Your SaaS probably spends a lot of time trying to get new sign-ups, right? Obviously getting people through the door is an important activity, but even more important is what happens once you have them there.
Do you have robust strategies for encouraging your customers to upgrade?
If you’re not getting the upgrades, you’re probably spending a lot of money to see people either exit, or linger on your freemium tier.
It makes sense to do what you can to boost the lifetime value of the customer and ensure you keep them around for longer. After all, it costs much more to acquire a new customer than to hang on to the old ones.
So what can you do? We’ve got a few strategies to help encourage those customer upgrades.
#1. Master The “Soft Sell”
“Buy our product” hardly ever works unless you’re selling ice cream in a heatwave. This is where the “soft sell” comes in. If you’ve successfully got people signed up to your free trial or freemium tier, the next step is to ensure activation happens.
Activation means that they’ve started to use your software and to realize value from it. It means you’re being proactive about customer success and ensuring that new signups get through key milestones in order to see that all-important value.
Why? Because the soft sell means that customers know and love your product first, even before it’s time to upgrade.
Dropbox is often used as an example, mainly because they are a SaaS who do the soft sell so well. There is no immediate insistence for an upgrade, though most new users will quickly find that they need more space.
Instead, Dropbox has provided users with several ways to earn free space, including “take a tour of Dropbox” – a genius way to ensure new customers know where everything is and how it works.
One of the best ways to work on that soft sell is to ensure that new signups actually are using your product and know how to do so to achieve what they’re looking for. The idea is that you want to quickly become indispensable to them, so that upgrading is simply a natural next step for them.
#2. Track Usage
When is the perfect time to ask users to upgrade? Of course the answer is going to vary between SaaS, but tracking usage will provide you with a better idea of the optimum time to ask.
Say your product has some kind of built-in limit (for example, Buffer allows ten scheduled social media posts on their free plan). If you are monitoring usage and note that the customer is reaching limits of your free trial or freemium plan, that would be a good time to trigger an email which asks for the upgrade.
You could also trigger emails based on usage – where features which are only available with an upgrade are the logical next step for the customer. Using Buffer again as an example, their analytics tracking is not available on the free or tier two (“Awesome”) plans. Yet for someone who is using them a lot to schedule social media posts for business, analytics may be the next most logical step to ensure they’re optimizing their social media posts.
Tracking usage is about being relevant to the customer. Sure, you could blanket email everyone who is sitting on a certain level and ask for an upgrade. But, segmenting your audience so that only highly relevant messages are sent is going to be much more effective.
#3. Improve Your Activation Funnel
This is about looking at your activation funnel holistically – are there any speed-bumps which need smoothing out? According to Intercom, 40 – 60% of users who sign up for a free trial with your SaaS will use the software once, then never come back. Ouch.
Obviously, you’re never going to get the upgrade if people haven’t activated (AKA seen some value from your product) in the first place.
One method suggested by Kissmetrics to improve your activation funnel is to actually map out what your ideal customer flow looks like. This way, you can very quickly identify any signups who are off-track and reach out to offer assistance.
For example, here’s a flow Kissmetrics mentions for Airbrake:
- Signs up for Airbrake.
- Indicates which programming language they use.
- Installs and deploys a few lines of code in their app.
- Captures their first error.
- Marks their first error as resolved in their dashboard.
Once you’ve mapped out what your ideal flow looks like, you can also easily identify if there is any particular step where people are falling off. This is where you will want to investigate why – is there something “difficult” about the way it’s set up? Smoothing the activation journey will boost your odds of the customer seeing value and wanting your upgrade.
#4. Pricing Model
Pricing is often a painstaking thought process for SaaS. You don’t want to go so low that you lower the perceived value of your product, but you don’t want to price your ideal customers out at the same time.
When it comes to getting upgrades, the key is to be able to intelligently align user experience with your pricing. What extra features are people willing to pay for? How significantly is their experienced improved by moving to a paid tier?
As Lincoln Murphy points out, pricing really needs to be heavily tied in with value. What your competitors charge may be a consideration, but it shouldn’t be your main consideration. Assuming that you’ve built something which uniquely solves a problem better than others, the value you deliver to customers should be the main pricing consideration.
#5. Features To Encourage Upgrades
Of course features are heavily tied with pricing and with the likelihood that the customer will upgrade. There are a few different schools of thought when it comes to upgrades and SaaS features:
- You could give them full access to your product on a limited-time free trial. Do your best to ensure that customers fully utilize the free trial and understand and use the various features available to them. Your aim is to have become indispensable to them by the end of the trial so that they are compelled to upgrade.
- You could limit core functionality at the freemium level. For example, Dropbox limits storage space and Buffer limits the number of social media accounts connected as well as the number of posts which can be scheduled at once. Again, the aim is to give customers enough of a taste of your product features that they simply must upgrade to get unlimited (or less limited) access.
- You could keep some features specifically for tier upgrades. This is one to be careful about, because how will the customer understand the value of the withheld features? If you take this option, you’re going to need very clear, accessible education options to let customers know (emails, videos, etc.). You’re also going to need to have tested and clearly understood which feature upgrades will be of value to customers, otherwise people will simply remain on the next tier down.
Getting the customer to upgrade is usually the ultimate goal of a SaaS. Hopefully, once they’ve upgraded, you have a devoted user and have increased average customer lifetime value.
There are a number of ways you could encourage customers to upgrade, but one of the critical steps is ensuring that they see value from your product first. People don’t tend to impulse buy a SaaS product – they need to see themselves achieving some kind of goals from them.
Look at your pricing model and features, improve your activation funnel, and track usage so that you can send timely, relevant offers. It is often the “soft sell” which will achieve the upgrade.
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