Freemium is your friend

The core difference between freemium and free trials is time. When you’re trying to convert a prospect to a customer, you have a few different options to convert them. You can force them to sign up and pay before they use the product, you can give them a free trial so they can try before they buy, or you can give them a freemium plan where they can get a taste for the product and use it until they’re ready to buy. 

Now opponents of freemium may say that you’re better off getting money sooner than later, but in the world of thousands of products and users having less and less time, you want the onus of conversion to be on them, rather than your arbitrary timeline. 

Put another way—that user may be nurtured and convert in six months vs. you forcing them into a relationship they aren’t ready to start and you losing them forever. 

With freemium, users become advocates of your brand, even before they’re buying, and the data supports these users converting from freemium to be better customers in the long run. 

Let's look at the data.  

Freemium = better retention

First up, let’s talk about retention being better for freemium customers. 

When tracking the retention rates of 55k customers, we found that those who converted to being a paid customer from freemium, ended up having nearly a 10% higher retention rate (on an absolute basis) than those customers who converted from a free trial.

Better customer satisfaction

Freemium’s second appeal: customer satisfaction.

NPS, or net promoter score, which is a measure of customer satisfaction, is also greater with those customers who converted to paying from freemium. These customers tend to have double the NPS scores of those individuals who convert from a traditional sales conversation that doesn’t include a freemium plan. 

And we know happy customers means customers for life.

Freemium doesn't take away from value 

And last up on the data front, let’s talk about freemium eroding the value of your paid products. 

We used to think that if you have something for free, then the paid product can’t be that expensive, because it’s tough pushing someone to pay for something, if they’re currently paying you nothing. Well, in recent years we’ve found this zero dollar anchoring behavior to be less of an issue. For instance, five years ago the willingness to pay from an anchored free plan was only $150. The willingness to pay is now $1,000. 

To put it simply, freemium isn’t holding you back.

Join my freemium fanbase

Freemium is your friend. Why? Because freemium can up your net retention, increase your users’ satisfaction, and drive a higher willingness to pay. 

Although freemium is still a very individualized decision and shouldn't be taken lightly, it’s ultimately about letting your user experience your brand, your product, and your ethos on their terms, instead of forcing the ultimatum.

We have an entire ebook dedicated to freemium. The Freemium Manifesto uncovers how to make freemium work for your SaaS business. Get it.↓

📈7 day +0.86%     |      📈30 day +4.64%  |  📈90 day +11.74% How are churn and new revenue trending over time? MRR LOSS +0.27%