In a recent Lifehacker poll, Evernote took the top spot as today’s most popular note taking application, beating out pen/cil and paper, Microsoft OneNote, Springpad and Simplenote. Evernote is currently growing at a rate of 1.2 million users per month, averaging over 40,000 signups every day, which is enough people to fill Madison Square Garden, twice.
While you can use Evernote for free, forever, out of those 13.5 million, there are approximately 600,000 paying subscribers, representing a 4.5% conversion rate of free to paying subscribers. While there are a slew of premium features (advanced collaboration features, more versatility and monthly uploads of 1GB each month) worth dishing out $5 a month/$45 a year for, founder and CEO Phil Libin believes that the best predictor of a customer converting to the paid version is how long they’ve been using the system. While you can use the full featured version for free, forever, Libin thinks as you store more of your life and your memories it will become more valuable to you the longer you use it, thus prompting you to want to pay for it.
“The conversion percentage isn’t what I really care about,” says Libin. “We can break even at 1%. If my goal is to have a million paying users, then I hope to have 100 million people using it for free. I don’t want our conversion rate to go any higher than 5%, because that means we don’t have the best free product that we should.”
Evernote currently boasts a near 100% long-term user retention rate. In his speech this past March at SXSW, Libin said that in a post-scarcity economy, the new primary driver is love, and what determines the value of your company is how much people love it. As you store more and more of your personal notes, memories and work in Evernote, essentially giving it immense personal value, how can you not grow to love it? Now, that’s a perfect business model.
Interesting that Evernote is not too eager to boost up premium memberships.