How Analytics Can Unveil the Hidden Treasures Your Freemium Product is Hiding

Sometimes you need to take a close look at your user personas and how potential customers perceive your pricing page. You might be keeping your best customers from paying you, even though they really want to!

This post was sent to us by Digital Pigeon. It’s a detailed account of how a free version of a product can be both a curse and a blessing…

A Little Background

As a relatively new SaaS platform, and a late entrant to a crowded file delivery market, Digital Pigeon has been positioned as a premium service with a lean toward creative professionals. Our heaviest users are creative agencies – design, advertising, video, and audio production. This is because of features like instant media previews for images, video, and audio files, so they can be viewed in the browser, tablet, or phone before (or often instead of) being downloaded.

Our plan offerings were grouped into 3 main options:

  1. Multi-user plans
  2. Single user accounts with all the features
  3. A cheaper “basic” plan to capture those who like our ease of use and speed but do not need to deliver creative media or professional custom branding

Blue-sky Thinking

Despite being a more premium B2B service, we wondered if we could make use of a free plan. We’d read all the “freemium is dead” blog posts and, for a long time, agonized over going down that path. Eventually, we did add a free option. We never really expected to convert free users, but hoped that their network effect would help drive exposure to our product. (Luckily, that’s something inherent in delivering files via email.)

One unexpected, but very welcome, side effect of adding a free plan was the blog reviews that started cropping up. Bloggers love to help get something free to their readership. This is one aspect of freemium that’s not often touched on and was a nice surprise to us.

Worrying Signs

Since adding better analytics to Google Analytics and then discovering user analytics with KISSmetrics, we noticed something astonishing going on with our paid conversions. We were seeing up to 20% of our paid upgrades coming from free plans. Were all the freemium naysayers wrong? We doubted it, and looked at the alternative conclusion.

While Google Analytics showed us that a lot of free users were upgrading to paid, KISSmetrics showed us that many of those free users actually were business users who fit our paying audience quite well. So why would these users sign up for the free account instead of trying the paid accounts that many end up moving to anyway? Our Professional account has features that set us apart from our competition and which can be experienced only during a trial. Obviously, this was a huge concern.

The Bad Egg

the bad egg

The place to look was our pricing table. As you can see, our free plan is first in line. So we thought the answer might be to downplay the free choice at the cost of turning off our freemium audience.

The next step was the trusty A/B test. Given that we had seen many other SaaS businesses move to minimizing their free offering, this was one of those tests where we were pretty sure of the outcome. But we needed to confirm how it would play out for our visitors. The results surprised all of us for a number of reasons.

The New Layout

the new layout

For the new layout, we moved the free option down to the bottom where it is out of the way. To keep the layout neat, we added another of our multi-user plans on the right, which shifted everything left.

The Results

Old Layout

Plan Type Signup Share
Free 73.50%
Basic Trial 16.20%
Professional Trial 7.30%
Teams Trials 3.00%
Total Conversion rate 32.90%

 

New Layout

Plan Type Signup Share
Free 48.80%
Basic Trial 28.80%
Professional Trial 19.40%
Teams Trials 3.00%
Total Conversion rate 29.50%

 

As you can see, with the new layout, the percentage of free signups dropped from 73.5% to below 50%. Importantly, the overall conversion rate dropped 3.4%. However, since this likely is only free users responding to the changes, we feel we easily can live with the loss.

The real surprise was the increase in Professional plan trials over the Basic plan trials. In the new layout, the Professional plan appears to be a more reasonable starting point because there are 2 more expensive plans on display.

Best of Both Worlds

In the end, we didn’t just scrap the original layout. In fact, we kept both. When we detect a visitor has arrived as a result of a search containing the term “free,” we display the original table. Why hide it considering we know what they’ve come for?

What We Learned

  • Visitors looking for something free will look hard enough to find it even if you downplay it.
  • The placement of plans can have a big effect on preferred plan choice. Context plays an important role in the perceived value of a plan.

Finally, think about your offer and check your analytics to see what kind of behavior is occurring. Figuring out the intentions of your “soon-to-be” users can really change your revenue outcome.

About the Author: Stuart Clayton is a co-founder of Digital Pigeon, a large file delivery service.

  1. Interesting study results. Thanks for sharing the actual data.

    This is a great example of how to set a product and pricing strategy.

    If you are looking for more resources on setting product and pricing strategies here is another good resource. http://www.profitworks.ca/blog/marketing-strategy/348-how-to-write-a-marketing-plan-for-a-small-business-in-7-easy-steps

  2. Very valuable information, indeed.

    The data is interesting and it complements other blogs I am reading of late about pricing strategies.

    Yet what has opened my eyes on possibilities is how you are showing two different landing pages depending from where visitors are coming to your site.

    You gave me and my team food for our thoughts, thank you

    Ciao
    Blasko

  3. very insightful post! thanks for sharing the sampled data

  4. I would have been quite concerned that moving the free account down to the bottom like that would have spelled out the wrong message and would have had a much greater impact on signups.

    Seeing the figures you shared says to me that I clearly have much still to learn before I can ever comfortably trust my own judgement in these matters.

    The fact that bloggers like to share something useful that is free is a very good point here, and is something that we should not overlook when planning our own strategies.

  5. Stuart, great post, thanks for sharing your experience here. A clarification, how are you measuring your conversion rate in your metrics above? Is that % of people who visit pricing page, the whole site, or calculated some other way?

    An observation, the link to your linked in page tells me we don’t share anyone in common so I can’t connect with you. You might want to put a twitter handle or something in your bio too.

    Best,

    John

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