Enabling users to sign up for free is great for acquiring customers and building brand awareness for your product. Revenue, however, depends on how many free users turn into paying customers.
We wanted to know what strategies product-led companies are implementing to boost their free-to-paid conversion rate and conducted a survey with 25+ PLG experts to dive deep into their practices.
All our insights and learnings have been compiled into this playbook, so put on your reading glasses to find out.
✅ Freemium Vs. Free Trial - What should be your pick?
✅ How to segment users when they sign up
✅ What makes the users hit upgrade? - The Golden Spot
Let's learn 👓
Chapter - 1
Freemium Vs. Free Trial - What should be your pick?
There are two popular acquisition models in the PLG world -
1. Free plan/Freemium: Here, users have free access to the product forever, but the premium features are exclusive to paid customers.
2. Free Trial: In this model, users have full access to the product for a limited period and must become paying customers to continue using the product after the trial ends.
We also asked our survey respondents about which model they picked and why. Here’s what they had to say
Team Free Plan
"A free plan helps us test our product's market fit by seeing how users engage with it and what features they find most valuable."
Milo Cruz, Chief Marketing Officer at Freelance Writing Jobs
"A free plan reduces the barrier to entry. We’ve observed that users dislike giving billing info without testing the tool first. So, we give them a taste of the product's value with an easy option to move to a paid plan to unlock more features."
Matt Laybourn, Founder at Rockee.io
Team Free Trial
"We wanted to give potential customers a chance to test out the tool to its full capability before they decide to purchase the software on a monthly subscription basis. We give customers full access to the tool for 14 days so they can integrate it with their team and make the decision on an informed basis."
Ryan Jones, Marketing Manager at SEOTesting
"We wanted to create urgency. Also, didn’t have resources for managing support requests from freemium users well."
Andrus Purde, Co-Founder at Outfunnel
"We wanted to create a sense of urgency and encourage habit formation."
Soumya Singh, Marketing Manager at Voiceplug.ai
Based on their insights, the following are the pros of each model
Freemium
A larger pool of leads-
Free plans or freemium models usually attract more leads, creating more upselling opportunities.
Aids in building brand awareness -
From non-removable brand logos on templates to watermarks, products offering free plans can implement many tactics to build a brand identity amongst their audience and create recall value.
Thrives on word-of-mouth -
Freemium users derive real value from the product, tend to become more loyal customers,, and may become brand advocates.
Free Trial
Better qualified leads -
Users signing up for free trials have a higher intent of turning into paying customers and are more willing to upgrade after realizing value.
Shows early value -
A free trial gives unrestricted access to the product showcasing its full potential and creating an opportunity to introduce the hero feature early on.
Creates a sense of urgency -
Since the trial ends in a timeframe, the users make a quick decision, usually leading to a quicker sales cycle and saving time.
Needs minimal support capability-
Free trial only attracts high-intent users in limited numbers, making it easier to provide them with customer support.
What do we recommend?
Whether you pick a free trial or freemium plan, your goal remains the same - conversion. To achieve that, you have to ensure that your users witnes the value your product can add and have all their doubst cleared.
Have a look below to know how you can make this thing happen 👇
Here are some tips to optimize your free-to-paid conversions -
Educate
- Use in-product instructional videos to describe different features and how to use them.
- Enrich your “Help” library with relevant articles that explain the step-by-step process of using your product.
- Use interactive product tours for your product announcements. Embed them into your announcement emails to give your free customers a hands-on experience of the premium features. Reach out to those who engage with your tours for more conversions.
- Make your FAQ section exhaustive by talking to your existing customers and understanding their queries.
Gamify
- Reward the users for performing actions in your product. For example, extend their free trial if they refer a friend or add credits.
Check how we ran a referral program with only emails.
- If you offer a free plan, unlock the premium feature for a day if they invite a team member.
- Use elements like spin-the-wheel widget or quizzes to reward users with free trial extensions, access to a feature, or adding credits. You can even send this widget in an interactive email.
Start here
Nurture
- Invite them to user-only product webinars to solve their queries.
- Send them educational blogs and case studies in your emails.
- Encourage them to share their product-related questions in an email. You can use an AMP form where users can submit from within inboxes.
Chapter - 2
How to segment users when they sign up
User segmentation is a prerequisite for any successful marketing or conversion strategy. But what makes segmentation effective is its timing and basis. Experts suggest that segmentation done during onboarding is the key to better-qualified leads and higher conversion.
Here's what our survey respondents had to say 👇
Track events early on. They’re the lifeblood of understanding user behavior.”
