For the past two years I’ve been marketing a software product with a free plan. The freemium model is becoming more popular among startups looking to disrupt existing markets and attract major attention. This was my first. I compiled a short list of things to consider. I hope it provides some insight for those of you marketing a free product.
1. INVEST HEAVILY IN THE SIGNUP WORKFLOW.
If you’re going to have high volume (or if you want high volume) of free product signups, you better get your signup workflow right. There are so many things to consider. What information will you request from the user? Name, email, phone number are a few obvious ones, but there are many sales qualifying questions that could prove to be vital for qualifying leads. What other competitive products do they use? What’s their experience level? Why do they want to use your free product? Then there are the technical questions: Email verification, oAuth, password setting, tracking sources and so on. Getting the signup workflow right is crucial for a few reasons.
- You might be surprised by the drop-off between each step of the signup process (multiple forms, email verification, security tasks). Why is the abandon rate high? It's a free product. Users signing up are not as committed in gaining access to the product (as they would be something they paid for). What are they going to lose if they don't gain access to the software? Certainly not money.
- Also, with free products, users are less 'invested' in learning or adopting your software. The signup workflow is critical to collect key information that will help you market to your users. But it's also important to identify the similar characteristics of users that are successful with your product, and those that are not.
- The signup workflow is crucial for lead generation. The difference between a well thought out and tested workflow and an early version or confusing workflow can make or break your lead gen goals.
At my current startup, we made a design aesthetic change and saw a huge jump in signup workflow completions. We also embedded the signup right on our homepage which made a huge difference in lead generation. Invest heavily and invest early in the user sign up workflow for your free product. Test it again and again until you find what yields the best results.
2. DON'T UNDERESTIMATE HOW UNDERVALUED YOUR FREE PRODUCT IS TO THE USER.Once a user sees your offering as free, they immediately undervalue it. It doesn’t matter how much they like it. Read Dan Ariely’s “Predictably Irrational.” Chapter 1 is titled “The Truth About Relativity.” Dan states “We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly.” If you’re marketing an awesome product for free, you’re shooting yourself in the foot when it comes to selling the paid version of your product. Make sure your paid plan provides enormous value over your free plan. Make sure the free plan attracts but provides just enough friction to push the right user to the paid plan. It takes just the right amount of finesse. This will require a constant and vigilant marketing effort.
3. YOUR FREE USERS OWE YOU NOTHING. AND THEY KNOW IT.
How many free users convert to paid? Is 15% okay? Is 3% terrible? Whatever your rate is, don’t expect gratitude from the other 85-97% of your user base that are not paying you for your product. This is about approach. If you approach your marketing as “these are leads that are just dying to pay us for our product” you’re wrong. They will complain about product outages, bugs, too many marketing emails and sales calls. Even though they are free users of a product your company built and you are actually spending money for them to use your product, your free users owe you nothing.
4. MARKETING A FREE PRODUCT IS A WHOLE NEW TYPE OF MARKETING.
Throw out your traditional marketing playbook. If you haven’t marketed a free product before, you should know that you’re now playing a whole new game. Top of the funnel, if you get the word out, shouldn’t be an issue. If it's a good free product you already have the best content offer possible (it certainly beats eBooks, blog posts and infographics about your product). But guiding users down the funnel to a qualified sales state takes a lot of work. Again, invest early in lead nurturing and qualifying.
Marketing “free” sounds simple. But it’s not. Even using the word “free” can be dangerous. There has been so much advertising saturation of the word “free” over the past 20 years. People think the word “free” is deceptive. Run an A/B test on using the word “free” in a marketing campaign. You might be surprised by the results (I’ve seen tests where the variation using “free” converts less leads than the variation not using "free").
Consider these suggestions before you start your marketing efforts. Please comment below if you have additional suggestions (especially if you have experience in freemium marketing).