I was recently talking to a friend who is stepping in to run marketing at a company with a Freemium model. It got me thinking about where you start first in optimizing the funnel around a Freemium model for an existing business. As I've said before, it's critical to start at the bottom and work your way up–rather than aggressively attracting new users to a broken funnel.
I would explore opportunities for improvement in the following order:
- Paid Retention/Loyalty. When someone pays for the service—do they love it, talk about it and use it for a long time (until they no longer need it)? Are there any ways to make the product stickier? Stored data? Setup costs?
- Paid Conversion. When someone is happily using the free product—do they “know” when it’s time to upgrade and are the right people upgrading at the right time? You don’t want people to say “I didn’t realize that the paid version fit my needs perfectly”. Are the right people, who will need the paid version from the start, able to self identify at the point of signup and sign up for the paid and not free product? Might it make sense to have a free trial of the paid offering in addition to the free subscription?
- Free Retention/Loyalty. Do the people using the free product feel that they get great value? Do they continue to use for a long time (until they upgrade or no longer need it?)
- Acquisition/Awareness. Do you know who is likely to get value from your product? Do you know how to reach them in a cost-effective way? Does your message/trial offer convince the right people to convert? How well-known is your brand?
- Virality? Is your product organically viral (that is, just by using the product, do other potential get exposure? PayCycle and Netflix are not organically viral. SurveyMonkey and Gmail are.) If its not organically viral, do you have features and incentives to make your customers want to refer you?
