“Try-Before-You-Buy” Approach | Implement Freemium
Over the past decade, the Freemium model has become widely used across a number of SaaS companies. This business model is relatively new, but at the moment we can see a huge wave of implementations, and hear many success stories from across the software industry.
Here are some freemium business model examples:
The main idea of implementing the Freemium business model is to give users a cool free version of the product’s features. The great advantage of this model is that it allows Freemium users quick but limited access to the features, giving them the opportunity to discover your product without having to interact with marketing campaigns or salespeople. In the meantime, for businesses, it quickly drives leads, conversion, and revenue.
For this reason, many SaaS companies implement the B2B Freemium model, designed for users to check by themselves how your software works. You can build a very basic version of a new feature and check if your beta users like it or not. The concept is pretty simple—if your potential customer doesn’t enjoy their free trial experience, they sure won’t come back to purchase your solution.
Nowadays, companies are constantly searching for new ways to acquire new customers while keeping the costs down. With the Freemium business model by limiting access or usage in your product, you give free users just a small taste of what the product is capable of, thus encouraging them to upgrade to your premium tiers. The main goal is that these limitations will leave them wanting more after they are persuaded of the value of your product.
So, when B2B companies implement a Freemium acquisition model, it involves a more complex system of limitations. Beta users need more stimulus to upgrade due to the complexity and high price associated with the product.
To illustrate, let’s take a look at a B2B freemium example in action: Sales.Rocks’ marketing enablement platform.
At Sales.Rocks we have implemented this approach because it helps our users to learn about the value of our product, overcome common obstacles and reach the “aha” moment. We use this mix of free service of the software with paid upgrades to unlock sustainable growth for our platform.
But before we elaborate on how we implemented the Freemium model, let’s take a look at the pros and cons of it.
- Attracts high quantity of customers
- Opportunity for free testing new products and features
- Cheap marketing channel
- High potential to increase the growth of the product
- Chance for upselling
- Low customer conversion to paid services
- Most customers remain free users
- A high percentage of free users never convert
- Support for freemium users might be a large expense
- Throwaway mentality (users use it shortly, and then “throw it away”)
How Sales.Rocks implemented the Freemium model
Sales.Rocks is one of the SaaS companies that encourages prospects to try our product before they buy it. The logic behind this is that by using a Freemium model, our prospects will move down their customer acquisition process faster.
To make things clear, the Sales.Rocks’ modules offer an introductory, time-unlimited service experience to help our users find value in our service before purchasing it. They have the opportunity to play the main filters this feature has to offer to their targeted audience.
In order to access this feature, the user is required to sign up to the Sales.Rocks’ platform. Upon logging in, the user needs to provide an existing company email address. After filling the empty fields on the contact form, they have to check their inbox and follow a link to confirm their email address to complete the sign-in process.
Logging into the platform
By signing up on the platform, the users receive 20 credits which are valid for a period of 30 days. Note that one credit applies to one full data point search.
Clicking on the ‘Try Freemium’ button
According to our recent experience, when prospects try our software, they find enough value in our services, and are ready to take the next step – purchasing our marketing and sales enablement solution.
Our trick is that we keep innovating and adding more value to our Freemium plan, thereby nudging them down the conversion funnel. We view the Freemium model not only as a revenue model, but also as our golden ticket to innovation.
Although the Freemium business model worked for the Sales.Rocks’ platform, it doesn’t mean it is a good fit for every business. For some businesses, Freemium may be a costly trap and potential risk for a company’s growth. After all, your product’s success will ultimately come down to how well you understand the value of your product, and achieve the right balance between paid and free features.