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Free trial or freemium? You decide.

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How you can decide whether a free trial or freemium offer is the right approach for your SaaS business FAST (without losing millions)

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Free trial or freemium? You decide.

  1. 1. FREE TRIAL OR FREEMIUM? How to decide on the right approach for your B2B SaaS business.
  2. 2. Both models help your potential customer evaluate your product but...
  3. 3. Why use one model over the other?!?
  4. 4. Free Trial Argument
  5. 5. First off, Free Trial Definition A free trial is a customer acquisition model that provides a partial or complete product to prospects free of charge for a limited time. Typically, a free trial runs for 14 or 30 days.
  6. 6. Two Types of Free Trials (one you like & one you probably don’t like)
  7. 7. Meet Opt-In & Opt-Out Free Trials
  8. 8. The big difference between the two... Opt-In Free Trials (the one you like) ❏ No credit card required ❏ You need to sign up at the end of the trial to use the product Opt-Out Free Trials (the one you don’t like) ❏ There is a pay wall that requires you to give your credit card details before you see the trial ❏ If you don’t like the product, you need to “opt-out” ❏ Chances are you’ll probably forget to cancel your subscription… (or am I the only one)
  9. 9. Opt-In Free Trial Perks (the option you already like)
  10. 10. #1 Little to no friction = more signups (YAY)
  11. 11. #2 You add to the trust factor.
  12. 12. #3 You avoid accidental free trial-to paid conversions (meaning less refunds and angry users).
  13. 13. “Free trials which don’t require credit card information show a higher end-to-end conversion percentage compared to their counterparts.” -HT: Totango’s report
  14. 14. That means more $$$ in the bank. #winning
  15. 15. The Golden Rule of Free Trials (aka don’t do opt-out free trials)
  16. 16. Here’s why you shouldn’t use an opt-out model: 1. It’s hurting your brand. 2. It most likely is costing you a lot of potential revenue - do the math for yourself here. 3. Even a $1 free trial is a really bad idea. 4. People don’t like this option so your conversion rate will suffer.
  17. 17. Still not convinced?
  18. 18. Luckily, venture capitalist Christopher Janz dealt with a lot of stubborn folks and put together a great model for you to check whether an opt-in or opt-out model will work best for your business. See for yourself
  19. 19. Wait, where does freemium fit into the mix?
  20. 20. Good question ;)
  21. 21. Freemium Argument
  22. 22. Freemium Definition Freemium is a customer acquisition model that provides access to part of a software product to prospects free of charge, without a time limit.
  23. 23. TL;DR > Essentially the same as a free trial but no time limit.
  24. 24. Freemium is like a Samurai sword: “unless you’re a master at using it, you can cut your arm off.” - Rob Walling
  25. 25. Freemium Perks (for those that get it right and keep their arm)
  26. 26. #1 Powerful Acquisition Strategy
  27. 27. #2 You can test upgrade levers at scale.
  28. 28. #3 You can turn free users into a consistent referral source.
  29. 29. This all sounds amazing but...
  30. 30. Freemium usually only works when your organization is up against a few factors such as...
  31. 31. #1 A large addressable market (ie people who listen to music)
  32. 32. #2 Low costs to service each new user.
  33. 33. #3 It’s easy for users to start with your product and get value out of it.
  34. 34. I hate to be real with you but...
  35. 35. Most times the freemium model just doesn’t work with B2B SaaS companies.
  36. 36. After all...
  37. 37. Giving away your product for free without having people upgrade isn’t a robust go-to- market strategy.
  38. 38. You’re not building a charity, you’re building a for-profit business. - Lincoln Murphy
  39. 39. If you still think freemium might work, we’ve got lots of questions for you.
  40. 40. Questions to ask yourself when considering freemium 1. How much will it cost to sustain a large segment of free customers? Is a freemium model scalable for your business? 2. Can we provide enough value for users to realize product benefits but still limit value to entice them to pay for a subscription? 3. How difficult is it to get started with the product? Does it require technical integration and broader organizational approval? 4. How will we nurture and prioritize freemium users that are ready to purchase? 5. Are we attracting the right kind of customer (i.e., a customer in our target market with a real need, an urgency to purchase and a desire to expand the subscription)?
  41. 41. When to choose a free trial or freemium model?
  42. 42. Here’s a fancy chart from the CEO of Aptrinsic (smart man)
  43. 43. Now, think to yourself…
  44. 44. What well-known companies fit into each box?
  45. 45. Starting to make some sense now?
  46. 46. Now, let’s make it a little more complicated, shall we? (sorry)
  47. 47. “Just because a product is considered “easy-to-use” and inexpensive does not mean you HAVE TO HAVE FREEMIUM” -Yours truly
  48. 48. Why?
  49. 49. Complexity of a product is contextual.
  50. 50. Give two people the same accounting software Sam the concrete guy Miss Bitcoin
  51. 51. One finds it easy & the other doesn’t know how to login to their account.
  52. 52. You NEED to know your audience and constantly do user tests with them.
  53. 53. Maybe even drunk user testing...
  54. 54. In this case, sometimes it makes sense to not have a free trial or freemium offer.
  55. 55. But, when should you NOT consider a free trial or freemium model?
  56. 56. #1 If your entire company follows a top- down marketing approach.
  57. 57. (ie you’re targeting the VPs, C-level, and good ole Mark Zuck)
  58. 58. They are not “doers” in their organization.
  59. 59. #2 Your product is a complex and your target audience requires some “hand holding”
  60. 60. #3 Your product is very expensive and would max out most company credit cards each month.
  61. 61. Hence, avoid free trials and freemium models when...
  62. 62. Used for dramatic effect… Woah!
  63. 63. The Conclusion
  64. 64. Free trials and freemium models work if you’re marketing to “doers”
  65. 65. Demos work great if you’re going after business owners & execs and follow a top- down marketing approach.
  66. 66. Free trials and freemium models foster a bottom-up marketing approach.
  67. 67. But, can you use a hybrid strategy?
  68. 68. Why yes you can!
  69. 69. But, that’s for another slide deck. (Spoiler alert)
  70. 70. But, if you still have questions...
  71. 71. You should probably chat with someone weird (like me) who’s generated over 130,000 free trial users to see what option is best for you (no strings attached). Book 15-minute meeting

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