Lean Startup Israel presentation on improving free to paid conversion (trial/freemium) based on experience by TOTANGO

1. Welcome to Lean Startup Israel
@leanstartupil #leanstartup - please check in (online)
agenda
pizza
short announcements
free/paid conversion - presentation
open discussion
pizza ;)

2. Free to Paid Conversion –
The early days
Guy Nirpaz, CEO & Founder
TOTANGO
guy@totango.com
@guynirpaz

3. Google Image Search:
“Happy Customers”

4. Find / Evaluate / Buy

5. Free to Paid Conversion
Sign Up
Activation
User
Active Use
Purchase Event
Customer Paid Use
Renewal
Expansion

6. Touch Models
No Touch No sales team. Customer self-service
37Signals Yammer MailChimp
Low Touch Inside sales team + Inbound marketing
Zendesk Hubspot Box Clarizen
High Touch Enterprise sales
Jive software Taleo ServiceNow
Hybrid Models Mix & match

7. Free Models
Freemium
…is a business model that works by offering a product or service free of charge
(typically digital offerings such as software, content, games, web services or other)
while charging a premium for advanced features, functionality, or related products
and services. (source wikipedia)
Free Trial
… is a business model which allows potential customers to try out a product (fully
featured or partial) for a limited time period. (source Y.D)

8. Goal: Increase customer lifetime value
Visitor Free New Mature
Generate Focus sales On board Identify Increase Create
and on „right‟ customer cust. at customer more
manage prospects s risk to value value
leads churn within the
service
offering

10. Majority (87%) of SaaS executives regularly track “CAC related”
1 metrics, with a large percentage (58%) adding or planning to add
tracking of “CLTV related” metrics in the next year.
Executives at SaaS companies regularly monitor the following metrics:
59%
54% 56% 56%
44%
CAC Related
CLTV Related
Website Unique New Signups Conversion Rate Life Time Value Churn Rates
Visitors (Trial to Paying)
Plan to track in the next 12 month:
58%
19%
10
CAC Related CLTV Related

11. The Financials…
CLTV > CAC
Customer Success Marketing & Sales

12. The Data is There
They are doing it all on your property

13. So, how to improve and where to focus?

14. Change Measure
Learn

15. Measuring Conversion Rate

16. 3 Things to look at…
Conversion Rate
Overall 2.4%
282 out of 11,332 Signup
(11,332)
Actively
Evaluating Converted
(282) a
(2,136)
Conversion Rate
Actively
Evaluating
13.2%
282 out of 2,136

17. Considerations…
Calculate conversion after
accounts had enough time to
Signups
convert
• Time-based: after trial period (11,332)
• passed
Freemium: (more complicated)
A] understand mean conversion time
B] conversion analysis by cohort
Actively
Evaluating Converted
Who is “Actively Evaluating?” (2,136)
(282)
• Demonstrating “buying intent” by
trying out the SaaS offering
• Measuring can be tricky:
A] Return visits
B] Activated account
C] Specific functionality used

18. Conversion Rates for Sales Tea

19. Low Touch Sales - Reality
High volume of leads
From Inbound marketing activities
High rate of low quality leads
75%+ is not uncommon
Short staffed team
Sales-rep responsible for hundreds of new trials
Focus on opportunities that
matter
Use conversion data to drive contact priority

20. Conversion Signals
Conversion Rate
Entire Population 2.4%
282 out of 11,332
2.4% of ALL trials in May converted (282 out of 11,332)
A smaller segment of the population (2,136 trials)
Conversion Rate showed a much higher conversion rate (13.1%).
These are all the trials that were active on the service for
Evaluating 13.1%
281 out of 2,136
at least 2 days.
Nearly all converting trials (281 out of 282) exhibited
Had more than 2 days of activity this behavior
Conversion Rate
An even smaller segment (309 trials) had a much
Hot 29.7%
92 out of 309
higher conversion rate (nearly 30%)
These are all trials that had 3 users join the trial account
3 users or more in first 3 days of during the first 3 days of trial
trial

21. Who to contact?
Who has the team contacted?
Contact Rate
Hot TOP PRIORITY
Your best chance to make a sale!
41% Goal: 100%
129 out of 309
Contact Rate
Evaluating HIGH PRIORITY 33% Goal: 100%
799 out of 2,136
Ideal contact target
Contact Rate
Entire Population LOWER PRIORITY 19%
2,179 out of 11,332
Team‟s capacity

22. Conversion Rates for Marketin

23. Marketing: The Goal
Bring in as many high-quality
leads as you can, at the
lowest cost possible
High-quality: With a present “buying intent”
(Nurture all the rest)
? Measuring Effectiveness
Use conversion data to segment & optimize marketing
campaigns

24. Marketing Effectiveness
Lead Quality
Actively Entire population
Evaluating
Entire
= 18% (11,332)
2,136 out of 11,332
Population
Actively
Evaluating Converted
(282)
(2,136)
Effective
Cost per / Lead Cost
=
Lead Quality Per Lead
$5 18% $28

25. Marketing Effectiveness
PPC
SEM Social … Referral …
Campaig
ns
• Measure Lead Quality & Effective cost per lead separately for
each campaign
• Do more of campaigns with a high score
• Learn which messages attract people with a buying intent

26. Marketing:
Trial Onboarding Diagnostics

27. Onboarding Diagnostics
Understand the actions taken
during trial that result in high
conversion rate
“Users that updated their profile picture converted x3”
Encourage converting behavior
UX, tutorials, proactive content, ….
Highlight “Killer features”
Marketing collateral, web copy, …

28. Trial Onboarding Diagnostics: Example
Entire Population
15.5%
621 out of 4,002
Conf. Basic Conf. Invite Team
Settings Advance Members
20.5%
549 out of 2,675
8.5%
Settings
216 out of 510
34.4%
262 out of 760
50% 35% 21%
5%+ conversion when going 7%- conversion when going x2 conversion when inviting
through basic config, but only through advanced config. team!
50% of accounts do it.
Improve UX Improve UX
Optimize UX flow Hide functionality post-trial Tutorial / Marketing

29. 3 Things To Get Started On

30. Summary
Create a Baseline
Start measuring monthly conversion rates
regularly
Measure Who is Actually
Evaluating
Which parts of your pipeline are actually real?
Build Signals for The Sales
Team
High ROI with immediate, tangible benefits

31. Customer Engagement Cycle
Measure Cust. Analyze Business Proactively Engage
Engagement Context

32. Examples

33. How to know where to focus?
Model the customer life-cycle
Monitor weekly/daily business dashboard
Measure / Learn / Change

34. Questions?

35. Thank You!

36. Totango