Running a Freemium Model

 “Freemium” is definitely a buzz word in the product management world right now.  The product I manage offers a week-long free trial to anyone who registers.  Even without involvement from our sales team, these leads convert on their own at an 8.5% conversion rate.  There is a lot of talk in many industries on why and how to start a program like this, so I wanted to talk a little bit about the success of providing this “freemium” product.

 This presentation “How Giving Away Your Products Can Be Very Profitable”, given at Product Camp Boston by Chris Kirsch (@chris_kirsch) from Rapid 7, was extremely useful.  He reviewed why the Freemium model should be put in place and how it can be used to engage potential customers.  He noted that leads can be qualified much quicker, which ends in a faster sales cycle and ultimately more sales. As a product manager, I focus heavily on ensuring that the customer experience during this time is the best it could be.  We want to showcase our product without giving it away, while encouraging the user to remain engaged and active during the trial period.  Chris talked about ways to limit your trials through available features, length of trial, volume (or in my case, data), and audience which could mean private firms, students, etc.

PM’s must be involved in the creation of this model because you don’t want this type of offering to negatively impact your user experience.  For example, you may limit the data you show without necessarily changing anything about the user’s workflow. 

Do any of you have Freemium Models?  How often do you evaluate them?  How do you improve your conversion rates?  Is it better to leave sales out of the equation all together?

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