Leveraging User Behavior for Better Lead Scoring in a PLG Model

Leveraging User Behavior for Better Lead Scoring in a PLG Model

Without analytics, tech teams rely on insufficient demographic data or vanity metrics, hindering their ability to personalize services and understand customer preferences. So far, Openprise estimates that only 35% of revenue operations leaders possess full confidence in their capability to score leads accurately.

 

User behavior insights in a product-led growth (PLG) model lead to more accurate lead scoring, better resource allocation, and increased revenue generation. Adopting PLG strategies and aligning investments with user needs and market goals drives sustainable growth and profitability. Analyzing user behavior enables businesses to make informed decisions, enhance the user experience, and maximize their data’s potential for success.

 

How to Deploy User Behavior & Analytics?

 

User behavior denotes all the actions a user performs on a website or mobile app. It includes factors like time on the page, the number of pages visited, how people interact with different features, and also friction they encounter while using the product, etc.

 

Behavioral analyses help companies gain detailed metrics and segmentations to identify bottlenecks within their software or service, gauge customer reactions to investment messages, assess satisfaction with feature changes, determine the effectiveness of ads, analyze the conversion journey timeline, and improve the overall success of their product for customers. However, utilizing behavioral analysis effectively can be challenging, often due to the company’s lack of clear vision.

 

Exploring the Advent of User Data

 

McKinsey estimates that businesses capitalizing on customer data insights enjoy 85% greater revenue growth and over 25% higher gross margin than their competitors. As a result, businesses have begun to utilize behavioral data, ushering in a period of hyper-personalization in which firms compete to get a more nuanced knowledge of customer interactions.

 

Measures of user behavior on a website or mobile app, such as the amount of time spent there, the number of pages seen, the number of times a feature is used, and the amount of difficulty experienced by the user, are all considered part of user behavior. In a product-led growth (PLG) paradigm, organizations may improve their lead-scoring procedures by analyzing and understanding user behavior, resulting in more precise identification and prioritization of new customers.

 

ProductLed found that 91% of B2B SaaS businesses have already adopted the PLG strategy and want to boost expenditures in PLG efforts this year. This exemplifies the increasing appreciation for the value of exploiting user behavior inside a PLG framework.

 

Deploying User Behavior Data for Lead Scoring & PLG

 

Although various factors beyond your product alone influence user behavior, Lead scoring is improved as businesses learn how customers interact with a product. The possibility of a lead becoming a paying client may be estimated using data on user behavior as signs of interest, engagement, and intent. Considerable insight into a lead’s interest and propensity to buy may be gleaned from their use patterns, feature preferences, and engagement with marketing material.

 

Hence, pursuing better data-driven choices and more efficiently deploying sales resources is possible by analyzing user behavior in a PLG model. Sales teams may increase their conversion rate and revenue creation by focusing on the leads with the highest potential of converting into customers.

 

Leveraging behavioral data is a critical but overlooked component for measuring the effectiveness of Key Performance Indicators (KPIs) and making necessary adjustments. In PLG companies, the product serves as the primary source of data collection, w essential for driving growth and generating revenue. By analyzing this data effectively, companies can uncover valuable insights that guide their expansion and success.

 

3 Pillars of Efficient Product-led Growth

 

Gainsight outlines that “product experience data combines a wider data set, such as user sentiment, that allows teams to pull insights about intent, quality of user’s customer journey, and effective ways to expand each user’s product adoption.” 

 

Hence, forward-thinking businesses may learn more about a lead’s potential for conversion based on their activities in using a PLG model to score leads based on their behavior. Particularly in sectors where customer interactions can be tracked and analyzed in great detail, this method enables more efficient prioritization of sales efforts and improved decision-making. According to Open View Partners, 3 pillars empower viable PLG:

 

