Three good habits to pick up from ‘freemium’ marketing

Let’s be clear, nothing stirs the marketing loin more than a made-up word. ‘Freemium’ is one such word. In B2B technology marketing, it’s damn sexy. 

There’s lots to learn from the freemium model to help B2B marketers drive inbound sales, even if your products are far from free.

Freemium selling offers a basic product or service at zero cost. You want more whistles and bells, you pay for them. Sometimes it refers to a sustained trial period that, when expired, demands a payment for continued use. 

There is something very bold about freemium selling. It says ‘we’re so confident you’ll like this we’re going to give it away and wait for the magic to happen’. That ‘magic’ being sales, of course.

Octopus Group has helped lots of freemium sales strategies to prosper: security software, workplace and collaboration services, design technology and accountancy applications – the list goes on.

Freemium’s party trick is to blur the line between customer and audience. A pool of freemium users are customers, but they are not paying customers. The key for the freemium vendor is to convert freemium users into revenue. Like all sales funnels, this relationship works on a conversion ratio. If you’ve done the sums right, that ratio should be predictable and your focus is on acquiring the best mix of sign-ups to deliver healthy revenue.

Here are three lessons we can all learn from freemium:

Volume Vs Value

What’s a better sales quarter?

  1. 1000 freemium users sign up and 10 convert to paying customers.
  2. 100 freemium users sign up and 20 convert to paying customers.

Assuming all the customers pay the same amount and the marketing investment was identical, 20 customers is better than 10 customers, all day long. The sales team will love you twice as much.

But you know as a marketer that audience building is really important and option A gives you 900 more users in the ‘hopper’ even though conversion is lower. It’s a high quality problem to have.

Advocacy & Momentum

The power of advocacy and momentum, especially in tech, is key to sales. Freemium customers are advocates of your solution. They will talk, share and refer. In a world where awareness and competitive advantage are so important, this advocacy group has a measurable value to the business.

Data-driven Outcomes

Freemium selling is run on ‘the numbers’. You can plot a course based on the behaviours of the many, segmented into the actions of the few. Fishing for leads is actually a feedback loop between you and your nearly paying customers. It’s a great habit to get into and helps to bring predictability to your marketing investment.