If you work at a SaaS company, you’re likely already evaluating or executing Product-Led Growth (PLG). But there are many lessons to be learned from PLG beyond pure play SaaS use cases — especially when it comes to driving efficient growth. Just because you are in a different business model, you can still learn, leverage, and customize PLG concepts for your GTM use case.
The power of leveraging ‘free’ is one of those concepts.
First, A Quick PLG Primer
In a PLG strategy, the product itself is the primary driver of customer acquisition, expansion, and retention. It does this by allowing the product’s capabilities and user experience to speak for themselves. PLG can offer an effective way to engage prospects and convert them into customers by demonstrating value upfront, without the friction and heavy lifting typically associated with traditional sales processes.
This approach can be particularly effective in markets where users are already familiar with the category or where the product’s value proposition is clear and can be easily understood through direct interaction. A key part of what makes PLG work is how it lowers the barriers between your prospect and your product by making it easy to experience your offering.
6 Ways to Leverage ‘Free’ in Your Offering
PLG puts value before sales and monetization. That’s the key. PLG companies often do this by putting a free component front and center in their offering and in the customer journey. This free component supports the self-directed, digital-first CX and lower friction of a “use-it-first” experience — that hopefully leads to buyer trust, faster value realization. and virality.
There are different ways to leverage that free component in your offering and value proposition. Here are the six most prevalent and popular:
1. Self-Directed Demo
2. Free Trial
3. Reverse Trial
4. Freemium
5. Proof of Concept (PoC)
6. No Free Component — Premium
Each of these approaches has its unique characteristics, advantages, and disadvantages. These are directly applicable, if you are a SaaS company, but even if you aren’t, read through these and ask yourself: “How and where could we effectively leverage “free” into our go-to-market motions?”
We define each approach and explore their pros and cons below.
Note: ‘Free’ isn’t ever really free — to either the seller or the buyer, especially in B2B. Both parties are investing their time, attention and other resources into the process. It’s more of an investment in lower friction and shifting the perceived, and actual, risks of B2B buying.
Self-Directed Demo
Definition:
A self-directed demo is a type of product demonstration where potential customers can explore and interact with the software at their own pace, without the direct guidance of a sales or customer service representative. This model typically involves a fully functional version of the software, accessible through the company’s website or a dedicated platform, allowing users to experience key features and functionalities firsthand.
Pros:
- Autonomy for Users: Allows potential customers to explore the product on their own terms and focus on features most relevant to their needs.
- Scalability: Efficiently reaches a larger audience without the need for one-on-one demos by sales representatives.
- Immediate Accessibility: Available 24/7, accommodating users in different time zones and schedules.
- Reduces Pressure: Users can explore the product without the pressure of a sales pitch, leading to a more comfortable and authentic experience.
- Data Collection: Enables the collection of valuable data on user behavior and preferences, which can inform product improvements and targeted follow-up strategies.
Cons:
- Limited Personalization: May not address specific questions or unique use cases as effectively as a guided demo.
- Potential for Misunderstanding: Users might miss out on important features or misunderstand functionalities without expert guidance.
- Less Opportunity for Relationship Building: Reduces direct interaction with the sales team, which can be crucial for building customer relationships.
- Overwhelm or Confusion: Users unfamiliar with the type of software might find a self-directed demo overwhelming or confusing.
- Dependence on User Interface (UI) Design: Heavily relies on intuitive UI and clear instructions; poor design can lead to a negative user experience
This approach works well for products with intuitive UI/UX, especially those that are self-service tools or platforms with clear, immediate value propositions, and those offering extensive customization options. However, it’s less suited for highly specialized or niche products, those needing detailed explanations, or early-stage products still refining their user experience.
Free Trial
Definition:
A free trial is a temporary, full-access offering of a SaaS product or other offering, usually lasting a set number of days. During this period, users can use all or most of the product’s features without any cost.