  • Pillar 1: Design for the end user – 
  • Designing for end users means prioritizing their needs and understanding the problems they want to solve. Successful product-led growth businesses put the needs of real people first and commit to continuously improving their products to effectively address those needs. Companies can create a user-centric experience that drives satisfaction and loyalty by listening to users and making consistent enhancements.
  • Pillar 2: Deliver value before capturing value – 
  • In a give-and-take relationship with users, providing value upfront before expecting anything in return is essential. Product-led companies focus on delivering value quickly, often through free trials, freemium models, or open-source offerings. The key is for users to experience the product’s value first-hand, either by solving their problem quickly or by reaching a pivotal “aha” moment. By simplifying the initial product experience and removing barriers, companies ensure users can easily access and recognize the product’s core value.
  • Pillar 3: Invest in the product with go-to-market intent – 
  • The upfront investment in creating software can yield substantial long-term benefits. PLG companies understand that the cost of delivering value to additional customers is significantly lower than that of professional services. This includes gathering comprehensive product data to track user behavior, establishing a growth function that enhances distribution and value capture, and conducting go-to-market experiments to optimize the user journey. Companies can drive sustainable growth and profitability by aligning product investments with acquisition, conversion, and expansion goals.

Bottom Line

 

Acquiring clarity on the desired user path, a clear product roadmap, achievable goals, understanding market demands and product change requirements, and specific objectives such as revenue generation or increasing customer satisfaction are essential. 

 

Thus, those interested in leveraging user behavior data to improve lead scoring companies must define their expectations and ideal user paths before analyzing data, as generic data alone cannot magically solve unidentified problems. With predefined expectations, teams can identify deviations from the ideal path and make necessary adjustments to enhance the user experience and lead scoring, improving the PLG model.

Free trials, when used effectively, help users understand the potential benefits of a product or service without any initial financial commitment, thereby reducing entry barriers and making the decision process smoother. From a business perspective, free trials can significantly drive user growth and conversion rates.

Product qualified account framework

Growth Matters – Sales Leadership in the Product-Led Era by Asya Kotler, VP of Sales @ Komodor

The modern sales landscape is a labyrinth of Product-Led strategies, data-driven decisions, and interdepartmental synergies, making it a complex terrain to traverse. As our ‘Growth Matters’ series progresses, we aim to shed light on these complexities and chart a clear course through them.

For this expedition, we’ve enlisted the help of a veteran in this field who is adept at steering through these demanding dynamics. We’re pleased to introduce Asya Kotler, strategic advisor to early stage SaaS, B2B companies and VP of Sales at Komodor, whose broad experience and proficiency will enable us to explore these challenges in depth and equip us with the knowledge to navigate them proficiently. Welcome aboard, Asya!

Navigating the Changing Role of Sales in Companies Embracing PL Strategies

Successful sales leadership relies on three fundamental pillars: Strategy, Process, and People. And like a timeless classic, strong foundations are as relevant today as they were 10 years ago when I started my sales career. 

However, a lot  has changed, mainly the method in which businesses are achieving growth. Growth strategies have undergone a dramatic shift, requiring sales leaders to rethink their approach to building these pillars. And I will explain.

Before: 

Strategy

Sales are orchestrating top-down processes such as product demonstrations and evaluations. Their efforts are concentrated on activities like defining the Ideal Customer Profile (ICP), executing sales-driven initiatives to boost customer acquisition (including cold calling, face-to-face engagements, and social selling), and ultimately closing deals.
Marketing aligning its efforts to support the sales team. This involves providing collateral, generating leads, and creating promotional materials to aid the sales process. And Product is responsible for fulfilling customer commitments (to help during or post sale) and balancing it with execution of the product roadmap. 

Process

Sales are receiving a consistent flow of marketing qualified leads (MQLs) from Marketing and build a Process that will ensure the highest conversion from MQLs defined as sales qualified (SQLs) to paying customers. 

Since the Sales team holds the sole ownership for driving revenue the Sales leader’s efforts will be invested into: 

  1. Defining and adjusting the ICP and qualification metrics for MQLs and SQLs
  2. Building a strong partnership between sales and marketing to optimize the top of the funnel
  3. Optimizing the sales cycle to achieve higher conversion rates
  4. Setting up reporting based on key metrics to identify gaps in the sales process and assessing the efficiency of individual contributors on the team

People

Defining the hiring capacity, hiring and training new sellers in a sales-led company is a notorious  overhead. The pitfall in this strategy when it comes to people is that the company’s growth is directly linked to each seller. Miss on the number of hires and you have a “floating” quota that is not directly covered, overhire and you have cost overhead which is never a pleasant conversation with the C-levels. This became even a greater challenge in 2022 when efficiency and cost of acquisition became top priority on any sales org as CFOs put a stop on the hiring rush we experienced in 2021. 

