It’s a problem that is common across the SaaS landscape: how to convert free trial users to paid subscribers.
Especially now, during this time of economic crisis, the importance of focusing on your current users or even past clients, is made even more critical. When examining the paid activation rate of your free trials, what is your benchmark? Of course, it depends on your product and segment, but if you said your conversion rate is well below 10%, you’d be in the majority.
At BuzzBoard, we work with many enterprise tech companies that target the small to medium-sized business segment, and they struggle with the problem of mining their free trial rosters. Over the past six months, we’ve analyzed more than five million of these free trial account records from leading companies. During this process, we’ve identified several common themes and recommendations. The accepted SaaS industry playbook encourages everything from:
- Creating a sense of urgency with the free trial user
- Sending emails at the end of their trial period
- Conducting personalized demos and outreach programs
All these recommendations are sound, however, they often result in failure due to bad data, or a lack of data—both of which can be addressed.
As the old adage goes: garbage in, garbage out.
If your company is like most, the amount of information that you require a new user to submit is fairly minimal. Most likely, it only consists of a person’s name, email address, and maybe the company name. Ninety-percent of the time, what is lacking is a valid URL or business website. Without this critical piece of data, there’s little visibility into the DNA of the business: its revenue, headcount, and many other important growth signals.
It’s incredibly difficult for a company’s marketing or sales team to offer personalized outreach without knowing more about the business they’re trying to reach.
Enrichment and Segmentation
Your first step is to enrich the customer data record by locating the company’s URL. This will allow you to append its record with hundreds of useful signals and data points that answer questions such as:
- Is the business currently hiring new employees?
- Are they actively running advertising/marketing campaigns?
- Are they a big content creator, frequently posting new blogs and videos?
- Have they recently purchased a new tech platform such as a payroll, e-commerce, or marketing automation software?
When these insights are gathered and attached to a free trial user’s record, it enables a personalized marketing approach. Also, once your CRM records are enriched, you can begin to segment and prioritize.
Most companies create segments based on levels of user engagement. While this has great merit, it doesn’t take into account an SMB’s “outside the product” traits and characteristics. The goal of 1:1 marketing is more achievable when your front-line teams have a 360 view of the target business. For example, an in-depth understanding of the business industry or category can make a critical difference. If a trial user entered “consultant,” as their business category, what does that tell you about their business and their current or future needs? There are hundreds of types of consultants and there’s a big difference between an IT consultant and a financial consultant’s practice. Once you’ve narrowed down the business category, you can then layer in hundreds of growth indicators, including employee size, the company’s hiring trends, data usage, activity on social platforms, etc.
How to Leverage Your 360 View of a Business
Now that you have a full profile and understanding of your trial user, you can engage in more personalized outreach. Of course, with most small businesses receiving close to 100 snail mail, email, social, and telephone inquiries every week, cutting through the noise getting their attention is no easy task. Creating a sense of urgency is a popular strategy for the obvious reasons and most companies do that by sending a warning email that the free trial will soon expire. However, these types of emails are often met with limited conversion success. Many of our clients find that leveraging a business’s competitors is a more successful way to spark engagement, which leads to a demo session, which in turn leads to conversion.
Most businesses are interested in learning about their competitors—and specifically, the competition’s marketing strategy and returns. SMBs are no different. The good news is that competition data is one of the signals that can be added to the record of a free trial account and used in personalized outreach to that prospect. If you send an email or make a call with the intent to tell the business owner what is wrong about his or her business, your chances of getting to a demo or conversion are small. However, you’re highly likely to get their attention when you send an email that shows how their business ranks/compares with several similar businesses in that industry and locale, along with an offer to give them a deeper dive into more competitors.
Reimagine the outreach call in this scenario:
“Thank you for using our product. I’d like to share some valuable information about your competitors. Better yet, is there a specific competitor that you’d like information about? I’d be more than happy to show that to you.”
Now that you have their attention, you can demonstrate an understanding of their specific business landscape, educate them about the benefits of your product/service, and make a compelling, personalized pitch about how it could give them a competitive edge.
Better Data Leads to Higher Conversion Rates
Ask a SaaS marketer how to go about converting free trial users to paid subscribers and you’re sure to get a long list of preferred tactics, best practice email templates/call scripts, and lots of benchmarks. However, one foundational, undisputed piece of advice is that the more good data you can gather on your freemium/free users, the better you can conduct personalized outreach. And better outreach means higher conversion rates.
The good news is that collecting the data for a 360 view of the business (the specific services it provides, budget, growth trajectory, etc.) is doable—and worth it. Over the course of the next few weeks, we’ll be sharing more examples and success stories. We welcome hearing your thoughts and learnings along the way.