Freemium to Premium: 6 conversion techniques for SaaS
People like free things. They also like to try a service before they buy. This is why giving some of your product value away for free is such an effective way to acquire customers. It’s a popular way for SaaS businesses to keep customer acquisition costs (CAC) low in an age where the competition on familiar marketing channels has seen costs soar.
But getting people to try out your product for free is one thing. Convincing users to upgrade is a different ball game. You’ve got to prove how you will deliver more value - the kind worth paying for.
Here are six tried and tested conversion techniques that can help you encourage freemium customers to take the leap to a paid subscription.
1) Nurture your freemium users
So, for starters: let’s get those free users down the funnel. To do this you’ve got to treat them like valued, paying customers.
From carefully considered onboarding comms to clear routes for troubleshooting, the idea is to help your users to quickly and easily experience the value you’re offering them. With a clear direction on where they should go to answer their questions, or who they should contact for support, you’re setting users up for an excellent experience of your brand that will affect their willingness to pay.
Don’t forget to mention the benefits of the premium service while you’re at it. You don’t want to come across too ‘sales-y’, but reminding your customers of where they’re hitting any walls with the free version and what’s on offer in the upgrade will keep it on their radar.
Keep it simple and clear, yet educational. And don’t - whatever you do - overdo it on the upsells.
2) Create a sense of urgency
With a free trial, creating a sense of urgency is quite simple. Something like “your trial will end in two days” means users will no longer be able to use your product or service and entices them to get their wallets and type in their card details.
Freemium is a little different - but that doesn’t mean you can’t get those users to act quickly.
Time-sensitive promotions or one-off gift vouchers are a great way to give your customers that are already considering an upgrade that little push.
Website builder Wix captures the urgency of new website owners using their freemium plan by offering 50% off an upgrade. The trick? It’s only available for a limited period of time.
People hate missing out. When faced with an email or notification like that of LinkedIn’s ‘10 people have looked at your profile today’, it creates a different kind of urgency. Not only does an upgrade promise the information you’re missing, it also promises a way to act on it: when you upgrade with LinkedIn, your messaging capabilities to reach out to the people viewing your profile increase.
In short, let your free users know that premium users have access to the fuller picture. Your freemium model is invaluable when it comes to testing out what people value; use your findings to tailor these kinds of communications to the individual user and tap into what matters most to them to encourage an upgrade.
3) Unlock features
Seen by some as a stepping stone to help get your free users to premium, the promise of unlocked features for a lower fee than a full upgrade can be a lucrative step for some SaaS companies.
It’s an important consideration for your company, though, as you may not want to give freemium customers the only feature they want from an upgrade for a fraction of the price. It can also be difficult to come back from offering your service in fractured parts. What it can do, however, is help break down your potential customer’s mental payment wall.
The step between paying nothing and paying something, however little, is the most significant step for a user of your product. Once they’re past that first commitment, they’re more likely to make a full upgrade. Their brand loyalty is evidently there - and the financial reservations that were holding them back have been eased by the smoothness of the transition to a new, paid-for feature.
Note-taking app Agenda uses this model, promising a free product without time limits that can be tailor-made to your requirements with the addition of paid, individual premium features.
4) Charge to remove adverts
No one likes adverts. People can just about put up with them in the side panel of a screen, but when they’re interrupting your music, video or gameplay, the idea of getting rid of them entirely is very appealing.
If you use ads to support your free product, it’s worth offering a premium, ad-free version. Spotify is a widely-used example of a program whose premium upgrade involves the permanent removal of all ads.
This is also a popular route for iOS and Android game developers, who offer the option of a one-off payment to ‘upgrade’ to a version of the game uninterrupted by adverts.
5) Show ‘em what they’re missing!
We’re not just talking about having a pricing page that clearly compares the features included/excluded in each tier. Go further than that - tease your freemium users a bit. 👀
The last thing you want to do is make the freemium product so comprehensive that there’s no drive to upgrade. So, why not style your freemium product on the premium version but just grey out the features that are unavailable unless you pay?
This way, potential customers are reminded of what they’re missing every time they use the product. This technique embeds the value of the paid version into their journey and flow, which isn’t something a pricing page can do.
Check out how Piktochart uses this technique, with features like personalized color schemes being blurred out with a quick and clear link to ‘upgrade’:
6) Make it easy to upgrade
As soon as a process becomes too long or too complicated, users are going to knock off - and they might not come back. Your upgrade process is no different.
You need to make the transition as easy and smooth as possible. Users are far more likely to abandon their purchase if there are too many hurdles to jump over to get what they want.
One example is to consider how you can delay asking them needing to enter all of their personal details or configure their account until after the conversion. You can always point your new customer in this direction once they have access to the full features of the product.
This is why it is a good idea for your business to collect payment details when each user begins using your free product, where possible. According to Tomasz Tunguz , an average of 10% of unassisted leads convert when the payment method (like credit card details) is collected before the use of a trial or free product. That’s compared to the 4% who convert when payment details haven’t previously been collected.
This is worth experimenting with though. You’ll want to see whether the impact of asking for credit card details to access freemium, which can put people off, means your user-base shrinks more than your customer-base grows from the tactic.
Next steps: Tracking your freemium success
If you’re working on moving freemium customers to a paid version of your product, you’re going to want to track success and how much revenue it’s ultimately bringing in.