While traditional sales-led approach continues to prevail in the market, and most of us are buyers of products which fully execute this strategy, many of the organizations, especially B2B SaaS companies, have been adopting Product Led strategy in various versions. From freemium to free trial, the adoption of the Product Led strategy brings about a complete transformation in the sales process, the criteria for talent acquisition (as well as the timing of it), and requires alignment with more departments across the organization.

Now: 

Strategy

Product-led, user’s experience within the product takes precedence before any buyer interaction. It can vary from zero-touch models, directly leading to payment, to variations of low-touch, encompassing free trials transitioning to paid plans, and even high-touch scenarios with assisted onboarding leading to paid subscriptions.

Regardless of the specific approach, the sales team continues to play A HUGE ROLE in enabling revenue growth both through new customers but also through dedicated work with the CS team on existing customer expectations.

Marketing efforts in a product-led strategy revolve around increasing product awareness, driving user engagement, and enabling users to make informed decisions by providing educational content, tutorials, and resources.

Product efforts include qualified pipeline generation, building a zero-touch onboarding, driving adoption and stickiness through aha! moments and meaningful interactions between the user and the product. 

A common misconception about PL strategy is that companies who embrace this model do not require sales to drive revenue. In fact, all the biggest Product led companies such as Atlassian, Miro, Canva, Inrecom (you name it) drive more than 70% of revenue through a product lead sales (PLS) strategy where product is the primary driver of user acquisition, generating high quality sales pipeline.

By applying this strategy, the sales leader can build a highly efficient, data driven sales process and make more cost-effective hiring decisions. Let’s dive into it a bit to understand how. 

Process

For most of the companies undergoing a transformation from sales to product led, the most meaningful difference early in the process will be in the method of pipeline generation. Previously we mentioned how sales used to be the owner of a self-generated pipeline on one hand and worked with Marketing as a lead generation engine. 

Is the sales leader still own the top of the funnel – yes. 

Is the sales leader still responsible to verify the quality and quantity of the pipeline – yes. 

But the sales leader is no longer the sole revenue driver and this changes things! 

The prospects who sign into your platform are users, meaning end users, meaning they don’t pay or make organizational decisions (in most cases) which means the sales team is no longer looking at them as MQLs or hot-handedly approaches them. 

This is where Product takes ownership in creating aha! moments and driving adoption. 

The Product team has to make data-driven decisions through unique user behavior and cross-reference of multiple users from the same account, to qualify the value of the Account (PQA) prior to sales interaction. 

From this point, the PQA is handed over to Marketing for nurturing and targeting. Marketing generates MQLs, based on the ICP sales defines, and this is where sales takes over. 

The sales leader now invests most of their time on: 

  1. Build strong partnership between sales and product to optimize PQA definitions and hand over processes, including high-touch vs. low-touch criteria. 
  2. Build a strong partnership between sales and marketing to optimize the account based targeting, MQL definitions and multi-channel nurturing.
  3. Optimizing the sales cycle to achieve higher conversion rates between the stages in the sales process – Always true!
  4. Set reporting based on key metrics that will demonstrate the gaps in the sales process and the efficiency of individual contributors on the team  – Always true!

By generating a data-driven pipeline, building user journeys that help the sales effectively demonstrate user adoption and product value to the buyer, the Product team takes shared ownership of revenue generation and that is the most important change in the sales motion when it comes to product led sales. 

People

Since in PLS, the ownership over pipeline generation and qualification is shared between Product, Marketing and Sales, the required sales capacity for these activities decreases allowing the sales team to invest resources on strategic and focused subset of high intent accounts. 

Additionally, you will need less XDRs to generate and qualify pipeline, and less AEs to manage more accounts. Most importantly, you can scale the business faster without worrying about capacity gaps. Each individual can do more with less, making your cost efficiency higher and your CFO happier. 