Pros:
- High Conversion Potential: Encourages sign-ups and provides a hands-on experience, increasing the likelihood of converting trial users into paying customers.
- User Data Collection: Gathers valuable insights on user behavior and preferences, aiding in product development and targeted marketing strategies.
- Risk-Free Evaluation: Allows potential customers to evaluate the product without financial commitment, reducing their perceived risk.
- Market Feedback: Offers an opportunity to receive direct feedback from users, which can be used to improve the product.
- Brand Exposure: Increases brand visibility and product awareness, as users are more likely to try out a free offering.
Cons:
- Short Engagement Window: The limited trial period may not be enough for users to fully evaluate and appreciate the product’s value.
- Resource Intensive: Demands significant customer support and resources to ensure a positive user experience during the trial.
- Potential for Low-Quality Leads: Attracts users who are only interested in the free offering and have no intention of becoming paying customers.
- Conversion Rate Challenges: Transitioning users from free trial to paid subscription can be challenging and requires effective follow-up strategies.
- Dependency on First Impressions: The product needs to make a strong, immediate impression to convert trial users, which can be demanding in terms of performance and feature set.
The free trial model is a popular and often effective way to introduce potential customers to a product. However, its success heavily depends on the product’s ability to quickly demonstrate value and on effective strategies to convert trial users into paying customers.
Reverse Trial
Definition:
In a reverse trial, users initially have access to all features of the software, which are then progressively restricted. To retain full access, users must upgrade to a paid plan.
Pros:
- Immediate Full Access: Users experience the full suite of features from the start, allowing them to see the complete value of the software.
- Encourages Upgrades: As users become accustomed to the advanced features, they are more inclined to upgrade to continue accessing them.
- Enhanced Engagement: Early exposure to all features can increase user engagement and investment in the product.
- Clear Value Proposition: Demonstrates the full capabilities and benefits of the product upfront, making the value proposition clear.
- Data Collection: Allows for the collection of early usage data, which can inform product improvements and customer support.
Cons:
- Potential User Frustration: Gradual restriction of features might lead to user frustration or resentment.
- Complex to Implement: Requires a sophisticated system to progressively lock features without disrupting user experience.
- Risk of Value Misjudgment: Users might not fully appreciate the value of premium features if they are taken away too soon.
- Reduced Trial-to-Paid Conversion: Some users may feel coerced into paying and could resist upgrading out of principle.
- Dependency on User Understanding: Requires users to understand and remember the benefits of the full feature set, which they might not do once features start being restricted.
The reverse trial model can be effective in demonstrating the full potential of a software product, but it requires careful planning and execution to avoid user dissatisfaction. It works best when the value of the premium features is clear and easily understood by the users.
Freemium
Definition:
In a freemium model, a basic version of the software is offered for free indefinitely, allowing users to access core features and capabilities. Users have the option to upgrade to premium versions for access to more advanced features and enhanced capabilities.
Pros:
- Low Barrier to Entry: Free access attracts a large number of users, which can attract a broad user base.
- Organic Growth: Satisfied free users can become brand advocates, promoting organic growth through word-of-mouth in their community and social sharing.
- Market Intelligence: A larger user base provides valuable data on user preferences and behavior, which can inform product development and marketing strategies.
- Customer Segmentation: Allows for natural segmentation of users, where those needing advanced features can easily be identified and targeted for upgrades.
- Building User Trust: Provides users the opportunity to build trust and familiarity with the product before committing financially.
Cons:
- Lower Conversion Rates: A significant portion of users may remain on the free version, leading to lower-than-anticipated conversion to paid plans.
- Resource Allocation: Supporting a large number of free users can strain customer support and infrastructure resources.
- Perceived Value: The availability of a free version can sometimes lead to a perception that the product is of lower value.
- Revenue Delay: The freemium model often leads to a delayed revenue stream, because it takes time for free users to convert to paying customers.
- Challenge in Feature Differentiation: Determining which features should be free and which should be paid can be challenging, which can impact user satisfaction.
