Dear SaaStr: Is There Any “Con” In Giving Our Sales Tool For Free to Early-Stage Startups?
Free of course can real work, done right.:
- Slack
- Zoom
- Canva
All built massive businesses on the back of very Free editions, even if they later turned more enterprise. Very free, in fact. All of their Free editions are amazing.
But for most of us without a truly viral app, my #1 bit of advice is: don’t confuse Free with a marketing strategy.
It isn’t, at least not on its own. It’s an onboarding strategy. It pushes folks down a funnel, potentially. But it doesn’t get you there in the first place.
Simply making an edition of your business app “free” will almost never on its own attract a significant number of users, unless your app is truly viral. Simply calling it “PLG” isn’t enough.
If you already have a ton of folks coming to your site, and you think it’s more effective to maybe let the low-end use the product for free … that can work. That’s a great reason to add a Free edition, in fact.
But putting up a sign that says “Free” doesn’t attract users. It hasn’t in a very long time. There are just way, way too many apps out there.
Second, be careful that the Free users you do get — can also pay.
That’s a real issue with sales tools per the question. Sales reps and SDRs really have almost no budget. Getting them to use your product for Free, hard as that already is, won’t necessarily get any of them to conver to paid. If they don’t have budget, and won’t pay for it themselves.
Third, remember Free users often give you very different feedback from Paid ones
Your top customers will often move to Paid very quickly. And your Free users will often stay Free basically forever. So if you do add a Free edition, make sure you don’t overindex on feedback.
Roughly two types of Freemium strategy
Strategy #1: Get you to upgrade to Paid as fast as possible. Same day ideally.
Most common
Strategy #2: Make it Free so good you can't believe it and might never need to upgrade
See, e.g., Canva, Slack, Zoom, Calendly, etc.
— Jason ✨Be Kind✨ Lemkin 🇮🇱 (@jasonlk) March 18, 2022
Fourth, remember it’s complex organizationally to get Free to really work if it’s not already your team DNA. Sales may not like it. Marketing may see it as a distraction. Support may have it.
Those Free users can be very demanding. Who will take care of them? You may need a VP of Free. More on that here.
Finally, and trust me here. Free and PLG aren’t magical Hail Marys in tougher times.
This I see way too much these days. Folks struggling, running out of money, and/or with bad metrics, think adopting “PLG” will somehow magically cure all ills. It won’t. If that was the magic solution, you would have already adopted it. That’s not to say don’t do it. But it isn’t a magic solution to your ills.
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Jason Lemkin, Khareem Sudlow
