Freemium: The more you engage in your own service, the better you will understand your users – Freemium Meetup Aug 2012
With each passing Freemium Meetup, everything increases, improves and gets bigger! Continuing in our tradition of bringing you the most up-to-date information about “all things Freemium,” at August’s Meetup we had two terrific speakers and more than 70 attendees. As usual, this event was sponsored by Kachingle.
Our speakers talked about conversion rates, market tests and gave some lessons away. Furthermore, YouSendIt gave a one year full-premium-pro-account to every attendee. (So, while you can access our complete video productions of these Meetups on YouTube, it does pay to be there in person!)
Mihir Nanavati of YouSendIt shared statistics and also a few insights about the company. So far they have 33 million users and 620,000 Premium users, which creates a 40 million dollar revenue stream for the company.
You need to know your customer
Everything is about building a wide potential user funnel, which means one needs to create a big market. The best way this happens is by word of mouth. Then it’s all a matter of scale within freemium economics. Better customer engagement brings a better conversion rate.
“The lifetime value of a customer = greater revenue to the company than the cost to acquire and maintain him.” – Mihir Nanavati
Basically you need to know your customer. YouSendIt’s target users are “pro-sumers.” They are using the product as power users. So if you know the problem what you are try to “solve for,” you automatically know how to fill the funnel. Mr. Nanavati, VP of Product Management told the audience that it is important to let users sign up for the service, regardless whether it is the free one or the paid one. Without this data you have no information about what your clients really want. And here you also filter out the consumers from the pro-sumers; as soon as YouSendIt added an account requirement to their service, the consumers dropped and the prosumers stayed. These are your target users; their engagement can be retained, converted and likely upgraded.
The more you engage in your service, the more you will know about your users. The more you know about your users, the higher your conversions will be. There are many ways to measure conversions:
- Find the metrics that work for you;
- Focus on active users and their engagement level;
- Know how many people are signing up.
You need to know what to measure, and use common sense
You can do some A/B testing showing the plan page with no pricing to get more interest, but this is clearly not what potential users will need. But how many will continue to pay after their first free month for the service? Usually the lifetime value is low. This is because not everybody needs to send large files all the time. When YouSendIt figured this out they created some collaboration tools, which are tools, the users were using frequently, things they really wanted to have and put them partly in the premium packages.
Podio has built a workspace for each project instead of collaborating by email. The free version is five active users and five viewers. The VP of Apps, Ryan Nichols, gave away his five lessons of living freemium
- Show, don’t tell (educate you inside the product, not telling you about the product)
- Push for commitment
- Nurture free users
- Encourage free fans (do your free users add value)
- Free -> Fun
Every test they have done so far, shows that how sooner you can get the people to sign up, the better it is. But you need to make sure, that they know, what they need from the product. Furthermore you need to enhance their “onboarding” experience, e.g. when a company is signing up, make them to add as many information as possible like their own logo, to their profile.
Communicate with your free users
You should also communicate with your free users, about their use. Listen to their needs and add them to your own “to-do” list. More likely you will not implements every suggestion but some of the most wanted things perhaps.
With giving promotions away, you get the users to “share their love” about your product and allows them to collaborate with outsiders. Having a freemium model allows this kind of spontaneous love and free promotion.
Want to learn more about the Freemium Business Model for your business? If you are in the Bay Area, join our monthly Freemium SF Bay Area Meetup for a chance to hear world-class speakers and make networking connections! If you can’t make it, you can always catch the summary, video and presentations.