When Free Isn’t Really Free: Freemium Marketing Strategies in B2B – Part 2

In Part 1 of this blog post series about B2B Freemium, I detailed the need to climb inside the mind of the B2B buyer when you look to launch a Freemium SaaS offering.

But if we dig even deeper into the mind of the B2B buyer, we discover that in fact “free” isn’t always really free.

3. Freemium isn’t really free in B2B

For the corporate buyer, there are many tasks and potential costs surrounding the deployment of any tool, even if its license cost is zero.

Think about integration into existing processes, user training, troubleshooting, and the range of other tasks that accompany deployment of a system to support a business function.

Even trialing a Freemium service in a lab takes up staff time and lab capacity. Naturally all IT departments know this and consider it a cost of doing business.

But it is still a cost, both in terms of the actual time and resources spent on evaluating and deploying your offering and also the opportunity cost.

In other words, if they are spending time on your free thing, they are not spending that time on somebody else’s free thing.

Of course, simplifying and facilitating these tests, trials and implementation costs can be a great incentive for Premium conversion.

Freemium isn't always free

In addition, many SaaS companies have taken the “User-targeted” approach to enterprise penetration, which eases some of these adoption expenses. Team collaboration SaaS companies Slack and Asana are prime examples.

These messaging, sharing and communications tools can be adopted by individual teams for free, leading eventually to hopefully enterprise-wide adoption upon conversion to Premium.

Presumably, the fact that employees have already embraced the tools mean that training, user migration and adoption will be easier tasks. The result is that their central IT buyers and administrators will have an easier time saying “yes” to a trial or pilot of the upset enterprise version.

4. B2B Freemium conversion is not about boosters or lives

Of course the Freemium model is a massive money maker in the consumer space, where gamers spend tons of cash on boosters or extra lives or avatar skins in otherwise free games.

In B2B SaaS, conversion to premium is a function of value delivered and perceived potential future value, plus all the other costs associated with deploying and supporting something new in the environment.

That’s because your enterprise buyer typically has to build a business case to win budget to go premium.

On the benefits side of that business case, your corporate buyer will be asking things like:

  • What is the app enabling my people to do?
  • What’s the incremental benefit of that capability beyond the current method of operation?
  • What would I be paying to obtain, maintain and support that benefit without this SaaS app, like with traditional software and systems?
  • Does the SaaS solution’s value, functionality and footprint grow economically along with my business?
  • What’s the “all in” cost of this SaaS offering in terms of adoption, migration, maintenance and support, including training my people and solving their problems?

So incentives to convert from B2B Freemium to Premium might include services to assist with data and user migration.

Training and support services, such as an enhanced help desk, can be a conversion incentive.

Expert tuning and configuration customization can be another way a customer could justify their business case to go Premium.

In my work with clients operating Freemium models, I’ve seen other “carrots” that SaaS companies dangle to entice customers to go Premium, such as:

  • Integration modules with other SaaS or on-site enterprise applications.
  • Packages of differentiated user licenses, such as basic users, power users, admin users.
  • Enhanced workflow management, such as better dashboards and process-flow data.
  • Expansion of capacity, seats, archives or similar functionality, to grow with the customer or its adoption footprint.

SaaS email marketing solution MailChimp is a great example of Freemium to Premium conversion done right.

If you are a small company, just starting out, you can send emails at no cost to your targets within certain monthly limits.

But as you grow, and presumably grow your revenues and market share, the paid MailChimp options may be more aligned with your increasing target market, with enhanced support, reporting and analytics features.

Marketing the Freemium Offering

In Part 3 of this blog series, I will take a look at marketing’s role in converting Freemium to Premium in the B2B context. I’ll discuss customer journey mapping as a tool for timing your conversion offers and how other aspects of B2C marketing are finding their way into B2B with SaaS and Freemium model promotions.

Are you launching a SaaS product? Converting a traditional premises based software product to SaaS? Or considering a Freemium marketing strategy?

Prime Product has enabled technology companies to launch market disrupting  SaaS products, penetrate new markets with Freemium offerings, and capture leadership positions. Contact us to learn more.