A user guide to using freemium in your growth playbook
If you haven’t heard of freemium, you’ve seen it.
Remember that app you downloaded on your phone last week, the one that was free but now wants you to upgrade to unlock new features? That’s freemium.
Companies are always exploring new ways to increase customers while keeping down cost. The freemium model solves this by letting you showcase your great product with minimal expense but maximum value.
Freemium adds immediate value to your customer's buying experience with minimal disruption to your business.
But it’s not restricted solely to software. At its core, freemium follows the give/get principle of sales: give your prospects something they want to get something in return - commitment.
And the good news is that there are few businesses that wouldn’t benefit by adopting freemium as an effective sales strategy - including yours.
This blog contains (almost) everything we know about freemium. We already use freemium offers in our sales process and we help clients develop their own unique freemium campaigns. We also make the best use of useful freemium tools from Six & Flow partners such as Drift and HubSpot.
This blog is divided into thee parts. All are useful, but feel free to pick and choose what works best for you.
What's in this post?
Part 1 - How and why you can use freemium to drive growth
What is freemium?
Freemium gives you a powerful ‘give’ that enables you to ask for an equally powerful ‘get’. Normally, your freemium offering will be a cut-down version of whatever it is you sell or do. For example, a mobile phone app with some of the functionality locked out, or a financial consultant offering a free 30-minute initial consultation over Zoom.
The ‘get’ is likely to be some level of commitment from your ‘client’ and the permission to market to them more substantially. They will, after all, already be using your product or service. Freemium lets you to cross from consumer/seller territory by allowing you to progress to 'trusted adviser’ guiding them through their buying journey.
Why else should you have a freemium offering?
Freemium allows you to overcome many of the typical objections you might face as part of your day-to-day sales activity. By offering your prospects something for free, you can overcome objections around costs and ease of adoption quickly and easily. You start adding value to your prospect and strengthening your relationship almost immediately.
Seeing it from the prospect’s side.
It’s worth thinking about the power of freemium from the viewpoint of your prospect. They've probably already used to ‘free’ in their everyday B2C lives but not really experienced it in a B2B setting. The benefit? A prospect can now engage with you for free thus setting you apart from your competition in a busy market place.
Think of it as a perceived discount in the eyes of the client: it helps those on a tight budget experience your product direct while simultaneously reducing the need to obtain decision-maker permission.
Additionally, because your prospect gets to use your product for free, it’s also great way to overcome objections by letting the product speak for itself. After all, if your product doesn't solve your customer’s problem, should you even be selling to that demographic?
Freemium gets your prospect/provider relationship off on the right foot and gives you the best possible chance to sell your paid product or service.
Freemium to paid: an example journey
Here’s the journey of one of our clients as they progressed from freemium to paid. This client’s journey with Six & Flow is still ongoing, but in 2019 their client acquisition (thanks to freemium) was up a whopping 420% AND we won a marketing award for the campaign. Not bad for a relationship that started with us giving away our product for free, huh?
Imagine where your ‘free’ relationships will take you and your clients.
Here's a 6 step breakdown of how it happened:
- Freemium consultancy - We began the relationship by offering free advice to help a potential client solve a tricky problem. Yes, we could have charged, but it was only a small fee and we wanted to help.
- Choosing their freemium tools - We facilitated getting the client access to HubSpot’s free CRM and marketing tools to see if it could streamline their sales process and grow there business (spoiler alert! It did).
- Paid consultancy - Because the client liked what they saw, they then started paying us a retainer to integrate the new system (see...freemium is already working).
- Software trial - With results starting to show, the client felt they were now being held back by the limitations of HubSpot’s free product. No problem. We negotiated a free trial of the paid version for them so they could see if it was worth the extra investment. (Note: freemium + free trial can = a big win for your freemium offering. See part 3 of the blog for more details).
- Paid software adoption - Guess what? Yup, the free trial progressed into the client investing in the full HubSpot package.
- The result - a whopping 420% increase in client acquisitions! (We’d like to think all freemium adoptions will end this way.)
“If we can do this for free, what could we do if we paid?”
Hopefully, you believe in your product or service. You believe it will make a difference to clients, that it will solve problems, and that the more prospects you speak to the more problems you can solve.
