<ul><li>Giving away too much of the product. The goal of the freemium is to get customers to increase product usage and finally convert to a paid subscription.</li><li>Don’t deliver enough value.&nbsp;</li><li>Don’t create a sense of urgency.&nbsp;</li><li>Don’t nurture and engage continuously with prospects, resulting in a lower free-to-paid conversion rate.</li><li>Don’t track and analyze insights on how and why customers convert</li><li>Don’t provide appropriate onboarding experience</li><li>Don’t evaluate the cost of supporting free customers.</li></ul>

Why Companies Fail With Freemiums

An effective customer acquisition strategy will:&nbsp;<ul><li>Boost product growth</li><li>Reduce Customer Acquisition Costs (CAC). CAC can be a silent killer of SaaS companies.</li><li>Shorten the sales cycle</li><li>Force a focus on the initial interaction</li></ul>

Customer Acquisition Strategy Is Important

Freemium considerations:Freemium is suitable when your organization has:&nbsp;<ul><li>A large addressable market&nbsp;</li><li>Low costs to serve free users&nbsp;</li><li>Low barriers/commitment for users to start with your product&nbsp;</li></ul>Free trial considerations:<ul><li>How long does it take for prospects to recognise initial value on average? How long should the trial last?</li><li>What features can our team limit or remove from the free trial process?</li><li>How do we nurture a free-trial user? </li></ul>

Considerations for Designing an Effective CAS

An essential part of designing a customer acquisition strategy is looking at how prospects buy instead of how your company sells its product. It requires you to understand your customer's lifecycle:<ul><li>Acquisition stage</li><li>Adoption stage</li><li>Retention stage</li><li>Expansion stage</li></ul> The four steps of a customer acquisition strategy:&nbsp;<ul><li>Drive awareness and demand&nbsp;&nbsp;</li><li>Design initial prospect-product interaction so the prospect can try your product&nbsp;&nbsp;</li><li>Design a journey to deliver value to prospects&nbsp;&nbsp;</li><li>Convert prospects to paid customers&nbsp;&nbsp;</li></ul>

Designing A Customer Acquisition Strategy

Incorporating freemium or free trials in your customer acquisition strategy can help your company sell more effectively. Psychological reasons are:<ul><li>The Endowment Effect. People attribute more value to things merely because they own them.</li><li>Behaviours Drive Attitudes. Studies suggest that prior knowledge of the brand makes a person slightly more favourable towards it.</li><li>Loss Aversion. We fear loss more than we value gain. That is why we favour a free trial.</li><li>Effort vs Impact. How much effort will your prospects spend to try your product vs the kind of impact (benefit) they will get.</li></ul>

Four Psychological Aspects of a Customer Acquisition Strategy

Freemium is a customer acquisition model that gives free access to part of a software product without a time limit. Free trial is a customer acquisition model that gives a partial or complete product to prospects free of charge for a limited time. Companies often structure freemiums using a few parameters to limit the usage, for example:<ul><li>Feature-limited&nbsp;</li><li>Capacity-limited&nbsp;</li><li>Seat-limited&nbsp;</li><li>Customer class limited&nbsp;</li><li>Effort limited&nbsp;</li><li>Support limited&nbsp;</li><li>Time or bandwidth limited&nbsp;</li><li>Storage and space limited&nbsp;</li></ul>

Freemiums and Free Trials

Offering a full-featured free trial to select users can be an effective way to get the best of both options. Freemium can drive higher signups associated with the freemium model and create a sense of urgency due to a precise expiration date.&nbsp; Drive higher signups: Offer a fully working free trial of your product for a specific duration. At the end of the trial, part of the product is gated, and the prospect can use a freemium version as long as they desire.

The Hybrid Approach

In the traditional sense, a customer acquisition strategy is a list of channels and techniques of where and how customers will be acquired.&nbsp; Saas companies have to design an initial interaction between the prospect and their product.&nbsp; A customer acquisition strategy is an essential part of your Go-To-Market (GTM) strategy. It covers four elements:<ol><li>Customer (WHO)</li><li>Market (WHERE)</li><li>Product Offering and Pricing (WHAT)</li><li>Channels (HOW)</li></ol>

The customer acquisition strategy

This article covers the key aspects of designing and implementing an effective customer acquisition strategy. It zeros in on a few important decisions when it comes to the customer acquisition…