Tuesday Apr 8, 2014 by David Skok - General Partner, Matrix Partners
This article is part of a series titled “The Art & Science of Growth Hacking” that will be published over time. My thanks to Gail Goodman, the founder and CEO of Constant Contact for introducing me to this concept.
Free trials and freemium products are two of the best ways to sell your product. They help the buyer address key concerns such as:
For a buyer, being able to get this level of proof is far better than having to trust what a web site or sales person has told them. Think about how you buy a car. How important is it to you to test drive the car before you part with tens of thousands of dollars?
Free trials (and freemium) also have another huge benefit for SaaS and consumer internet companies: the buyer does most of the work of selling themselves. If you have read any of my previous posts on the importance of CAC (Cost to Acquire a Customer), this can be a very powerful way to reduce CAC.
Wow! is the moment in a free trial where your buyer suddenly sees the benefit they get from using your product, and says to themselves “Wow! This is great!”. It’s also the moment where you have converted them into a fan who is likely to buy.
If you’re going to use free trial (or freemium) as a key part of sales funnel, it pays to understand exactly where in the free trial experience your buyer says “Wow!”. Then you will want to focus on the following set of questions:
Let’s look at these in a bit more detail:
Do you know what is Wow! for your product/service? It’s not always that obvious, and may require some thought. One way to figure this out is to demonstrate your product to a series of buyers in person, and ask them to tell you what was the moment when they got excited, and why.
Sometimes Wow! may be less about generating excitement, and more about providing them with the proof points needed to feel comfortable making a purchase. But if there is no point in the demo where anyone gets excited, I would recommend going back to the drawing board to design a feature that will clearly delight your buyer. This could take the form of a really easy way to do something that today requires a lot of effort. Or it could take the form of a graphical representation of their data that suddenly gives them new insight. etc.
With some products, it can vary for different buyer types. We’ll address that later in the section on “Different Wow! moments for different buyers”.
Sometimes the initial Wow! moment will get them excited, but to fully complete the trial to the point where they are ready to purchase, there may be additional features they need to see. We need to identify these and make sure that they are easy to get to in the trial.
Now that we understand the importance of Wow!, we’re going to want to work on reducing the time and effort it takes for the buyer to get to that moment. One of the most valuable things you can do is diagram out those steps, as your free trial is like a micro-funnel where where people starting the free trial will drop off at different stages.
As an example, Imagine that you are working at LinkedIn in the early days, and you are designing the flow for a trial for a sales rep:
I cannot over-stress the importance of this diagram. I love working on startup funnels helping entrepreneurs improve them. And typically the the first thing I do is draw out the steps in the funnel with them. It’s surprising how often it takes a bit time and work for them to layout these steps. Everyone starts off sure that they know the steps, but when it comes time to draw them, there is often discussion required and redrawing as different people add their views. Then once the steps are up on the whiteboard, something magical happens: without me prompting, they start to realize how they can improve the funnel. The diagram acts as a strong catalyst for creative brainstorming. Ideally the diagram should stay up all the time on a large whiteboard because of this effect.
Now that we have the diagram, we can see how many steps it takes to get to Wow!, which is a catalyst for thinking about how to reduce those steps. We’re also going to want to understand the how well this micro-funnel is working, which means instrumenting the application to gather some metrics.
There are two metrics that we need to understand how buyers are engaging with the trial, and where they are dropping off: Flow (number of users at each stage) and Conversion Rate. We need those for each step in the trial, as well as for the overall trial.
As you see above, the best way to look at these metrics is with a graph that shows how things are evolving over time.
(We may also want to measure engagement with the trial, as well as the business outcomes that the user is experiencing. For more on this topic, see Manage Customer Success to Reduce Churn.)
It’s highly likely that there will be places in the funnel where you’re seeing a lower conversion rate than you’d hoped for. Going back to the LinkedIn theoretical example, there are two places in this flow where the metrics indicate issues:
I have developed a simple methodology for looking at these blockage points that helps trigger brainstorming on how to fix the problems. It involves looking at the two factors that stop people from moving through a particular step: Friction and Concerns, and the one thing that can pull them through a hard step: Motivation / Incentives. Using the ‘Import Contacts’ step in the LinkedIn trial as an example, let’s look at the friction and concerns in this step:
If we look at the original LinkedIn step for Importing Contacts for users of Outlook and Exchange, it involved downloading and installing an app to grab your contacts out of Outlook and send the back to LinkedIn:
As you might imagine, there is a ton of friction involved in getting a user to download and install an app. And in many companies, Windows would be locked down to prevent users from accidentally installing malware. So to get them through that step, we need to remove the friction. One way you might imagine doing this would be to simply ask the user for their Exchange login credentials, and then connect directly to Exchange to grab those contacts. However, while that removes the friction, it creates a new concern: “if you have the password for Exchange, you could read my emails, and I have lots of private and confidential emails”.
So we have to address that concern. This might best be done by putting up a message as part of the dialog box to assure the user that you are storing their credentials in a highly secure fashion, and that no-one will never look at their emails.
(Note: this is the real LinkedIn screen – so the incorrect wording in the sentence is their mistake.)
But in the new era of Smartphones, we could take this a step further: on iOS and Android, they will have already connected their phones to Exchange, and those contacts will be sitting on the phone. So all that is needed is to ask them to install LinkedIn on their smartphone and connect it to Contacts. That is pretty low friction, and eliminates the concern completely.
