SaaS Marketing Blog

Optimising the Freemium Model for Product-Led Growth Success

24th January 2024

Product-led growth (PLG) or the ‘freemium’ model conversion tactic has been popular for many years now, and for good reason… it works! Many potential customers find that the alternative approach of demos and free trials does not fit in with the day-to-day demands of work. How many times have you signed up for a SaaS product, tried it once, and then never logged in again?

It’s difficult for prospective customers to find the time to thoroughly evaluate a product to see whether it’s right for their business. To avoid this barrier, many SaaS companies find that freemium services are much more pragmatic and evaluation-friendly.

Offering some of your product’s core benefits for free with no time limitations provides initial value at zero cost, while allowing users to get a feel for functionality and your brand at their own pace.

This allows users to move through the sales funnel naturally, evaluating your product on the go based on their particular needs. When your product is a great fit for a user, they will start to use it habitually on a weekly or daily basis. This has proven to be an effective conversion tactic, most successfully with mobile apps.

Tools for subscription management, usage tracking, in-app messaging and email marketing let you guide your free subscribers toward premium functionality, encouraging users to take their experience to the next level. As they’re likely already hooked on the core features, it’s a compelling approach for an easy sale, converting a free user into a paid subscriber.

How does HubSpot use PLG

HubSpot has been a key proponent of this product-led growth (PLG) model in recent years, building a user base of freemium customers and focusing its marketing efforts on upselling and converting them into paying customers.

The brand’s free tools include CRM, marketing, sales, service, operations and CMS solutions, designed to give a taste of the full product’s breadth of functionality. Paid plans allow for additional users, as well as offering automation, payments, and playbooks, making the transition from trial to adoption easy.

PLG lets your product sell itself, demonstrating its ease of use and streamlined user experience and lets free subscribers make informed decisions about conversion to paid subscriptions.

PLG AI-Driven Strategies for 2024

For 2024, AI is likely to enable SaaS businesses to improve the results of freemium product-led growth strategies. Through analytics and automation, AI identifies high-value freemium users and recommends paid features to those who are most likely to convert to paid customers, using in-app messaging and email campaigns. Predictive analysis also helps to automate interventions that prevent churn, personalise onboarding and optimise the pricing structure where the audience may be price sensitive. Onboarding has evolved from a static workflow to dynamic behaviour-based workflows, and in 2024 expect to see personalised one-on-one powered AI onboarding.

7 Smart Ideas to Market Your SaaS Business in 2024

This smart concept, Maximise the freemium model of product-led growth, is just a glimpse of the valuable insights available in our latest guide ‘7 Smart Ideas to Market Your SaaS Business in 2024’. You can download your free guide here.

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