The freemium model is effective in market situations where the user base is large and diverse, and where the product design benefits from network effects. It’s crucial to carefully balance the features offered in the free and paid tiers to ensure that both are attractive to their respective user segments.
Proof of Concept (PoC)
Definition:
A Proof of Concept is a structured demonstration or trial used in the prospect’s real environment to showcase the feasibility and effectiveness of a software solution to solve a specific problem or achieve certain objectives for a potential customer.
Pros:
- Customized Solution: Tailored to address the specific needs and pain points of the potential customer, showing the product’s value in a relevant context.
- Builds Trust: Demonstrates the software’s capabilities and builds confidence in the product and the provider.
- Direct Feedback: Allows for immediate and detailed feedback, facilitating improvements and adjustments to better meet client needs.
- Problem-Solving Focus: Directly addresses and potentially resolves a critical issue for the customer, illustrating the practical value of the software.
- Relationship Building: Fosters a closer relationship with the customer through collaborative problem-solving and direct interaction.
Cons:
- Resource Intensive: Involves significant investment in terms of time and resources to set up and execute effectively.
- Uncertain Conversion: Success in a PoC does not automatically guarantee a sale, as external factors may influence the final purchasing decision.
- Limited Scalability: Customized nature of PoCs makes them challenging to scale across multiple prospects.
- High Expectations: Can set high expectations that might be challenging to meet in standard product offerings.
- Dependency on Customer Engagement: Requires active participation and engagement from the customer, which might not always be forthcoming or consistent.
A Proof of Concept is best used when targeting high-value clients or in situations where the product’s value and capabilities need to be demonstrated in a client’s specific, real-world environment. It is particularly effective for complex, high-stakes solutions where the customer needs assurance of the product’s efficacy in addressing their unique challenges.
Premium
Definition:
A premium model is a straightforward paid subscription to use the software or the offering. There is no free version, and users must pay to access the service.
Pros:
- Immediate Revenue Generation: Every user contributes to revenue from the outset, ensuring a direct return on investment and aiding in cash flow management.
- High-Quality Customer Base: Tends to attract customers who are committed and see intrinsic value in the product, potentially leading to higher customer lifetime value.
- Simplified Sales Process: Without a free tier to manage, the sales process can be more straightforward, focusing on acquiring paying customers.
- Enhanced Perceived Value: Charging for the product from the beginning can create a perception of higher value and quality.
- Resource Allocation: Resources are focused on paying customers, which can lead to better customer service and product development.
Cons:
- Barrier to Initial User Acquisition: The requirement for upfront payment can deter potential customers who are hesitant to invest in a product without trying it first.
- Competitive Disadvantage: In a market where competitors offer free trials or freemium models, a premium-only approach might be less attractive to cost-conscious prospects.
- Limited Market Reach: Potentially excludes a segment of the market that is unwilling or unable to pay without experiencing the product firsthand.
- Dependence on Strong Brand and Marketing: Requires robust marketing efforts and a strong brand reputation to convince users of the value without a free trial.
- Risk of Higher Churn Rate: Customers who have not had the chance to try the product before purchasing might be more prone to churn if the product doesn’t meet their expectations.
Which approach should you use?
Let’s get down to the real question: which method for leveraging ‘free’ suits your GTM strategy best? Remember that it doesn’t have to be a one-size-fits-all answer; it’s about matching the approach to your unique product, your business aspirations, the special features of what you’re offering, and your ideal customer profile..
Think of it this way: How can you use ‘free’ to not just grab attention, but also build trust and early value with your prospects and customers? As you saw above, each approach has its own strengths and fits different scenarios.
Need help thinking through how to do this in a smart way that is aligned with your GTM strategy and well-integrated into your current growth program? We’ve got your back.
Drop us a message and let’s strategize together. We’re here to help you create the right initial experiences with your ICP and convert them into lasting and profitable customer relationships.