Lastly, I wanted to lightly touch upon the pre-sales role. A lot can be said about the evaluation of this role over the years, but the most meaningful transformation when it comes to PLS is that users shouldn’t require support in installation or integration. Therefore, if in a traditional sales-led org you had pre-sales mostly responsible to lead the installation, nowadays, the solution engineers will help much earlier in the process. Oftentimes they will take ownership over in-app communication and help in bringing the buyer to a sales interaction through building a trusted relationship with the user. This is yet another great example for optimization opportunities PLS strategy carries. 

One can’t discuss the vast advantages PL models bring to sales efficiency without understanding the motivation and some of the key challenges organizations will need to be aware of prior to committing to this transformation. 

Redefining Sales in Today’s Tough Market

Anyone in a sales position today will tell you this: selling became 10x harder. According to Ebsta, 2023 B2B Sales Benchmarks Report, the main leading indicator to hitting the quota, pipeline velocity, dropped in Q1 2022 by 47% (QoQ) and from there the numbers are only getting worse: sales win rate dropped by 15% and the sales cycle lengthened by 32%. 

Whichever strategy you choose as your GTM, you need to make sure it is lightweight, efficient and highly adjustable. 

Being a Product-Led company puts you is a strategic position to move faster and scale, however, to maximize those advantages you need to address the following challenges: 

  • Resolve conflict between growth and sales teams 

For PLS to really work, sales, product, marketing, and customer success must form a unified revenue unit. The days of separate teams working individually towards a shared revenue target are over. The team needs Clarity and Structure. 

 There will be a lot of noise. There will be a lot of cooks in the kitchen. But it is the revenue leadership’s role (including Marketing, Sales, Product, and CS)  to establish clear boundaries and handover processes. This will guide team members on when to interact with leads and when not to, preventing negative user experiences. For instance, we want to avoid bombarding users with three emails, LinkedIn messages, and phone calls from different people in our company just because we’re eager. On the other hand, we don’t want to miss out on a highly relevant account because we’re unsure who the user is.

Decisions regarding outreach and follow-up methods should be data-driven and strategic, not driven by excitement or eagerness. To achieve that, you will need to: 

  1. Define your Ideal Customer Profile to identify the user, champion, and buyer. 
  2. Define the marketing responsibilities for low-touch automation and the sales responsibilities for high-touch and personalized outreach activities.
  3. Use data and AI-solutions to help define PQA and MQL criteria
  4. Over communicate, establish a handover process, hold weekly syncs, and define touchpoints for reviewing and adjusting as needed. 

Lastly, remember that PLS is a team sport, so ensure that all this data is clearly displayed on dashboards that the entire company can track and understand.

  • Optimize sales team efficiency and ensure the ability to handle increased pipeline

PLS strategy allows sellers to focus on high-impact activities. This may sound trivial, but for most sellers, reducing volume or changing the “more activity equals better results” mindset is hard not only from a business but also from a psychological perspective. 

Reaching real efficiency means you will have to let go of old habits and build towards the winning formula. 

For an early stage company taking first steps towards PLS, I recommend starting from a manual approach. Define a set of rules, mark the relevant account, define threshold for sales follow up vs. Marketing nurture. 

If the sales-touched volume decreases while outcome increases? You are on the right path. 

Most certainly, it won’t happen on the first iteration, this is why a weekly review and optimization are key. Once you create a repeatable process, it’s time to introduce automation: be it via sales automation for outreach, accurate and actionable CRM dashboards, and leveraging AI-powered tools for scoring and prioritization. Chat automation can go a long way to activating the user and help the sales team understand when is the right time to prioritize this account. 

  • Deal with complex enterprise sale that origin from self-serve

An average Enterprise process involves ~10 decision makers. Think about your seller trying to find all of them, connect, create personal relationships and all that, when the person actually using the product is way below in the food chain – making them almost a silent partner instead of the champion we need. 

This is a huge overhead and scaling your pipeline in this manner can lead to poor performance and seller burnout. 

If your company’s strategy is to sell to Enterprises through a PLS model – you better equipped Sales and Marketing with an ABM plan.  

