Freemium, Trial, Interactive Demo or... Gary the sales guy?
Freemium, Trial, Interactive Demo or... Gary the sales guy?
It depends. A deep dive into deciding which onboarding motion is right for your product.
This post is sponsored by Storylane, drive product-led growth with no-code interactive product demos.
This article is part two in a three-part series on the state of product-led growth onboarding.
Choosing between freemiums, trials, interactive demos, and Gary the sales guy
Growth. According to LinkedIn, it’s actually super simple:
Sales stink, so product-led growth is the only game in town
You either do Freemium or you are not cool enough to have a startup
The reality is…more complicated. Everyone from GTM leaders to Growth PMs must make tough choices between creating a free offering, trials, reverse trials, interactive demos or simply leaving the job to Gary the sales guy.
Questions you’ll find yourself asking include:
Which option should we start with?
How do you limit and build trials or freemium offerings correctly?
How do we not piss off every other function in the company?
How do we predict what’s coming next as everyone begs us not to cannibalize our entire portfolio?
How do we integrate ANY of this into the broader company?
“Which option should we start with”
Well, first let’s make sure we know how each option works.
Terminology
Freemium: A free offering of your product without a time limit often limited through usage limitations and/or feature limitation
Trial: Time-limited full experience of your offering, oftentimes coupled with requiring payment options
Reverse Trial: A combination of freemium and Trial. A free offering of our product with the option to enter a trial to experience a higher paid plan. If you don’t like it, you simply revert back to the freemium experience.
Interactive Demo: A simulated experience of your product offering often split by audience types. Rather than some useful output or value it mimics the experience of a complex product.
Gary The Sales Guy: Gary, a guy, who does sales.
Great. Here’s a flowchart:
Activa(c)tion
Before we can decide at all which form to pick for our business we need to define our ICP (Ideal customer profile) that we are looking to “activate.”
Your business only has a chance of having a good self-serve motion if your users can activate themselves without having to walk through too much friction (this might also include talking to a salesperson).
But if you’re not sure who your ideal customer profile actually is, you’ll have a much harder time determining which form is right for you.
In other words, the shorter the time to value - the time it takes for a customer to realize they have a problem until they get a (partial) solution from you - the more likely they will become a paying customer (assuming your pricing and use case match are what they’re expecting).
Do we have a measurable customer signal that tells us “Yes, they are having success with the product. Their need matches our value proposition.”
Some good examples of a measurable customer signal are:
Document Management Platform: Customer has uploaded and processed a document.
Analytics tooling: Customer has connected a data source and created a dashboard or query.
Slack.com: Customer has 2000 messages in 30 days.
Supermetrics.com: Here’s a quote from Edward Ford, Marketing Director at Supermetric:
“Get data to table”, and then sees the document populate with their data, that’s when our users realize the power and simplicity of Supermetrics. (Source & More examples)
The purpose of our self-serve motion is to activate a user/account through engagement. A good self-serve motion, whether it’s a trial or freemium, should be tethered to an easy-to-track measurable customer signal. This way, you can track and make changes easily.
Limitation
What’s a recurring or extended value you can provide to the customer that is easy for you to limit and track?
Case study: Slack
Slack is a poster child for good freemium execution. The obvious choice for how to limit access on Slack is to throttle the number of messages that you or your team can send to each other.
Would that be very efficient? Probably not. Quite the opposite — imagine using Slack when your company is in full crisis mode when - uh oh - you have run out of messages - sorry. Please upgrade by clicking here.
Who doesn’t love to think about how many seats they need while the company burns? The friction would be so high that you would have to use a different tool. At this point, the Slack Freemium would be dead.
Slack went a different route. Rather than limiting you by how many messages you can send, it instead limits whether:
you can see messages older than 90 days
you can connect with other companies with other companies
use audio and video huddles with more than two people
you can integrate with unlimited external tools
etc
However, none of this will be too apparent when you start using Slack. Slack is focused on activating “you” fast, by getting you to use the product often.
Then, as you fall in love with the product, you’ll realize there’s even more you can do — once you pay. They aren’t in a hurry to force you into a paid relationship.
You as the user have to make the decision that you would like to connect to another company channel or search for something older than 90 days. By this point, you are bought in, which means the amount of money you are willing to spend to expand on that value is clearly higher than if they would ask for it right at the start of your journey.
Slack is playing the game this way for two reasons:
Not everyone who uses Slack will be a good paid user. For individual users and very small teams, the free Slack plan may be all they ever need. Asking them to pay will make them either use a different product or end up hating the experience. By keeping them free, Slack turns these users into evangelists with the potential to recommend the product and drive the brand toward others who will be paying.
Slack competes against Microsoft and other global players, so having a freemium tier is essential. In addition, Slack layers a Reverse Trial on top of the freemium offering. You can experience the extended value of a Paid plan for a set amount of time before you revert back to a freemium.
But at no time will they block you from sending messages to your colleagues.
Thus, we can conclude that a freemium product in itself needs to be able to deliver core value end to end even if it’s in a limited form.
Case study: Smallpdf
However, at Smallpdf for instance, we decided to limit the amount of documents processable per day but gave you free access to our 21 different tools. We used this limitation because we felt that the processed documents without too much-extended value can’t be given away completely free. This was essentially our entire product and there was almost nothing else than that to move into a paid plan.
