ask for a version to run on their business computers, and Kleczynski saw a new revenue opportunity. “By 2010 I was wiser, and started selling a subscription product,” he says.
But the company sold the subscription software only to businesses, which under current pricing pay license fees starting at $29.95 per year per software application per computer terminal. For paying fees every year, business customers receive extra features such as a management console for managing the deployment of the software across hundreds of computers throughout a company’s operations.
Now Malwarebytes is extending the subscription model to its consumer customers as well, though in a way that gradually introduces the new fees along with expanded features and services. Working with cleverbridge, which provides its subscription management and e-commerce software, Malware developed a new subscription service for consumers. Using cleverbridge’s A/B multivariate testing system, it determined how consumers shopped compared with businesses, producing product displays and checkout pages that maximized conversion rates for each customer segment.
For example, while many business customers apparently don’t mind filling out online forms—with information like job titles and billing department details to maintain proper records—tests showed that consumers convert at higher rates when presented with simple registration forms. “We can run A/B tests on the fly to see what works,” Kleczynski says. “With a test of a shopping cart, we can get conversions up by 10%.”
Malwarebytes also uses an e-mail marketing system that cleverbridge integrated with its subscription software, enabling the provider of security software to send automated e-mail to customers with messages tailored to different scenarios, such as when a customer needs a reminder to renew or after an incentive to renew a canceled subscription.
Cleverbridge earns revenue by charging between 8% and 10% per payment transaction that it processes for clients, a spokesman says. It usually charges no set-up fee, though may in some cases to cover unusual costs, says cleverbridge product manager Eric Bingen.
Cleverbridge lets its clients develop online displays of products at different prices based on purchasing terms and order volumes clients have arranged with their customers, “We’re flexible and can customize,” Binger says.
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