Complementary to the user activation through the product experience, use ABM to multi-channel and actively push more users, with a higher rank in the company to join the account.
The marketing team will create highly personalized content and advertising to target individuals that were identified as potential champions. Distributing the effort can be done in the following way: product focus on users, marketing focus on champions, sales focus on buyers.

In any ENT deal, regardless of the user experience in the platform, you will be required to frame the pain, quantify it and build a business case that supports strong ROI. Meaning, even the most effective PLS motion will not replace a well curated plan aligned with the prospect needs and goals. 

Leveraging Product-Led Growth for ARR Success

Lastly, it is important to acknowledge that implementing a Product-Led approach is not a one-size-fits-all solution for every company, at every stage, or with any product or buyer. However, in today’s buyer landscape, it is crucial to harness the power of your users as a significant asset to achieve ARR goals, both from new customer acquisitions and existing partnerships, while simultaneously reducing reliance on expanding headcount across all revenue teams.

Product qualified account funnel

Crafting an Effective Account Prioritization Strategy in Sales

Strategic account prioritization is key to realizing the full potential of your sales efforts. Emphasizing this stance, Emerton postulates that “a winning account-centric strategy creates a system where all stakeholders work efficiently to grow share at the accounts, renewing their competitive advantage, fueling profitable growth, and generating overall better ROI on marketing and sales expenditures.”

Although account prioritization may be crucial to a business, not everyone recognizes its value. Any salesperson can utilize account prioritization to generate a strong pipeline if they do it well, but it isn’t given the attention it deserves despite its obvious worth. Salespeople can achieve rapid and significant improvements by focusing on high-potential customers and minimizing time spent on others. Here are steps to implement a powerful account prioritization system:

Exploring the Benefits of Account Prioritization

Well, here are three compelling reasons why account prioritization is worth implementing:

Time Savings

Prioritizing accounts saves time in the long run. By understanding which customers have the greatest potential impact on the company’s bottom line, salespeople can focus their efforts on high-value leads. Just like planning a trip, prioritization ensures you spend your time on the most important attractions and don’t waste it on less rewarding activities. With limited time and countless distractions, prioritization is crucial to maximizing productivity and results.

Acquiring the Trusted Advisor Status

Account prioritization transforms salespeople into trusted advisors for their most valuable customers. Salespeople can build credibility and trust by nurturing relationships and investing time in the right accounts. Customers who have already purchased are likely to buy again, and prioritization helps identify those key accounts and individuals within them. This strategic focus on long-term relationships fosters customer loyalty and positions the salesperson as the preferred provider.

Performance Tracking

Account prioritization enables salespeople to track their performance effectively. By calculating indices such as potential purchase, probability of transaction, urgency, and customer satisfaction, sales teams can estimate the value of their accounts. If sales numbers are disappointing, prioritization provides insights to adjust strategies and improve sales performance. It also facilitates better account and pipeline management, increasing sales productivity and meeting quarterly targets.

Focus on Your Ideal Customer Profile (ICP) for Acquisition and Development

Your Ideal Customer Profile (ICP) represents the sweet spot in your account base – clients with a low customer acquisition cost (CAC) and high spending potential. Your sales team must understand your ICP and target their efforts accordingly. By prioritizing ICP accounts, you ensure the best returns in the short term and set the stage for long-term success. 

  • Analyze your most valuable clients and identify firmographic similarities.
  • Develop targeted lists based on these factors for prospecting and account development.
  • Ensure your entire revenue team is aligned with the ICP and devotes time and resources to these accounts first.

Identify Propensity-to-Buy (PtB) for Timely Opportunities

Targeting organizations with an appetite for your offerings is a good start, but focusing on accounts that match your ICP accelerates results. However, ICP alone is not sufficient. To determine their purchasing potential, you must assess each account’s propensity to buy (PtB).