To give another illustration, TribeHR, a SaaS human resources application started off by requiring their trial users to import their own data into the system. That turned out to be a high friction step. They solved the issue by providing a set of sample data that the trial user could play with, to see how things worked before going through the effort of importing their own data.
If there is no way to remove the friction, or fully address the concerns, we need to look at the other side of the equation: what are the users incentives, or motivations to pull them through doing the step regardless of the friction or concerns. If there is a big prize for them when they complete the step, they will have adequate motivation. Think of yourself as a Behavioral Economist, looking at how human behavior is impacted by incentives. Ask yourself, is the Wow! powerful and exciting enough to pull them through the work you are asking them to do. Brian Halligan, the CEO of HubSpot has a great way of asking this: “Is your Wow! to work ratio high enough?”
If you know the end result of the trial is something of great value to the user, you may want to provide them with a message like “You’re almost there. This is the last step before you get to see the finished dashboard”, and include a small picture of what a typical finished dashboard looks like. This can improve the motivation of the user to get through that last step.
In the above LinkedIn example, there might be an even smarter way to go about this free trial: instead of asking the user to sign up, and fill out a profile, why not simply give them access to the Search report that will give them the Wow! moment before they sign up? Most marketers hate to do this, as they are desperate to capture at least the users email address. But if you A/B test this against the other approach, you can find out clearly if you get a higher number of completed sign ups with the new process versus the old. My bet is that this approach will lead to a higher overall conversion rate.
Think about how many bad sign up forms you have abandoned trying to get access to some system.
If you really have to get some information before a trial, keep the fields to a minimum, and get the rest of the information later, after the user has gone through the Wow! moment and seen some value.
One of the best ways to improve the free trial experience is to provide the user with a guided experience, where the product leads them through the steps. (There are SaaS tools out there that make it easy to add this to your application.) Also providing a “% completed” graphic acts as a gamification-type motivator to complete all the steps. Don’t forget to also offer a way out of the guided experience for those who want to look at the product in their own way.
Think about a product like LinkedIn. It has many different kinds of users: recruiters, sales people, individuals wanting to get hired, etc. For each of these, what it takes to get them to say Wow! will be different. Make sure you know the Wow! moment for each of your key persona, and don’t forget to diagram the flow of steps needed to get there.
In this situation, it can be useful to provide the user with an easy way to identify themselves at the beginning of the trial, and then lead them through a different guided experience.
After the initial guided tour, the user may have several more days in which they experiment with the software. In these situations, your hardest problem is to get them to come back to the trial to re-engage. One of the proven ways to solve this is to send them emails that remind them to come back. The more personalized information these emails contain, the better the chances are for success.
For those that do come back, you may see them doing a few things right, but missing out on some of the other things that you know are key strengths in your product. In these situations it can be a good idea to use in-app messages such as: “You might want to try out the XYZ module which provides the following business benefits. Watch this video for a guided tour.”
The key to building this kind of intelligent and personalized interaction is tracking app usage on an individual user basis. Many of the Customer Success apps like Gainsight, Totango, etc. provide this kind of tracking.
Another key technique worth testing is to use a customer success person to connect with customers (either by email or phone) to help guide them through the trial. Even though this adds considerably to the cost of customer acquisition, the improvement in conversion rates can make it worthwhile in many cases. This is easy to figure out using A/B testing to see the comparative increase in conversion rates justifies the cost.
For the person doing these calls, tracking customers usage of the app will tell you which customers need help, and what kind of help.
If you are going to use this technique, it is very important that the buyer does not think that this person is a sales rep. There is a strong built in resistance to talking with sales people at this stage of the buying process. That’s why you see names for these people like Guides, Sherpas, etc.
Here’s another useful tip: a good way for a customer success person to open a conversation with a customer is to ask them “What was the business objective you were hoping to achieve using this software?” Sometimes the answer to this question is not what you’d expect, and it allows the customer success person to figure out how to best demonstrate that the product can fulfill their specific needs. With this question, the customer is effectively telling you what Wow! looks like for them.
Many times I have found that simply writing down the friction, concerns and motivations for any broken step, will trigger the right brainstorming to solve the problem. It focuses the attention directly on where the problem lies. For more on how to use this technique, see this article: Optimizing your Customer Acquisition Funnel.
Hopefully the above methodology will help you with growth hacking your free trials. If other readers have experiences that are helpful in this discussion, I would love to have you add your thoughts in the comments section below.
As I mentioned at the start, this is one of a series of articles on Growth Hacking that I will be publishing. Growth Hacking has become extremely popular with tech startups recently. Although the term is new, many of us have been practicing the concepts involved for years. Some believe that Growth Hacking is simply a new term for marketing. Others believe it is the job of the Product Manager. My own view is that Growth Hacking is about breaking down the silos between marketers, product managers,and developers to maximize the flow of leads and the conversion rate of those leads. It is also about using data at every step to understand what is going on, and sometimes incorporate new skills such as viral marketing, and data science.
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David Skok is a General Partner with Matrix Partners. You can find this post, as well as additional content on his blog called For Entrepreneurs. You can also follow David on Twitter (@BostonVC) by clicking here.
Wow - cover photo by Shutterstock