Companies using the “freemium” model easily attract customers. Moving freeloaders to paying customers can be problematic, however.
Even in traditional business models, raising prices is hard enough. But how do you get people to be delighted with paying for bonus features when they are accustomed to getting something for free?
Peter Shankman, founder of HARO (Help A Reporter Out), and Dave Goldberg, CEO of Survey Monkey shared their thoughts on how a passion for serving both the non-paying and paying can move customers from free to paid versions of a product.
Both HARO and Survey Monkey offer free versions of their online products as well as paid versions with tiered pricing for premium features.
Launched in 2008, HARO connects over 100,000 sources with nearly 30,000 media professionals. Recently, the company added paid subscriptions for its media-query e-mails along with special services that help sources with publicity efforts.
Survey Monkey boasts more than 40 million users who create and conduct surveys, collect data and analyze results using its survey tools; the business has used the freemium model since its inception in 1999.
Both companies have customers who are eager to pay for certain benefits. In my conversations with Peter and Dave, I learned about critical elements needed to engender happy-to-pay customers.
Focus on great product design
HARO emphasizes ease of use and product integrity. Filling out a media-query form takes just a few minutes. Rules are clear and simple to follow. Notably, the company guards its processes by following up with reporters and sources who don’t comply with requirements, assuring a positive experience for all.
At Survey Monkey, staffing and resources are weighted heavily toward product design and development, rather than sales and marketing. Customers are wowed by the experience of using the product, not the cleverness of its advertising campaigns.
Use customer feedback to improve the product and add features
Both HARO and Survey Monkey solicit and use feedback to create better products. Often, improvements are made to both free and paid versions. In some cases, new features are added to paid plans only.
For example, when customers asked for guidance in crafting survey questions, Survey Monkey responded by creating “Question Bank,” a list of hundreds of questions. These are accessible from the basic account as well as those requiring a paid subscription. Customers also wanted help with analyzing and presenting results. Some analytics were added to the free product but more advanced tools are available in upgraded versions.
At HARO, customers asked for features that would allow them to respond more quickly, efficiently and effectively to media queries. Meeting those needs led to the design and introduction of standard, advanced and premium levels of paid plans.
Make sharing easy
Product sharing is easy for Survey Monkey’s customers because a viral loop is embedded in its design. Those conducting surveys, whether businesses, educational institutions, government agencies or non-profit organizations, naturally reach out to their customers, employees, constituents, donors, etc., who learn about the company’s survey tools from these experiences. Next, they create surveys for their own purposes and continue to spread the word.
But, even if the viral nature of your product is not inherent in its design, there are ways to enable people to tell your story. HARO’s social media presence is strong and reporters are encouraged to share success stories.
Offer a useful, fully functional free version of the product
Dave told me that the essential ingredient in convincing customers to pay is to make sure that the free version provides a real benefit. Oft-used alternatives are demos and product trials that give prospects an idea of how the product works but rarely deliver tangible results. To be effective in reaching customers and eventually moving them to paid plans, you must offer a free version that fulfills a specific need.
Likewise, HARO is committed to ensuring that all members (registered customers who serve as sources for reporters) derive value from the company’s basic product. A free plan that is effective in getting media coverage and publicity is crucial.
“HARO,” explains its founder, "was always about helping the members get the best press, while helping them market and grow their business. When they realized how easy it was to get that from a free product, and what the premium version could offer, it's kind of a no-brainer. If they get great success from the free version, imagine what they could get from the paid version.”
Julie Rains is a senior writer at Wise Bread, a leading personal finance community dedicated to helping people get the most out of their money. Get daily money tips by following Wise Bread on Facebook or Twitter.
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