  • Analyze sales performance and identify statistically relevant factors for your business.
  • Seek input from sales leaders to rank the importance of each factor and assign weights for scoring accounts.
  • Validate your assumptions by reviewing a sample account list with sellers for feedback.
  • Optimize Account Prioritization and Seller Coverage.
  • Are your top performers handling your highest potential accounts? Ensure optimal account coverage and prioritize resources for maximum impact. To achieve this:
  • Identify vulnerable or high-potential accounts that require attention.
  • Align your best team members with these accounts to deliver maximum value.
  • Assess areas such as potential churn, open territories, and high-potential accounts needing strategic pursuit.

Account Size and Upselling Potential

Sales teams prioritize larger accounts since they often have higher revenue potential. Likewise, it’s beneficial to think about upselling opportunities inside an account. The most effective way for sales teams to improve their income is to focus on the accounts most likely to make further purchases.

Assess the Account’s Strategic Significance

Some clients may fit the firm well because they share similar goals, markets, or products. By assigning these accounts top priority, you may better deploy your resources to take advantage of strategic possibilities that can increase your market share and your client base or give you a leg up on the competition. Strategic alignment enables sales teams to use their knowledge and skills better while focusing on the demands and objectives of their most valuable accounts.

Evaluate the Strength of the Relationship

Customers who have developed a strong relationship with the business are likelier to remain loyal and expand their business with the firm. So, what can you gain from investing time and energy into these relationships and consistently exceeding expectations? Well, sales teams can earn their customers’ loyalty, open doors to cross-selling possibilities, and solidify long-term partnerships.

5 Steps for an Effective Account Prioritization Strategy in Sales

  • Define Prioritization Criteria – Establish clear definitions for A, B, and C accounts. Avoid basing decisions solely on past performance and instead focus on future potential. For example, consider an A account as one with the potential to buy $1,000,000 worth of products/services per year. Develop a method to determine this potential, such as calculating each account’s Quantified Purchasing Capacity (QPC).
  1. Assess Potential and Partnerability –  Evaluate each customer’s QPC (potential purchasing capacity) and their likelihood of becoming a committed customer in the future (partnerability). Collecting and analyzing these variables will help rank prospects and customers based on their potential.
  2. Train Sales Team – Educate the sales team on the established prioritization concepts and criteria. Set a deadline for them to analyze and rate their customers using the defined system. Provide forms or tools to facilitate the process and encourage a fresh perspective.
  3. Define Time Allocation Rules – Establish rules for time allocation with accounts. Emphasize spending 50% of the time on A accounts and the remaining 50% on other accounts. This ensures that salespeople dedicate their efforts to high-potential customers while still maintaining a balance with other accounts.
  4. Manage Implementation – Monitor and manage the implementation of the account prioritization system. Discuss the system during salesperson rides, incorporate it into sales meetings, and evaluate its effectiveness regularly. Encourage accountability and track evidence of adherence to the system. 

Account Prioritization vs. Lead Scoring

Both account prioritization and lead scoring for PLG revolve around prioritization processes, although they function on separate levels and apply different criteria. Larger accounts are given more priority in account prioritization based on criteria such as account size, upselling potential, strategic relevance, and relationship strength. 

Conversely, leveraging user behavior in a product-led growth (PLG) model is all about mining information about a lead’s interactions with a product for clues about how likely they are to convert. It is possible for businesses to better spend their sales resources by gaining a deeper comprehension of the connections between user behavior and conversion.

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Optimizing Free Trial Strategies: A Blueprint for SaaS Businesses

The significance of free trials in SaaS-based businesses is immeasurable. As a compelling strategy in the toolkit of a product manager, free trials serve a dual purpose: They act as a customer acquisition tool and as a solid building block in establishing long-lasting customer relationships.

Free trials, when used effectively, help users understand the potential benefits of a product or service without any initial financial commitment, thereby reducing entry barriers and making the decision process smoother. From a business perspective, free trials can significantly drive user growth and conversion rates.

