No More Freemium

The new strategy that Airtable is using to get 40% more conversions.

Hey — It’s Nico.

Welcome to another episode of Behind Tactics 🧠, the newsletter in which I analyze all the different marketing strategies startups use to succeed in their markets.

This issue is brought to you by Zette, a subscription to unlock paywalled articles, which is currently crowd-raising a funding round.

Today, I'll be delving into the world of trial periods. I’ll explore the advantages and disadvantages of implementing a trial period versus adopting a freemium model.

More importantly, I’ll analyze how companies like Airtable are implementing a new strategy called reverse trials, which increases their user conversion rates.

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The Strategy

Freemium vs Trials

Many SaaS companies today employ one of two strategies to monetize their offerings: they either adopt a freemium model or provide limited-time free trials. Both of these strategies come with their own set of advantages and drawbacks.

A freemium model entails providing users with access to basic features for free, with the option to upgrade to access additional features. Unlike trial periods, users under this model can utilize the tool indefinitely without time constraints.

One advantage of the freemium model is its ability to drive new user acquisition. Since users are not constrained by trial periods, they are more inclined to explore and engage with the product regularly. Consequently, this leads to a larger user base, with many users being just a step away from becoming paying customers.

Moreover, the expanded user base resulting from the freemium model often translates into increased word-of-mouth recommendations, more online content discussing the product, and a thriving community. 

On the other hand, time trials let the user use the entire product but only for a limited time (usually 14 days). Once the period is completed, users must either pay for the subscription or lose access to the tool. 

This model has a much harder time acquiring new users. All users must decide in a few weeks whether they like your product enough to subscribe to it or stop using it altogether. Therefore, the user base is much smaller than in the freemium model, and each new user costs significantly more.

Nevertheless, time-limited trials offer several advantages. Firstly, they have significantly higher free-to-paid conversion rates compared to freemium models, often achieving rates two to three times higher.

In the freemium model, the free tier competes against the paid tier. It is, therefore, harder to convince users to upgrade since they already have access to many features. In the time trials, users either have to pay or lose access to the tool altogether, so it makes sense that more users opt to pay the subscription. 

Additionally, time trials tend to have a higher activation rate. The activation rate shows how many users really get into using your product. It measures the percentage of users that are really engaging with the product and getting the most value out of it.

In freemium products, users might not be as dedicated and could miss out on their activation moment, meaning they might not fully experience the value of your product. However, in time trials, because there's a time limit, users often spend more time exploring and testing your product, leading to a higher activation rate.

A Better Way

Fortunately, there is no longer a need to decide between freemium and time trials. There is a better approach.

To find out what this strategy is, let's look at Airtable’s onboarding process.

Anyone can create an Airtable account in a couple of minutes. The process is designed to be frictionless and doesn't require entering credit card details. After a brief setup, you're all set to start using their spreadsheets.

This type of onboarding is typical for freemium tools, designed to be fast and seamless, simplifying new user acquisition.

However, once you've completed setting up your account, you encounter this pop-up:

Airtable informs you that you've been upgraded to their full version for 14 days. After that, you'll revert to the free plan unless you opt to upgrade.

This is called a reverse trial and is a strategy that combines the improved user acquisition of the freemium model with the higher conversion rate of the time trials.

The idea of the strategy is quite simple. You start with a freemium model offering both free and paid tiers. However, once users subscribe, they're automatically placed into a time trial. During this trial period, users can access all the features of your app, but once the trial ends, they lose access to these features unless they upgrade.

This approach combines the smooth onboarding process and large user base typical of the freemium model while achieving higher conversion rates. 

Elena Verna, a B2B Growth Specialist and advocate of reverse trials, has implemented this strategy in various freemium businesses. She observed conversion rate increases ranging from 10% to 40%.

She also created this great chart that illustrates the benefits of employing reverse trials.

Should I?

Why This Works

  • Loss aversion: This fundamental concept in Behavioral Economics suggests that the pain of losing something outweighs the satisfaction gained from a similar acquisition. In a typical freemium model, the focus is on convincing users to gain something (such as paying for additional features). However, in a reverse trial model, the emphasis shifts to persuading users to avoid losing something. Since humans tend to experience losing something more distressing than gaining something, more users are motivated to upgrade to retain their existing features.

  • Getting new users is still easy: Reverse trials don't hurt the freemium model's ability to attract users because the smooth sign-up process stays the same, and users don't need a credit card. This means that reverse trials will have a much larger user base than normal time trials, which increases word-of-mouth recommendations and enlarges the community.

  • Enhanced user engagement: Since users have access to all features during the trial, they are more likely to fully engage with the product and explore its capabilities, leading to a deeper understanding and appreciation of its value.

How to Apply It

  • Avoid adding friction to the onboarding by requiring a credit card. Users should be able to add their billing information only if they decide to upgrade to the paid tier.

  • Add an interactive onboarding that guides the users through both the free and the paid features of the app.

  • Throughout the trial period, encourage the user to interact with the paid features. Remind them that these features are available for a limited time and motivate them to utilize them.

  • Send value recap emails. Remind the user of the value they are getting from your tool. It’s even better if you can highlight the value they are getting exclusively from the paid features, which they could lose in the future.

  • Send a reminder before the trial ends and make the subscription process as smooth and easy as possible.

Yes, But

  • It could be expensive: If giving reverse trials means scaling up your infrastructure, then this strategy could be costly. You should also consider the increased customer support roles of giving every new user access to premium features.

  • Potential for customer churn: Users who do not upgrade after the trial period may feel disappointed or frustrated if they lose access to features they have become accustomed to, leading them to stop using the app altogether.

  • Risk of abuse: Ensuring a seamless onboarding process without complex steps or credit card requirements is crucial for this strategy. However, it also increases the likelihood of users exploiting the system by repeatedly creating multiple accounts to access the free trial.

Keep Learning

Others Playing It

Canva prompts users to try their Canva for Teams upgrade once they subscribe.

While it may appear that you have the option to opt out of this reverse trial, in reality, you cannot. The "I prefer an individual trial" option simply offers another trial for Canva's premium features.

Asana gives all users a 30-day reverse trial:

Toggl also provides a reverse trial, but users aren't automatically enrolled. Instead, they need to click a button to be added for free without needing a credit card. It could be beneficial for Toggl to automatically place every new user into the Premium tier for the reverse trial.

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