“Free” reigns supreme when it comes to online marketing. But “pay” is more profitable to your bottom line. In the popular Freemium world of digital offerings, where free and premium content or services are offered, it’s prudent to consider how you will transition free offerings into paid subscriptions before you actually take that leap.
The conversion rate is all over the boards when transforming free into premium services. Industry averages have been reported anywhere from 0.5% to 5%. When it comes to profit, that’s a huge range.
Here are six factors to smartly monetize your products when you make that move:
For best results, treat customers with respect and communicate upcoming changes from free to subscription or premium offerings. It’s important you don’t make dramatic, unannounced moves. Be sure you provide and outline strong reasons why customers should continue to use your product or service. At the same time, be transparent about premium pricing. Don’t hide pricing details behind a pricing link or tab.
It’s a delicate balance. You want to give customers enough free and easy to use products to keep them coming back for more. And you want to limit access to even better products that are so awesome folks are willing to pay for the extras. Give away too much, and customers see no reason to upgrade. But if your freemium offerings don’t give them enough, they won’t even bother with you from the start.
Your first goal should be to build a large audience, then monetize it. Identify what is making users come back time and time again. And leverage that understanding so paid features best serve your clients’ needs and show them why they need your product or service. You should also consider a trial period as it encourages people to opt in and allows them time to become addicted to your product.
Use Key Performance Indicators (KPIs) to gauge success. KPIs offer great insight into performance and let you see what’s working well or not at all, allowing organizations to see what improvements are needed. KPIs should also be actionable – only measure something you can actually change by creating new actions. For example, measure page views not only too see how the overall performance of your site is doing, but also to gain insight into which pages are performing best. The pages with the most views let you know what features of your free product customers use most or what potential customers are interested in so you can promote those features in a premium version.
Customer lifetime value (CLV) is a prediction of the net profits that can come from a long-term relationship with a customer and can also be defined as the dollar value of a customer. CLV is extremely important in converting free users into long-term paid subscribers. To accomplish this, offer products or services that have enough value users are willing to pay for them. Design your customer billing in a way that makes transactions for premium and recurring offers easy. An effective customer billing system will manage all of your billing activates in one place, at one time, without the need to recreate processes if and when your customer upgrades to a paid subscription.
In today’s digital age, concerns over security can slow down, and even stop, conversion rates. Consumers have to trust your security, whether you are offering something for free or requiring payment to access content. Can you guarantee their personal information will be secure and not shared with others? Safe cloud billing is necessary for any business looking to upgrade free services to paid or recurring subscriptions.
Once you’ve enacted these six steps, you still need to market, track metrics and continually improve your site in order to turn freemium customers into premium customers. Keep providing features that make their experience safer, give visitors content they find valuable and are willing to pay for, and make your premium packages worth their while by offering valuable services unavailable to free users.
And be relentless in your strategy to convert freemium users to premium users. Use emails, snail mail if appropriate, and even phone calls to engage your audience.