Monday 21 October 2019

How to convert your freemium customers into long-term clients

Objective: With a freemium model, conversion is all about getting a customer to stick with you and discover value on your website regularly
Objective: With a freemium model, conversion is all about getting a customer to stick with you and discover value on your website regularly

Richard Rodger: VOXGIG founder

Last week, I wrote about our sales process. Now that we're revving up the money-making machine (that is the point of a startup, after all), we need a solid sales process to make it happen.

We run a business-to-business software-as-a-service (SaaS) freemium enterprise model (say that three times before breakfast every day), so we need to define a sales process that supports the model.

(Freemium is jargon for having a free-to-user-forever version with limited features; think Dropbox storage limits if you don't pay).

There are three parts to the model: lead generation, conversion of those leads to users, and then upselling engaged users to higher-value product tiers.

Last week, I wrote about our lead generation strategy. This week, I'll write about our conversion strategy.

Conversion, with a freemium model, is getting a user to stick around and start finding value in your website on a regular basis.

This can be contrasted with the trial model, where you offer your service for a limited period but, after that, the user has to pay. These are both examples of 'low-touch' SaaS, where users set themselves up with your system and don't require direct contact with a salesperson.

Now, it is never a good idea not to have a sales team in your business, and ours will indeed form part of the conversion process, but we'll come to that in a bit.

First, let's answer the question that may have already occurred to you: why choose freemium over free trial? When is each appropriate?

It comes down to how much of a network your service creates. Do your users interact with each other and, in doing so, get even more value from your system? Slack is a good example.

Or is each user self-contained, getting value directly from your features? Basecamp, the project management tool, is like this.

It's really not that useful if other companies are also using Basecamp, as your internal projects can't be shared. But with Slack, you can set up customer support channels; it lends itself naturally to creating a network.

The simple tactical approach is that network-oriented businesses grow faster with freemium, but if you don't have this market structure, go with free trials.

Of course, there are many shades of grey here, and many specific ways to structure your pricing.

For Voxgig, in the events industry, which is naturally a network, freemium makes the most sense.

When a lead lands on our website, or gets invited on to our platform, we need to show immediate value for them to continue using the free version of the system. That means identifying what kind of user they are (speaker, organiser, exhibitor) and getting that specific functionality in front of them. It means making it easy to use the system without a huge commitment.

One tactic we will use is our existing database of conferences.

This lets us pre-fill data for our users, so that they don't have to do this themselves. Their accounts are 'ready to go'.

It means tapping into existing workflows. Speakers submit talk proposals and need to track their status. Organisers invite speakers to talk, and need to track their acceptance.

Exhibitors get pitched by organisers and need to get conference prospectus documents before the events, and reports afterwards. Venues need to submit quotes. And so on, and so on.

By facilitating these workflows, we ease the 'on-boarding' of new users.

It means identifying when users from the same company have independently signed up to use our system, and letting them know about each other. This makes coordination of their event activity much easier.

It means providing a sense of community. We already do this by running EventProfs meet-ups, and planning a conference.

But our website (under reconstruction) needs to clearly communicate that we care about the event professionals community. Community will be one of our top-level navigation items.

It means providing learning resources to make our users better event professionals. By helping them professionally with high-quality learning material, they will stick around more.

This is part of the reason we put so much effort into newsletters and meet-ups. The articles and videos from these activities can be curated to form a comprehensive guide to running events.

We have quite an embarrassment of riches on this front, and I can't wait to start publishing it properly on our new site.

It means providing progressive learning and tutorials within the product itself. This is a hard one.

Teaching people how to use technical products is never easy. Power users want quick access to lots of features, but beginners need you to make decisions for them.

It will be up to our product development team to get this right.

While I have some experience of building learning materials for open-source software, this is still new territory for me. Our users are non-technical and under high pressure to deliver events on fixed deadlines; we can't get in their way.

Finally, it means following up with users who are really finding our system useful. These are the so-called 'high-engagement' users; people who log in every day and get useful things done.

These we can reach out to directly to find out how we can help them even more, and this blends into the third stage of the sales process: moving free accounts to paid accounts. (And that is our topic for next week.)

Richard Rodger is the founder of Voxgig. He is a former co-founder of Nearform, a technology consultancy firm based in Waterford

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