SaaS Marketing

How To Optimize and Increase Your Freemium Conversion Rate?

Ameet Mehta
Jul 19, 2021
6 mins read
How To Optimize and Increase Your Freemium Conversion Rate?

Freemium vs free-trial pricing model, which one is better? Well, both drive traffic to your product and increase the signup rate but the reality is that neither generates revenue. You can drive all the traffic you want to your business but if your users aren’t converting, you will fail to see the growth.

Although a lot of SaaS companies out there have employed the freemium models, not all have been successful. Take for example the case of Evernote – Cloud-based note-taking software they weren’t able to convert most of their 200M users into paying subscribers. The story isn’t unique to them, Dropbox, a file-storage service, has managed to convert only 10% of their 500M users into paying subscribers.

You need to use your strategic energy to figure out how to transition more free users into paying customers. You need to deep dive into what can motivate your customers to upgrade. In this article, we will give you the best ways which can help you increase your conversion rate and build a strong SaaS business using the freemium model:

Set The Right Product Limitations

One of the first things that you should analyze for a low conversion rate is your product limitations. What does your free version offer? Is it too extensive? If your users feel their needs have been satisfied with the free version, they won’t go ahead to buy a paid version of the same product. 

You can use data from your competitors to analyze what should be free and what should go in the paid version of your product. You obviously don’t need to copy them, the collected data will help you set a benchmark and help you understand what the competitive landscape is so you can later design your marketing campaigns accordingly, leveraging your USPs. You just need to leave enough value to lure your customers into upgrading. 

Free Trial Of Premium

You might have decided on implementing a freemium model over the free trial model for your product. Wait, who said you’ve to choose when you can use both.

Since you’ve taken up the freemium model, you can offer users a free trial of the premium version of your product. The two strategies complement each other very well, so you get the best of both worlds. This will allow users to explore the premium features and functionalities of the product, i.e., they get to see the full value of the product and then decide whether to go for it or not. Also, users aren’t forced to upgrade once the free trial is over, reducing the free trial churn rate. 

Let Your Product Speak

When using a freemium model it’s your product that needs to sell itself. You should be well aware of the USPs and leverage them while convincing your users for an upgrade. They should be able to see the benefits of your product as soon as they hit the signup button.

There are many things you can do to improve customer success, such as:

  • Start with a warm welcome email followed by a series of onboarding emails
  • Highlight the best product features with in-app notifications
  • Develop a comprehensive product knowledge base with all the possible questions
  • Have a dedicated customer service team
  • Share tips and guides to get the best out of the product by sending out a newsletter
  • Give them all the information they might need, including instructions and even third-party tutorials and blogs
  • Providing the right content at the right time

Your goal here is to build a rapport with your customers to a point where they are convinced that they trust you enough to upgrade.

A Friendly Reminder

Try to find every excuse to remind users that their plan is limited and they should upgrade to premium for more benefits and fewer restrictions:

  • Highlight the best product features with in-app notifications targeted to specific user pain points
  • Follow-up emails with the best blogs and tips regarding the features they were using
  • Track the user behavior and use email segmentation to send out hyper-targeted upgrade emails

User Interest And Feedback

The key is providing the best service to your customers. Take a look at the freemium model of Microsoft – around 18M people are using Office 365, out of which about 50% are paying subscribers, isn’t that incredible?

According to Apptopia, “Successful apps have to be easy to understand and appeal to users very quickly.” 

Make people fall in love with your software by keeping an important set of functionality free. Your app needs to have the best service and it should not take users more than 30-40 seconds to sign up for it. They need to “wow” the customer within 5 minutes of their signing up so they continue using that app. 

You also need to understand your customers for which we suggest investing in customer intelligence software and increasing customer engagements and developing relationships over time. Ask for the customer feedback, and use it to refine your existing product; this will send out a message that you acknowledge your customer’s opinions. 

Take the example of LinkedIn, they added the “My Network” section(a section that helps people keep a track of what people in their network have been up to) in their app after their user research stated that people using LinkedIn “wanted to know what’s happening in their network”. This led to a 50% increase in the number of job applicants using LinkedIn’s mobile app and a 22% increase year-over-year in its subscription business in just the first quarter of 2016 simultaneously.

Final Thoughts

If you have a higher conversion rate, you can use freemium to bring in more users into the funnel. The critical consideration is the execution of the Freemium model. Consider what Rob Walling said about the freemium model: “Freemium is like a Samurai sword: unless you’re a master at using it, you can cut your arm off.

To ensure your dominance in your target market, you need to do everything in your power to make sure your product is indispensable for your users and your users will convert into paying customers eventually.


About Ameet Mehta

Ameet Mehta Ameet Mehta

Ameet Mehta‘s expertise lies in building revenue engines for technology-enabled companies and private equity investments. He began his journey with TechStars Chicago and has since founded and acquired several companies through FirstPrinciples Holding Company. The FirstPrinciples portfolio generates over $7M in revenue/year with most companies in the SaaS space. He...

About Ameet Mehta

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