Freemium products still need premium marketing strategies

If you’re reading this while listening to music through a streaming audio service, then you’re probably more familiar with one of enterprise tech’s burgeoning concepts than you’d think. As anyone who has used Spotify, Pandora and even Dropbox or Hootsuite knows, these services are free for anyone to sign up and begin using right away. The “freemium” model, in which app developers or software-as-a-service (SaaS) companies give away access to basic functionality for free, then charge a subscription fee for premium features, has become such an impactful pricing model that it is being adopted by companies who serve not just consumers, but billion dollar organizations and industries.

Enterprise software developers are already on board with the concept of freemium pricing, adopting a “land and expand” sales methodology. As IT professionals know, the best way to decide if a tool is valuable is to use it. Developers likewise know that their products are experiential, so by allowing users to get a taste at no cost, they’re betting that the performance of their product will encourage the buyer to expand the scope of services to access richer functionality at a subscription cost.

A price tag with a giant zero is already an appealing marketing tactic. It reduces any hesitation on the part of the potential buyer, who ostensibly has nothing to lose by giving the product a shot. The free label gets the customer’s foot in the door, and definitely accelerates adoption, but the sale is far from complete. Along with trusting that the product will deliver great value, marketing managers have to take a few steps to nurture the relationship:

  1. Encourage product champions: Just like the proverbial tree falling in the woods, if nobody knew about Spotify’s great service, would anyone hear its streaming music even though it’s free? Developing relationships with media and getting key influencers to use your product is a great way to drive visibility, define and lead the market and create top of the funnel interest. Offering bloggers the opportunity to try and write about a great new product before it’s available to the public will encourage them to share their experience with other potential customers and convince them that your product is worth something more valuable than dollars: their time.
  1. Disseminate mid- and late-level collateral: With media visibility and a tantalizing pricing model dumping users into the top of the sales funnel, it’s important to nurture these leads and view them not as active users, but as prospects for subscriptions. Especially in enterprise tech, where a SaaS purchase could be worth a considerable portion of an IT budget, it’s important to have educational collateral to convince users that advanced pricing options provide increased value as the cost rises. Whitepapers, microcontent, email marketing and other forms of content are critical at this stage.
  1. Internal transparency and buy-in: Marketing managers can’t skip communicating to the internal sales team the importance of relationship-building in the lead generation process. Because of their experiential natures, land and expand and freemium models depend heavily on the sales team creating a top-notch user experience. Sharing educational content with them is a crucial component to transition customers to a paid model. Tapping the sales team for customer success stories and potential case study subjects will not only encourage strong sales-customer relationships, but will also provide a pipeline of content for your sales funnel.

Whether you’re giving users a free trial for a set number of days, setting a usage limit or charging progressively more for expanded features, the sales process does not stop when someone signs up for the free version of your product. With the land and expand model, the most important marketing efforts take place after a user is already experiencing the product, as these individuals become your most valuable prospects. With a combination of continuous and strategic marketing efforts, along with a great product, implementing the freemium model can pay dividends.

Looking for ways to step up your marketing strategy and convert your free users? We can help.