If that were to change, however, for instance by adding collaborative tools into the product, essentially shifting the core value from a multitool to workspace offering, it’s possible that the company will revisit that thought.
Every business is individual and it’s hard to give a one size fits all advice in this regard.
Freemium or/and Trial?
More often than not we combine freemiums and trials as stepping stones to get the best of both worlds.
Freemiums
Freemiums are the poster child of product-led growth, by itself, it has the “worst” conversion rate from the number of users you need to pay conversions because it also give away the most value for free before charging anything.
Since freemiums are also not time-limited some will simply never convert. So what’s in it for us, as a business?
Word of mouth
Data, lots of Data
Freemiums are really good at leveraging word of mouth. Something that can be used without a time limit stays on top of mind. These users might never pay themselves but maybe they recommend it to someone else who will. We’re maximizing the chance for recommendations more than any trial by itself could.
Freemiums also generate a ton of data. At Smallpdf I had 50,000,000 monthly active users to play with, the majority of this - 99% of all our traffic - were freemium users. They were crucial in driving statistically relevant experimentation data and improving not only onboarding but also the product itself.
Enter…The Reverse Trial
A reverse trial is essentially the option to try the full experience of a paid tier of a product for a limited amount of time - If you don’t like it you still revert to a freemium plan, essentially still having the chance of becoming a fan and recommend the product even if you don’t pay.
Conceptually what’s cool about reverse trials though is that they break down the big prize of getting long-term revenue from an account or user.
If you think about that big prize being broken into different steps you arrive at something like this:
Freemium: Onboarding on Core Value (no payment interferes)
Trial: Onboarding on Payment process (no lack of trust whether the core value is good enough interferes
Expansion: Onboarding on expanded value (core value and payment process already taken care of)
It also shows the beauty of being product-led. Without a truly great product and onboarding experience you stand no chance.
Trial only
There is still an option that you might opt for a trial only instead of combining it with a freemium offering:
You struggle to offer the core value of your product for free because you can’t limit it easily afterward through usage alone.
A good example is Superhuman with its integration on top of your email. They’re clearly positioned with their trial offering whereas a freemium offer would not work with their current product. You’re either in or out of Superhuman, there’s no in-between.
Your product is integration-heavy and requires considerable effort to even register for an account to get going. We need the customer to input this data first before they even can become a trial client. In that case, the additional friction from registering for a trial becomes marginal compared to the introduced friction of entering credit card information. Maybe you also need this data mandatory to do background checks and other legal compliance reasons (often the case in financial products like Neobanks).
This is your first time offering anything self-serve as a sales-led company with substantial revenue from a sales-led motion. Getting self-serve right is difficult and a trial-only offering might be a safer bet to get it all figured out before going “all the way” with a freemium offering.
Interactive Demos
Interactive Demos are kind of new in the context of how elaborate they are becoming and how the market demand for them is increasing.
I’ll do a deep dive into Interactive Demos in part three of this series, but for now, here’s a quick overview.
In the sea of options that we have available to us between freemiums, trials, and interactive demos it’s easy to overlook that we are talking about two different categories of onboarding.
Freemiums and trials are predominately led by your product and assisted through sales, whereas Interactive demos are still Sales Tools that are assisted by your product.
The difference is that an interactive demo’s intent is to convey as much trust and perspective about a product’s capability as possible so you are confident that sales is the next logical step in the process.
The major lifting is still done by sales, but an interactive demo gives some great optionality where a trial or freemium is simply not feasible.
In other words, an interactive demo is a good middle ground between a freemium / trial and a full-on Gary the sales guy approach.
Interactive demos also have a special place where you have diverse product value through different user types. In the example of Zendesk that would be:
The customer who needs help
Support Agent that assists the support agent
Admin that needs to manage the support agents
Seller to assist sales through Zendesk
If this were done through a normal trial you would have to involve multiple people, including an admin that onboards people and finds a way to expose it to your users/customers. That’s an impossible ask for some enterprises and only something they are willing to do when they enter a proof of concept stage.
In a way, the interactive demo is an onboarding tool for sales to get you transparency before you enter into a proof of concept stage which is another way of saying once a company is ready for an enterprise trial.
And more often than not, platforms that offer interactive demos usually have the most transparent pricing. The game is still about transparency and giving agency to the customer, not talking them into anything.
That’s a differentiator to competitors that might have the same product but a different acquisition flow.
My next article will be about Interactive Demos more in depth.
It’s the new kid on the block and deserves some attention.
Gary, the sales guy
Classic sales-only motions still have their place of course, but their markets are usually in very specific niche segments and new categories.
Almost everywhere you turn you see how sales is starting to get literate with using data to close their pipelines faster. And if that means they want to have access to usage data then trials, freemiums, and reverse-trials are the way to go.
Who you are, for sales, is not anymore the only qualification, the name of the game is now much more who you are and whether you love the product.
I want to hear from you!
Where does your business struggle with deciding between freemium / trial?
What experiments have you tried that failed?
Have you had any trial and freemium experiences in B2B that you consider best or worst in class?
What questions do you have for me about freemiums, trials, interactive demos, etc.?
This article was created with the help of the editing prodigy
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