Seven things to consider when launching your freemium product
It usually starts with someone's bright idea:
"We need to disrupt this market…fast. How about we
just give away our product. It will go
viral and kill ."
In theory it sounds great. It’s such a simple way to kick your mortal
enemy in their revenue stream by giving away your product for free.
In my world, there are many examples like Solarwinds and
Splunk, where the free products were key awareness builders and growth drivers.
It seems pretty straightforward… however, launching and growing a free product
is hard work and the "overnight sensations" are often high-profile
exceptions rather than the rule. Over
the past 10 years I've marketed a number of different free offerings and here
some things that I have learned:
1. Commit to
building a product that is "stupid easy" to install and use. Companies like Dropbox and Evernote have set
the standard for usability and your users' expectations are based on these
Even if you are in a complicated space and your product
does much more, you need to find a way to reduce the time to value to minutes
(or less). We live in an instant
gratification world. If it looks hard
then your users will give up and move on.
2. It has to be
compelling enough but it doesn't need to do everything. The best freemium products find that balance
of providing enough functionality to keep you hooked, but leave you wanting more once you start
using it (i.e. he crack cocaine analogy).
3. Think about
what in your product will make it viral. The cloud backup guys figured out that
simple incentives work wonders to get people to spread their products (it is
amazing what people will do for an extra 500MB). Another example I have seen is providing
additional reports to share the value from your product with others.
4. Marketing can't
do it alone. If your freemium offering
is going to be successful then you need to treat it like a core product. You need to add it to your roadmap and invest
significant resources. Like your paid
product, it will require regular updates and tweaks to get it right.
5. Virality is not
magic. You need to prime the viral
marketing pump by announcing it with PR, creating buzz and engaging with key
influences. I know, you are going to say
"Google didn't need PR" or "look at how Twitter took off without
marketing." If you are confident
that you are that awesome, skip the marketing and outreach.
My suggestion is to go big with marketing and so you can
quickly figure out what you have.
6. Think about
your upgrade path. I know that revenue is a distraction for some online
businesses but cash still matters. Even
if you don't have everything figured out, it makes sense to have some idea of
your revenue model. I imagine this will
be an early question from your skeptical board when you pitch the whole
7. It isn't always
pretty. Conversion rates can vary from
5% to less than 0.05%. Many people will
register with temporary email addresses or Gmail accounts with vague information. Also, large parts of the developing world
rely on free stuff to make things work.
Building and nurturing a big user base can help overcome
these challenges but understand that the percentage of qualified prospects from
a freemium product is likely to be less than from a traditional marketing
In the end, having a product that works well and solves a
real problem is critical for the success of any product regardless of whether
it is free or paid. Some delighted users will upgrade to your paid product
while others will stick with the free version and tell their friends about
it. Either way you win. Just keep in mind that there is nothing
magical about it. Hard work and a
thoughtful product are requirements to make it happen.
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