Pick-up the right gun for you PLG : Freemium vs Free Trial vs Demo
Choosing the right strategy for your PLG business
If you were beaten up so badly like Bruce Willis in movie pulp fiction, and you are in life or death situation and you had to choose one weapon to kill your enemy, what would you choose? Not kidding, but making this one wrong decision might quickly derail your SAAS business.
Hey!!! There is no best practice or easy downloadable play book on what works and what doesn’t, and like in other blogs and books it’s easier to say experiment and find out what works, but on early stage the cost of the experiment is too high. So let’s put some structure toward your Freemium vs Free Trial vs Demo decision making, before your development starts
Before deciding what will work for your business, let define all three models for our sake.
Freemium: A part or whole of the software is given away for free for lifetime, agenda here is to acquire users.
Free Trial : A part or whole of the software is given for free for a limited period.
Customer Demo: Is very much a known term where customer comes to you site and clicks on “book a demo “ you have them in your calendar and you have your sales person getting in zoom call giving a walk through of your product.
Whats the right strategy ?
A simple answer is this
This is an excellent stats from Open view partner, but when the there are lot of unknowns and when your brand is still nascent, there are high chances that your number will still stoop low than the above stats, PLG is not that direct is we had dreamt about.
There are lot of theories on market research, talking about different ocean conditions and taking the right go to market strategies, but i am going to restrict myself into PMF and not go deeper into Market research mode. I am not goanna say “it depends” rather would like to ask you few questions on each models before implementing it
14 Questions to ask yourself before implementing a Freemium model
1 Can your user with minimum support or no help can activate themselves ?
2 Does the product have enough elements of stickiness to hold the user on weekly or bi-weekly or per-transaction basis?
3 Are you catering to Micro, small business (not more than 250 employees)
4 Will the targeted users pay for the premium feature on the go with their pre-approved credit cards ?
5 Assume only 5% of the users are converting into premium paying users, will the product still sustain at a unit economic level, calculate Revenue Per Paying User, your operational cost and recovery cost?
6 In the segment you in, how much of word of mouth virality for the freemium is gonna create vs free trial ?
7 Will you be able to onboard them seamlessly to the “Aha Moment” ?
8 How long it’s gonna take an avg user to convert into paying customer ?
9 What would be cost of acquiring a paying user ?
10 Is the premium model usage based or feature based or seat based ?
11 You can offer a very low price point ?
12 Your target users have lest tech-savvy skills in them ?
13 Your target users company have no security issues blocking the buying process ?
14 The market you are targeting has scope or example of bottom up user buying journey ?
10 Questions to ask before implementing a Free Trial model
1 Can your product provide quick time to value within the free trial itself ?
2 Avg SaaS Free Trial conversion is around 14%, will you be able to find enough paying customers within that funnel?v
3 Are you employing an AE to engage with your activated users on free trial ?
4 Is you product/ industry mature enough for complete self serve onboarding ?
5 Is your team is tuned for regular optimisation on onboarding and engagement ?
6 Is your product marketing in place during trial engagement ?
7 Whats plans do you have to make the activated user convert into a intermediate or power user ?
8 Are you targeting end users bottoms up ?
9 Will users go through pain of loosing the product when trial end ?
10 How many of your competitors are using Free trial or freemium and are they largely successful ?
Questions to ask before implementing a Free Demo
1 Have you set demo process on place ?
2 Whats your customer qualification process?
All said and done, on an early stage book demo+ free Trial is the best thing to have unless your product is perfecting, building relationship is the best thing you can ask for. But if you are entering a market where self service is already a norm, you can not escape the route of Freemium & free trial model.
Conclusion
Go for it based on combination of Experiment time you have + Market experiment offering + the stage of your company:
Early stage of company on nascent market& with or without competition: Go for demo have 50 demos , have conversation with customers
Nascent market, less PLG competition : Product Demo rules
Nascent market, mature competition : Product Demo + Free Trial
Mature market, mature competition: if quick TAT is possible Freemium + Free Trial model is the best.
Mature market, less competition: Product Demo + Free Trial+ Freemium
Great products are built out of great experiments, but that doesn't mean you should not look at historical success and failures, these data becomes building structure behind your decision making at the end of the day PLG is all about data.
Hi I am Gokul Rangarajan, Scouting for Google Ventures, Ex- Freshworks, Ex-Bigbasket, Keka KR. I am Senior Product Manager in SaaS for around 12+ years, Have built & scaled business from scratch to $50M revenue, worked with 50+ Founders on their Product & fundraising journey.
I trying to put out content about PLG & Community lead growth on a regular basis, follow me on Medium
Linkedin : https://www.linkedin.com/in/gokulrangarajan/
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