When customers are most likely to upgrade to an annual plan. It’s way earlier than I thought.

I used to think you'd want to give customers some time to experience the product, then push for an annual upgrade in months 6-12.

Turns out the opposite is true.

Customers are 3-4x more likely to upgrade in month 2 than they are in month 9.

And the upgrade is valuable. Median net revenue retention on monthly plans ranges from 43% (<$25 products) to 76% ($250-$500 products). It's about 10-20 percentage points higher for annual plans.

What to do with this data:

1. Make sure customers are able to not only activate in the first 30 days, but they're able to build a habit around your product.

If they're not seeing value, a nudge to upgrade from monthly > annual will fall flat.

2. Ask for the annual upgrade much earlier than you think.

You can (& apparently should) start campaigns toward the end of the first month.

3. Push for annual not just as a "discount" but as making an "investment" in the product.

One thing I like to see is personalization down to the exact $ saved by shifting to an annual plan.

4. Keep offering a monthly plan, especially in the early days.

Turns out that folks with a meaningful % of their customers on monthly plans (50%+) are growing faster than others, esp when growing from $0 to $10M ARR.