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Free to paid conversion the early days


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Lean Startup Israel presentation on improving free to paid conversion (trial/freemium) based on experience by TOTANGO

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Free to paid conversion the early days

  1. 1. Welcome to Lean Startup Israel@leanstartupil #leanstartup - please check in (online)agendapizzashort announcementsfree/paid conversion - presentationopen discussionpizza ;)
  2. 2. Free to Paid Conversion –The early daysGuy Nirpaz, CEO &
  3. 3. Google Image Search:“Happy Customers”
  4. 4. Find / Evaluate / Buy
  5. 5. Free to Paid Conversion Sign Up Activation User Active Use Purchase EventCustomer Paid Use Renewal Expansion
  6. 6. Touch ModelsNo Touch No sales team. Customer self-service37Signals Yammer MailChimpLow Touch Inside sales team + Inbound marketingZendesk Hubspot Box ClarizenHigh Touch Enterprise salesJive software Taleo ServiceNowHybrid Models Mix & match
  7. 7. Free ModelsFreemium…is a business model that works by offering a product or service free of charge(typically digital offerings such as software, content, games, web services or other)while charging a premium for advanced features, functionality, or related productsand services. (source wikipedia)Free Trial… is a business model which allows potential customers to try out a product (fullyfeatured or partial) for a limited time period. (source Y.D)
  8. 8. Goal: Increase customer lifetime value Visitor Free New MatureGenerate Focus sales On board Identify Increase Createand on „right‟ customer cust. at customer moremanage prospects s risk to value valueleads churn within the service offering
  9. 9. Majority (87%) of SaaS executives regularly track “CAC related” 1 metrics, with a large percentage (58%) adding or planning to add tracking of “CLTV related” metrics in the next year. Executives at SaaS companies regularly monitor the following metrics: 59% 54% 56% 56% 44% CAC Related CLTV Related Website Unique New Signups Conversion Rate Life Time Value Churn Rates Visitors (Trial to Paying) Plan to track in the next 12 month: 58% 19%10 CAC Related CLTV Related
  10. 10. The Financials…CLTV > CACCustomer Success Marketing & Sales
  11. 11. The Data is ThereThey are doing it all on your property
  12. 12. So, how to improve and where to focus?
  13. 13. Change Measure Learn
  14. 14. Measuring Conversion Rate
  15. 15. 3 Things to look at… Conversion RateOverall 2.4% 282 out of 11,332 Signup (11,332) Actively Evaluating Converted (282) a (2,136) Conversion RateActivelyEvaluating 13.2% 282 out of 2,136
  16. 16. Considerations…Calculate conversion afteraccounts had enough time to Signupsconvert• Time-based: after trial period (11,332)• passed Freemium: (more complicated) A] understand mean conversion time B] conversion analysis by cohort Actively Evaluating ConvertedWho is “Actively Evaluating?” (2,136) (282)• Demonstrating “buying intent” by trying out the SaaS offering• Measuring can be tricky: A] Return visits B] Activated account C] Specific functionality used
  17. 17. Conversion Rates for Sales Tea
  18. 18. Low Touch Sales - RealityHigh volume of leadsFrom Inbound marketing activitiesHigh rate of low quality leads75%+ is not uncommonShort staffed teamSales-rep responsible for hundreds of new trialsFocus on opportunities thatmatterUse conversion data to drive contact priority
  19. 19. Conversion Signals Conversion RateEntire Population 2.4% 282 out of 11,332 2.4% of ALL trials in May converted (282 out of 11,332) A smaller segment of the population (2,136 trials) Conversion Rate showed a much higher conversion rate (13.1%). These are all the trials that were active on the service for Evaluating 13.1% 281 out of 2,136 at least 2 days. Nearly all converting trials (281 out of 282) exhibited Had more than 2 days of activity this behavior Conversion Rate An even smaller segment (309 trials) had a much Hot 29.7% 92 out of 309 higher conversion rate (nearly 30%) These are all trials that had 3 users join the trial account 3 users or more in first 3 days of during the first 3 days of trial trial
  20. 20. Who to contact? Who has the team contacted? Contact Rate Hot TOP PRIORITY Your best chance to make a sale! 41% Goal: 100% 129 out of 309 Contact Rate Evaluating HIGH PRIORITY 33% Goal: 100% 799 out of 2,136 Ideal contact target Contact RateEntire Population LOWER PRIORITY 19% 2,179 out of 11,332 Team‟s capacity
  21. 21. Conversion Rates for Marketin
  22. 22. Marketing: The Goal Bring in as many high-quality leads as you can, at the lowest cost possible High-quality: With a present “buying intent” (Nurture all the rest)? Measuring Effectiveness Use conversion data to segment & optimize marketing campaigns
  23. 23. Marketing Effectiveness Lead Quality Actively Entire population Evaluating Entire = 18% (11,332) 2,136 out of 11,332 Population Actively Evaluating Converted (282) (2,136) EffectiveCost per / Lead Cost = Lead Quality Per Lead $5 18% $28
  24. 24. Marketing Effectiveness PPC SEM Social … Referral … Campaig ns• Measure Lead Quality & Effective cost per lead separately for each campaign• Do more of campaigns with a high score• Learn which messages attract people with a buying intent
  25. 25. Marketing:Trial Onboarding Diagnostics
  26. 26. Onboarding DiagnosticsUnderstand the actions takenduring trial that result in highconversion rate“Users that updated their profile picture converted x3”Encourage converting behaviorUX, tutorials, proactive content, ….Highlight “Killer features”Marketing collateral, web copy, …
  27. 27. Trial Onboarding Diagnostics: Example Entire Population 15.5% 621 out of 4,002Conf. Basic Conf. Invite Team Settings Advance Members20.5%549 out of 2,675 8.5% Settings 216 out of 510 34.4% 262 out of 760 50% 35% 21%5%+ conversion when going 7%- conversion when going x2 conversion when invitingthrough basic config, but only through advanced config. team!50% of accounts do it. Improve UX Improve UX Optimize UX flow Hide functionality post-trial Tutorial / Marketing
  28. 28. 3 Things To Get Started On
  29. 29. SummaryCreate a BaselineStart measuring monthly conversion ratesregularlyMeasure Who is ActuallyEvaluatingWhich parts of your pipeline are actually real?Build Signals for The SalesTeamHigh ROI with immediate, tangible benefits
  30. 30. Customer Engagement CycleMeasure Cust. Analyze Business Proactively Engage Engagement Context
  31. 31. Examples
  32. 32. How to know where to focus? Model the customer life-cycleMonitor weekly/daily business dashboard Measure / Learn / Change
  33. 33. Questions?
  34. 34. Thank You!
  35. 35. Totango