Free Trial Benchmarks

For SaaS businesses to effectively acquire customers and generate revenue, free trial benchmarks are crucial. In order to evaluate the success of your own trial initiatives, you must understand the typical conversion rates and performance metrics associated with free trials.
Typically, in the dynamic SaaS industry, free trial conversion rates ranged from 1% to 10% a decade ago, with most businesses falling within the 2%-5% range. As this industry has evolved in recent years, benchmarks have gone up to 20%, 40% and even higher.
Which shows why it’s important to recognize that the landscape of the SaaS industry is constantly evolving, and customer expectations are evolving alongside it which means your company can’t just set and forget free trials and must evolve with it as well
It is crucial to acknowledge that the SaaS industry is in a constant state of evolution, accompanied by evolving customer expectations. Because of this, companies cannot afford to adopt a “set it and forget it” approach to free trials. In order to remain relevant and meet their customers’ needs, they must proactively adapt and evolve

Choosing the Right Free Trial Type

There are primarily three types of free trials, and choosing the right one depends on your product, your goals, and your audience. 

Time-Limited Trials

The first type, time-limited trials, provide full access to all features for a specific duration, usually between 7 to 30 days. This model gives users an immersive experience of the product, with the aim of showcasing its full potential and driving the users towards a purchase decision.

Feature-Limited Trials

Feature-limited trials restrict access to certain advanced or premium features while giving free access to the basic ones. This approach works best when your product has unique features that distinguish it from competitors.

Usage-Limited Trials

Usage-limited trials, on the other hand, offer unlimited time access but limit the usage, for instance, the number of projects that can be created or the amount of storage available. This model can be effective in products where long-term usage is crucial for realizing the product’s value.

Cracking the Code: Free Trial Metrics

Next comes a critical component of a free trial strategy: metrics. Monitoring the right metrics helps businesses understand user behavior, gauge the trial’s effectiveness, and make data-driven decisions to optimize the trial process.

Key Metrics to Monitor

When it comes to tracking performance, there are three free trial key metrics to keep a close eye on:

  • Number of Sign-ups: This metric provides a snapshot of how many users are interested in trying your product. It serves as the starting point of your funnel.
  • Activation Rate: This percentage measures the users who take a meaningful action (like completing a project or achieving a milestone) during the trial period.
  • Conversion Rate: This is arguably the most crucial metric. It measures the percentage of trial users who become paid customers, thereby directly impacting your revenue.

How to Calculate These Metrics

Calculating these metrics is straightforward yet essential as tracking any other key KPIs . The activation rate can be calculated by dividing the number of users who achieved a meaningful action by the total number of users who signed up for the trial.

The conversion rate is calculated by dividing the number of users who converted to paid customers by the total number of users who signed up for the trial. This key metric helps you understand the efficacy of your free trial in converting users to paid customers.

Essential Aspects Often Overlooked

There are often-overlooked aspects in managing a successful free trial strategy:

Smooth User Onboarding

Ensure user onboarding is as smooth as possible. The easier it is for users to get started, the higher the chance they will explore your product in depth.

Guidance for Achieving Outcomes

Provide users with guidance on how to achieve meaningful outcomes with your product. This could be via email, in-app messages, or a dedicated support team.

Monitoring User Engagement

It’s not just about sign-ups and conversions, pay attention to user engagement during the trial period. This can give insights into potential roadblocks or opportunities for improvement.

Best Practices for Optimizing Your Free Trial Strategy

Maximizing the impact of your free trial requires a strategic approach that extends beyond simply monitoring metrics. Below are some tried-and-true best practices to optimize your free trial strategy:

  • Personalize the trial experience

Tailor the free trial experience to match the user’s needs, preferences, or use cases.

  • Communicate value constantly

Regularly highlight the benefits and value your product brings to the user during the trial period.

  • Use a combination of trial types

Depending on the user persona, you may want to offer different types of trials (time, feature, or usage-limited) to cater to different user expectations and requirements.

  • Test and iterate

Regularly test different aspects of your trial strategy (duration, type, communication, etc.) and iterate based on the results.

  • Proactively engage with the users

Don’t wait for the user to reach out. Proactively ask for feedback, provide support, and address any potential issues the users might face.

Wrapping Up

Free trials are a pivotal part of any SaaS business. It’s not just about offering a glimpse of your product, but about fostering a relationship with potential customers. From choosing the right trial type to closely monitoring metrics and fine-tuning the process, a well-executed free trial strategy can drive user growth and revenue while setting the foundation for long-term customer relationships.