6 ways to create urgency when your pricing model is freemium

Customers love getting something for free. Since the early days of software startups, SaaS companies in particular encourage new clients to sign-up with Freemium pricing models.

Freemium gives new users a free, no strings trial of a product, for a limited period, or in some cases, unlimited, with the option to upgrade to access premium features. Software companies can also offer new users full access for one or a small number of people, with the aim that they encourage dozens of colleagues to start using the product, thereby upgrading to a premium plan.

Unfortunately, as anyone in software sales knows, converting freemium clients to paying customers is not that easy. Encouraging conversions is something every software company struggles with. Typical conversion rates are around 15-20%, although some best-in-class products convert at a rate of 60%.

As sales professionals know, creating urgency is one of the most effective ways to encourage conversions. Here are a few ways SaaS sales teams can do that when they’re offering a freemium trial period.

#1: Limit the trial period

Free for 7 or 14 days are increasingly common. Unless you go for an extended trial with limited features, or for a limited number of users, thereby encouraging conversions that way.

However, when you go beyond 14 days, you risk a trial period that makes it more difficult to close a deal. Will someone learn more about your product in the two weeks after those first two working weeks? Prolonged trial periods reduce urgency.

A trial customer will stop worrying about how long until they need to pay, and could fail to see the value if they don’t make enough use of the product, making them likely to stick with the free plan (if that is an option) or stop using the product. Either way, that is an opportunity missed or a lead that wasn’t properly qualified.

#2: Don’t give away too much

When it comes to free trials, it can be difficult to know how much to give away.

Should premium features remain premium? Or are these features the perfect way to encourage conversions? It can be a difficult balancing act. One way to increase conversions is to demonstrate to trial users these premium features. Your sales team could do this using screen sharing software.

During the trial period, you could arrange for short demonstrations, thereby giving your sales team a chance to up-sell premium benefits and increase the chances of converting trial customers.

#3: But . . . Don’t give away too little

Giving away too little of the product reduces any perceived sense of urgency. If someone on a free trial can only access a limited number of features, they won’t necessarily see the value you are trying to sell. It won’t be perceived as a ‘must have’ product, merely a could be useful product, but not necessarily one worth paying for.

#4: Demonstrate the value of paying

During a trial period, the balancing act software providers must walk is giving away enough to demonstrate value, while not giving so much away that there is no sense of urgency or curiosity as to why someone should pay for the product.

Sales teams need to constantly demonstrate value. Use these opportunities to show instead of telling; helping them see the value of paying.

#5: Engage with trial users

Free trials need an engaging on-boarding experience (provide trial users with walk-throughs, videos, FAQs) and of course, instant demos. Show them how to use the product. Make sure you’ve aligned solutions around specific pain points. Not every potential client is going to use a product the same way. Leaving trial users to figure a product out without support is a good way to ensure they don’t pay. Instead, engage them and guide them towards subscribing.

#6: Encourage with a promotional offer

And finally, who doesn’t love saving money? Give trial customers an offer too good to refuse.  A discount over the first 3 to 6 months, for example. Successful software companies are willing to absorb reduced cashflow in the first few months if the result is a higher customer lifetime value (CLTV) and revenues.

Engaging with trial customers, creating urgency and demonstrating value are the most effective ways to encourage conversions during a freemium trial period.