Top 10 Hacks To Move SaaS Customers From Free Usage To a Paid Subscription
|Dr Anil Kaul in Marketing & Promotion Friday, February 20, 2015|
A perennial problem faced by SaaS companies is the difficulty in converting free users to paid customers. This problem is compounded by free alternatives, often of varying quality. A business must be tactful in what it says and what it offers, analyzing customer behavior, preferences and how they navigate their website.
The best strategy to increase the number of paid users depends on the service, but there are ten strategies that are universal in their efficacy. Some of these strategies are relatively easy to implement, while others may require research to fully utilize them.
Math Not Myth
While some suggest putting themselves in the place of a free user, the problem is that user experience varies from person to person. Instead of using a "gut feeling" for marketing, the more logical approach is to analyze how users navigate through a site using analytics. Analytics make it possible to identify drivers of conversion and experiment with different approaches. Taking qualitative feedback from customers is important, but analytics provide a much deeper set of insights, providing an objective measurement of conversion performance and identifying the true conversion accelerators.
Do not be too aggressive with conversion messaging for free users, they might get annoyed and lose interest in your service. Instead, the free user must be prodded every now and then with a drip campaign. With this method, customers are contacted via automated messages depending on their interaction with the service.
These messages follow a timeline for each user type. A user who visits once may receive an email every few weeks, while a user who visits every few days does not require this. The idea is to remind the user that the service is still active and constantly improving, so that when a customer is considering a paid solution, the service should be considered.
One-size fits all sales messages may alienate users if they do not fit the intended target. Instead, tailor messages to appeal to customer's usage intent and activities. For instance, if a free user heavily uses the site, they would receive a different advertisement than a person who visits every few weeks. Similarly the message could be tailored to the type of features that the user uses.
If you don't know and understand who your users are, you won’t know what to do or say to convert free users into paid users. It is important to focus on who the customers actually are. What is their age, typical educational level and income? Why are they using the product, and more importantly what value do paid users derive from their subscription? Where is the average user in the conversion cycle? The answers to these questions can create a clearer picture of the type of demographic that is more likely to purchase a paid subscription.
A good rule of thumb is that marketing should be guided by the specific set of behaviors that customers are intended to progress through so that the product's value is evident. For instance, on a cloud storage site, there should be ad copy that alerts free users to the benefits of a paid subscription, such as more storage, file revision history or other benefits. Below the copy would be a link that brings the user to a signup page for the paid version.
Conversion-Specific Engagement Metrics
An analytics package can offer mountains of metrics, though not all of them will be beneficial to a company trying to convert free users to paid status. It is important to allocate higher weight to activities that heavily influence conversion, such as the time that a user spends on the site or the number of visits. Contain specific features that drive conversion do not look at all metrics with the same lens, but instead focus on what actually matters to the process of converting free users.
It is important to note that different customers have different drivers. Some customers will respond better to personal sales rather than automated sales messages, while others will respond to larger feature sets or the service's brand. The reason that a person pays for a service depends on the person, so it is not wise to view all customers the same way. Instead, find out what motivates a customer to purchase a product and capitalize on that.
Call to Benefit
Potential customers will likely not respond favorably to aggressive tactics that scream, "pay me more." If a customer has little knowledge of a product, they might not see a reason to pay and instead might opt for the free version. A much better tactic would be to help the customer see the value of a paid service.
Using the cloud storage example, one could explain to the user how much space is available to a paid user compared to a free user, and what could be stored with that extra space; images versus movie files and so on. By showing a customer the potential value in a service, they become much more amenable to giving the paid version a try.
Even if a company uses the right message and channel, timing can be critical. For instance, if a pop-up ad advertising the paid version of a service appears while the free user is in the middle of an activity, it can be obtrusive. Similarly, attempting to convince a free user to sign up for the paid version the day after they begin a free trial would not be very effective. A message advertising the service would be more appropriate after the user has spent a significant amount of time using the free trial or after using most of their storage capacity.
Lastly, it is important to devote time to the website design. Users will be less interested in purchasing a paid subscription if they cannot navigate to the features that they want, or if a user interface is garish or amateurish. A website must be easy to navigate and should be available on all platforms the company is targeting, mobile or not. The site should work on all modern browsers and not cause errors. The company should get the basic things in place, and only then should they work on a sophisticated conversion plan.
There are innumerable ways to try and convert free users to paid status, but it is important to know which strategies will actually generate results, and which tactics are a waste of time. If a significant portion of users do not respond positively to a campaign, it is better to be tactful and try something else. There will always be free alternatives, but a user should see that in the end a paid subscription is the way to go.
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