🆓 How to Compare 4 Free-to-Paid Conversion Strategies...
4 effective customer conversion strategies for your business, each suited to different types of users and product needs: Free Trial (8–25% conversion rate), Reverse Trial (7–21%), Sales-Assisted Freemium (5–15%), and Self-Serve Freemium (3–8%). Learn which model could work best for you based on your target audience and product complexity.
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Freemium, free trial or reverse. It’s not only for SaaS. These days almost every business type has some form of sales funnel that seeks to get people aware and testing your product, with an eventual (percentage of total new users) sale in sight.
The question is: Which one will work for what you’re building?
And the answer is… way more complicated than you think (obviously). Because companies don’t just publish their internal conversion info. HOWEVER, good boys Kyle Poyar And Lenny Rachitsky (from Lenny’s Podcast) did us all a solid and collected some data on US companies’ conversion rates (percentage of new users converted to paid).
Here’s what we learnt…
What delivers the highest conversion rate
- Free Trial: 8–25% : This is when you offer free access to your full product for a limited time (14 to 30 days), and when it expires, the person has to actually start paying or stop using the product (lose access).
- Reverse Trial: 7–21% : When you give users access to your top-tier product for a limited time (14 to 30 days), after which they can either pay or revert or a low-tier free version.
- Sales-Assisted Freemium: 5–15% : Freemium is the classic SaaS model where you have various pricing models, one free (with limited features) and then tiered paid options (with more features). Importantly, Sales-Assisted Freemium is where you are guided by (and often even HAVE to interact with) a sales team or real people to purchase the higher tier.
- Self-Serve Freemium: 3–8% : This is the same thing, but the entire onboarding and up-tiering process is automated. Users almost never have to speak to another human to use the product and upgrade etc.
Note: This is obviously US data, so it might be different here in SA. But still worth noting that the all-or-nothing Free Trial is so powerful.
Which one is right for your product?
Turns out it depends on who you’re selling to. Since more people complicate decision-making (including purchases), companies tend to take longer to convert and do so at a lower rate (interesting insight for those in SA being told to go B2B, no?).
Conversion rate based on size:
- Individuals and very small businesses: 5–25%
- SMEs: 4–20%
- Larger companies: 4–18%