Freemium doesn’t give that away. It just proves you're good at what you do.
You get to demonstrate the power of your product or service at low cost to you but a high benefit to the client.
What’s not to like?
Part 2 - Six & Flow's 7 hot tips.
3 ways to make freemium work
- Know who fits free: three groups who fit the freemium model.
- Prospects with no money: these could be start-ups or teams with limited budgets. Use freemium to show them why you’re really worth the gamble.
- Prospects with no power: if you’re dealing with a junior member of the team, use freemium to allow them to show the decision-maker how good you really are.
- Prospects with no confidence: they’re interested but reluctant to part with their current provider. Use freemium to show why you’re the bee’s knees.
- Listen for the signals: how to spot a profitable freemium opportunity.
- “I need to get buy-in from my director.” Offering your product for free lets results speak for themselves; it proves you need to be taken seriously.
- “We already have XYZ.” Use freemium to apply the ‘show don’t tell’ technique. Instead of trying to convince your prospect you have something better, let them find out for themselves.
- “Sales want XYZ.” Use freemium to let one team win over another. By creating internal champions elsewhere in the business, you can showcase your product to resistant parties with minimal confrontation.
- Know who doesn’t fit free: it won’t work for every prospect. Make sure your sales team know that freemium can be a challenge in these cases.
- There’s no internal champion: there has to be someone who’s going to use your freemium product or service for it to be adopted on a paid basis.
- There’s no educated internal resource: if you’re going to need to spend excessive time getting a prospect up to speed with the freemium version of your product or service, this is usually an indication the full-scale version may not be what they need.
- There’s complicated processes: if the prospect has multiple complex processes which need to be navigated prior to adopting freemium trial, then it’s a signal they’re not a good sales fit for you.
4 ways freemium can fail
- it increases your churn rate. Keep an eye on the clients who don’t stick with you (whatever timescale makes sense for the product or service you provide). See if there’s a link to those who churn and those who progress from the freemium offering. If you are getting an unacceptable ratio then you need to revisit if freemium is for you.
- it disrupts your sales cycle. If you can make a sale without drawing attention to your freemium offer, do it. Freemium is a back up tool for your sales team, not a primary sales strategy.
- Your freemium offer is too good (or just good enough for too many people). Beware the bootstrap heroes: those who will create a network of ‘free’ tools, even if there’s a paid version that would get them further, faster. Likewise, if your product solves just enough of your client’s problem for free, then it’s unlikely they will ever progress to paid.
- Your prospects will ‘drown’ in your product. Open up areas of your product slowly if this is the case. Give freemium access only to specific parts of what you do and always offer clear explanations of how the freemium offering can best be used quickly.
Part 3 - The Six & Flow freemium playbook
So, you’ve got a freemium offer. Now what? How can it help grow your company? Sounds like you need our tried and tested playbook. Share it with your sales team and make sure they’re aware of all of the ways they can do to turn free into paid in the shortest time.
The quick wins play:
Don’t just offer prospects a freemium product or service, offer a solution to their problem. Make sure there are quick wins baked in. It doesn’t have to be world-beating (that’s what clients pay you to do), but it does need to be something your prospects will care about. Something that will give them a taste of what the full offering both does and solves. After all it's difficult to turn down something that’s both free and useful, right?
The extended trial play
Your freemium product will be limited compared to your full offering. But that’s the point. If it matches your sales process, and it’s commercially astute, encourage your sales team to offer a free trial of your full product to freemium users. If the user decides to buy during the trial, then it’s always possible to build a 'trial user' discount into the final price. Combining freemium and free trials can be a powerful way of converting tentative prospects into happy customers.
The empowerment play
If you’re not talking to a decision-maker, freemium can help you to get there. By giving an influencer in the sales process your freemium offering, you can quickly and easily turn them into your champion. Pair it with some tips that will see them overcome some key company challenges and you are well on your way to walking your paid offering through the door.
The growth play
Depending on both what you sell and how you sell it, you can use an offering just above ‘free’ to encourage clients towards your full service (without needing to overcome tricky cost objections). Offering incremental paid upgrades of your freemium product can be a good way to convert clients slowly over time. However, always be aware you’re not giving away too much too soon. Your freemium product needs to add value but not so much clients never need to upgrade.