Estimated read time: 4 minutes, 34 seconds
Everyone likes free stuff. If you’ve ever been to Costco during sample time, you know what I’m talking about. People will eat little pizza samples all day, but the big question is, “Will they actually make it to the freezer aisle?”
Giving away free samples is a great way to get people’s attention, but it usually isn’t good for your bottom line. At some point, you need to get your samplers to become paying customers. And that’s what we’re here to talk about.
On average, only about 15%-20% of users upgrade to premium plans. So, we’re going to give you some foolproof tips to help increase conversions and encourage your freemium customers to become happy, paying customers.
What is Freemium?
Before we get ahead of ourselves, let’s talk about what “freemium” means. “Freemium is a two-tiered user acquisition model that splits users into either a free tier or a premium tier depending on whether or not they pay for an account. Free-tier users have limited access to certain product features as a trade-off for not paying. Premium-tier users gain greater access to features, but they must pay for their account.”
Recently, the freemium model has started replacing the free-trial or demo model. There are two main differences between freemium and the free trial. First, unlike free trials that give users full access for a limited time, freemium provides just a portion of the full application’s features. Second, freemium offers ongoing use—users can continue to use the limited application for as long as they want.
The main goal of the freemium model is to attract new users. The idea is that users will be so impressed by the freemium version that they will invest in the premium version. Now, you just need to figure out how to make your freemium option so enticing that users can’t help but become paid customers. Here are our top five tips to encourage your freemium customers to upgrade:
1. Create the Right Offer
The most important thing you’ll do when using the freemium model is to decide what features to offer for free. The features you allow new users to “test” have to be compelling enough for them to try it, but only a teaser of what they potentially have access to. It’s all about finding the right balance.
If you’re not getting enough people to sign up for freemium, it means your offerings aren’t enticing enough, and you need to provide more or better free features. If you’re getting tons of new users but few people are paying to upgrade, your freemium offer is too good, and you probably need to take away some free features.
2. Clearly Communicate Differences
As with any type of customer interaction, communication is key. With freemium, you need to clearly communicate two sets of benefits, which can complicate your marketing efforts. Customers need to understand exactly what they get with the free package, what they get with the premium package, and how they can move up from the free to the premium package.
If customers don’t have a clear understanding of what they gain by upgrading to the premium option, your conversion rates will suffer.
3. Track Usage
To understand if your freemium customers are having a valuable experience, you need to track how frequently they use your product. You also need to look at analytics to identify daily active users (DAU), monthly active users (MAU), and most-used features. This will help you identify what users value most about your product and help you make changes to both your freemium and premium offer. Just remember, active users is the most important metric to follow when offering a free service.
4. Personalize Messaging
Instead of a generic email drip campaign, your messaging should be catered to how your customers use the product. For example, here are examples of the types of messaging you can use based on user activity:
User hasn’t finished setup—Send next steps or a task list to complete setup
User is highly engaged with the product—Message them to upgrade to premium
User hasn’t used key features—Send message highlighting and explaining key features
User hasn’t used a feature or product in a while—Remind them about the value of the feature/product
User is stuck on a specific step—Share a training video that corresponds with their step in the process
For a more personalized approach, you can also have sales and service people call customers directly to help them move forward in the customer journey.
5. Create a Seamless Transition
You want to make the transition from freemium to premium as simple as possible. To remove any pain points, you may want to create specific messaging that explains what is involved when moving between the two tiers. Are there any additional fees? What information is required to upgrade? Is auto payment available? What type of customer service is available with the upgrade?
Identify any barriers that may prevent customers from upgrading, and try to address or eliminate those barriers.
With freemium offers, you’re going to have to go through some trial and error. Between finding the right balance between your free and premium packages and finetuning your messaging for each stage in the customer journey, you’ll have a lot of elements to test. But if you want to create buzz around your product, the freemium model is a great option.