How many customers does your SaaS have lingering on a freemium product tier? How many trial customers simply never upgrade and go to a paid service?
For every SaaS, clinching the customer upgrade is of utmost importance. It’s about boosting the lifetime value of the customer for your company, as well as hopefully generating loyal users who are advocates for your brand.
We’ve touched on strategies for getting customers to upgrade before, but this time around we want to look at a few extra ideas, such as how getting inside your customer’s head can help you make the sale…
Psychology of the Sell
It doesn’t hurt to understand a bit about what goes on inside a customer’s head when it comes to clinching a sale.
ConversionXL published a great piece recently about psychology and lead nurturing. The law of reciprocity was one thing discussed. Quite simply this means that the more you give, the more you are likely to get in return because people like to return the favor. As they state, this is a powerful strategy and should be deeply ingrained into any lead nurturing program.
Source: Content Propulsion
Practically speaking for SaaS, giving might look like all of those tips you provide in your lead nurturing campaigns to help customers achieve success. Look to deliver unique value, something through which a customer could really see results.
How does this relate to clinching upgrades? Reciprocity again. If the customer sees great results from the information or tips you gave them, they’re more likely to want to pay you back by upgrading.
This is another psychological principle outlined in the ConversionXL piece: when we need to make a choice about some product or service, we will usually pick the one we’ve been consciously or subconsciously exposed to the most. Humans favor the familiar.
This proves the importance of those emails you’re regularly sending out, the social media posts and the paid advertising. You can’t afford to take your foot off the gas once a customer signs up because you need to be ensuring that you’re still featuring often in their minds.
“Lifecycle emails” simply means sending the right email to the right customer at the right time. In terms of clinching customer upgrades, this means being on top of where customers are at with their free trial and which milestones they have or haven’t achieved. (Note: this could also be known as a “behavioral email”, though Totango treats them differently in the image below).
It will be difficult to convince a customer that they should upgrade to the next tier if they’re seeming to struggle with the free trial. Activation is the goal of SaaS here and this means that the customer has taken critical steps or used crucial features to the point where they are realizing value from the product.
If you know when customers haven’t achieved those milestones, this is where lifecycle emails come into play. Not sure how to place the code on your website? Here’s a quick guide. Need to know how to set up a new product? Follow these steps.
Of course the other side of lifecycle emails is getting in when the customer has achieved milestones and seen results. What’s next? Did you know that when you upgrade, you can access (X features and how they help)?
Use Promotions or Not?
Whether or not to use promotions to encourage upgrades is often debated among SaaS experts. On the one hand, people worry about devaluing the product or having people sign up simply because it’s on promotion, on the other hand, a well-run promotion can help draw a large number of upgrades.
If you’re going to do it, we suggest being very targeted about how you go about it. It would be easy to blast a promotion all over social media then have all-comers sign up, but you probably won’t get the numbers sticking around which you aim to have in the first place.
A more effective way of using promotions can be to segment your current audience based on their activities and make an offer only where it is relevant. For example, you might offer freemium customers who use your product at least twice per week a free one month upgrade to test out additional features. This way, you’re only targeting people for whom your promotion will have relevance.
Reach Out in Person
Many SaaS are reluctant to pick up the phone. You’re busy with a dozen different things in your business and the online nature of SaaS can push more old-fashioned methods further out of mind.
When you think about the standard kind of SaaS onboarding process, it tends to be very low-touch, especially in lower-priced SaaS who are not necessarily targeting an enterprise market. Often the process goes something like: customer signs up to free trial or freemium tier after finding your SaaS through some kind of online marketing, customer receives a few emails telling them how to use the product or giving success tips, trial period ends, customer either signs on or leaves.
It absolutely makes sense to have a process like this because that’s how you get to scale a SaaS, but if you don’t talk to people, how do you know what they’re really thinking or feeling about your product? The advantage of picking up the phone, even for just a sample of your clients is that you get actual immediate feedback. The customer may be more inclined to provide extra feedback which they might not if they’re filling out a survey or typing up comments.
Talking to your customers over the phone is also a good way to build relationships and increase trust. You’re putting an actual concerned voice behind your SaaS and are there to listen to the customer. You get to address any concerns they have and can more easily speak to the advantages of upgrading by relating directly to the customer’s own situation.
Value is Number One
The twenty extra features you provide with an upgrade might seem like good value to you when you consider your development costs, but that does not mean they will equate to value for your customers.
Value is rooted in customer success and may look slightly different for any given customer. The savvy SaaS stays in tune with customer sentiment and understands exactly what their clients are looking for in terms of value. They’re not going to upgrade for the extra twenty features, it’s more likely that they will upgrade for that one feature which signifies value to them because it makes something significantly easier in their lives.
This is where taking the time to reach out in person can yield very useful information. Are there any common themes coming out across your customer base? In a Price Intelligently study for example, they found that the model of allowing extra users on an upgrade is rarely perceived to be where value is found for users. What do users care about instead? Generally measures that impact their bottom line or ability to accurately measure, such as new contacts, extra sales or reporting functions.
For most SaaS, if you build a model based on upgrading for extra users, there is a natural ceiling in terms of number of upgrades that you get. Say your SaaS product is a reporting or analytics tool, how many people in one company realistically need to use it? This is definitely something to consider when creating your pricing tiers.
There’s no way around it, clinching customer upgrades means a lot of work for SaaS in terms of following through with effective lead nurturing strategies.
The psychology of getting the sale really underpins everything that you do in the pursuit of customer upgrades. Making sure you have sufficient exposure and deliver value with timely lead nurturing efforts is key.
How does your SaaS ensure sign-ups are realizing value?