Blake Burch, Co-Founder at Shipyard
What do we recommend?
Segmenting your users during onboarding provides you with data-driven insights into their intent at the earliest and helps create personalized nurturing strategies from the beginning.
Most product-led companies segment users based on industry and use cases, while a small but significant number also categorize based on team and individual plans.
Some other important segment cohorts could also be -
1. First timers & Migrating users:
Find out if the user has tried any other products in your vertical before or if your product is the first one they’re trying. New users will need more educational content, whereas migrating users will benefit from similar case studies, comparison pages or guides, or social proof about the ease of migration.
Discover how the user learned about you. Whether it was LinkedIn, referral, webinar, or email program. This information shows where they hang out most and are more likely to be influenced.
3. Active vs Inactive users:
Its effective to closely track users’ engagement post onboarding. Lead nurture tactics like email sequences, in-app messages should be based on how active users are.
"Segmenting trial users based on usage made a big difference for us. For users with low engagement during the trial, we're sending automated emails only, and we've reduced the number of onboarding emails that very active trial users get. We're targeting users with some engagement (e.g., have completed setup but not gotten real value out of the product) with a CTA to schedule an onboarding session to learn where they're stuck and nudge them back on track."
OutFunnel
Here’s how to segment and nurture users better after onboarding
Track
- Leverage your in-product onboarding process (Think Canva and Netflix). Ask users how they intend to use the product.
- Use product and marketing analytics tools like Amplitude, Mixpanel etc to map the customer journey, the first point of contact, and feature usage.
- Include questions about the industry, preferred use cases, and purpose in your welcome emails.
Use an interactive form to enable in-email submission
Segment
- Define your segments based on your product, goals, and user behavior.
- Create cohorts based on your segmentation criteria and user persona.
- Build strategies based on these personas and what would benefit them.
Nurture
Send relevant content to each cohort based on their preference.
Focus on building relationships with your audience by providing valuable and relevant content rather than solely pushing promotional material.
Matt Bailey, Site Logic Marketing
- Keep track of engagement levels - both on emails and product usage. Tailoring your communication based on interest can help you focus on warmer leads.
Chapter - 3
What makes the users hit upgrade? - The Golden Spot
Every product has a hero feature that differentiates it. Mostly knowns as the activation point, this “golden spot” makes users realize a product’s value.
If users engage with it during their free trial/plan, they’re more likely to become paid customers.
The first step is to find the trigger from the user’s POV. Andrew Capland, a famous PLG expert, suggests asking existing users where they derive the most value from and we agree.
You can also embed this survey inside your email.
Start here
After you’ve identified your USP, you must draw users attention towards it and nudge them to use it.
The next step is determining if users are more interested in the product. Our survey respondents listed a few user behaviors that have historically resulted in better conversion for their product. For example
- If a product allows integrations with other products and a user start integrating it with their internal tools.
- Actively using hero features that are the USP of the product
- Inviting more team members during the trial period.
- Adding API keys to complete an action
- Using coupons or promo codes sent to them to keep using the product
What do we recommend
Our top tip is to highlight your hero feature during their first session. It should be the first thing users notice and want to try out before their interest decreases.
Educate every segment of your free users about how the hero feature can solve their problems and encourage them to use it. Here’s how -
Simplify
Make it easy for users to get onboarded and use your product. Allow quick sign-ins via Google, LinkedIn, and even Slack
Showcase
Use in-app prompts and explainer videos to guide the user along the product.
Influence
Leverage your email sequence to help users navigate through the product and start using your hero feature quickly
Chapter - 3
Most marketers agree that emails are a great tool for free-to-paid conversions but many of them debate about the frequency, context, and content of the free-to-paid nurture sequence. Our email flow resource has a pre-built plan to help you optimize this sequence with expert tips about what to include in the emails, how many days to wait before sending another nudge, and the number of emails in total.
Check it out
Chapter - 4
Our Contributors
- Nalini, SyndicationPro
- Andrus, OutFunnel
- Satyam, Make Web Better
- Alvin, SEOAnt
- Sabina, Survicate
- Ryan, Seotesting
- Alon, Sellegr8
- Kabir, Airmeet
- Grace, Livestorm
- Ahmed, Chargebee
- Soumya, Clevertap
- Anya, Restream
- Ryan, Copymatic
- Simon, Lingapp
- Soumya, voiceplug.ai
- Matt Bailey, Site logic marketing
- Faizan, infracloud.io
- Matt, rockee.io
- Sam, Myspace NYC
- Shashank, Mudrex
- Blake, Shipyard
Next
⚖️ Freemium VS free trial
