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:
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.