Results of monetizing account sharing for SaaS companies
People think account sharing (or password sharing) only happens to streaming companies like Netflix and HBO. But it's a problem affecting many SaaS companies (my previous company included). The question is: how much account sharing is happening? And how much revenue are companies losing because of it?
Rupt is a tool that helps SaaS companies monetize account sharing. We've been working with 30 SaaS companies to help them monetize their shared accounts.
In this article, I share the results of our work with them.
There's quite a bit of variation between companies. Companies in some categories have more account sharing than others.
|Ed Tech SaaS
|Social Media Management SaaS
|Video Hosting SaaS
|AI Writing Tools
|Data & Research SaaS
But that number alone doesn't tell the whole story. The number of people who use shared accounts is much higher than the number of people who share accounts. For example, if 10% of your users share accounts, that doesn't mean that 10% of your users are using shared accounts. It's more like 20% or 30% because multiple people use each shared account.
Here's a breakdown of how many people use shared accounts for each category:
|Average people per shared account
|Ed Tech SaaS
|Data & Res
Using a dollar amount would not be very helpful here because the dollar amount means different things to different companies. Instead, I'll use a percentage of the current revenue to represent each category's account-sharing cost.
To get the cost of account sharing in each category, multiply the number of shared accounts by the number of people per shared account and divided by the number of paying users. Here are the results:
|Data & Res
Not surprisingly, Ed Tech SaaS companies have the most account sharing. But what's interesting is that the cost of account sharing is much higher for Social Media Management SaaS companies than it is for Video Hosting SaaS companies. This is because Social Media Management SaaS companies have a much higher number of people sharing an account than Video Hosting SaaS companies do.
Each category however has a significant revenue leakage from account sharing. This generally means it's a good idea to monetize account sharing.
Most companies use the pre-built Rupt version of the conversion journey, which is the easiest way to monetize account sharing. It's also the most effective way to monetize account sharing. But here's a quick summary of how it works: Once Rupt detects a shared account, it redirects them to a challenge page. The challenge page asks them to create their own account or verify that they are the owner and kick out other users. To learn more about how it works, check out this article.
Once again, this varies. But the predictor of success here depends on what method you use to monetize account sharing. If you accurately identify shared accounts and target them with the right messaging, you can recover up to 95% of the revenue from those accounts. If you only target accounts that are obviously shared, you'll recover less revenue, which may not be worth the effort.
Here's a breakdown of how much revenue you can recover for each category (using Rupt):
|All other SaaS
This is an underestimate. Some companies used private conversion journeys such as email communications that Rupt doesn't have access to. So the actual numbers are higher.
Based on our study of the said customers, here are the key takeaways:
- Account sharing is a significant and underappreciated problem (and opportunity) for SaaS companies.
- When done right, monetizing account sharing can be very effective and profitable.
- The best way to monetize account sharing is to put it on autopilot and optimize the conversion journey. The account sharers will do the work for you.