Freemium models are a great way to quickly grow your user base.

The same prospects who can’t decide whether your software is worth a monthly subscription fee will jump at the chance to try it out for free. And if you wow them enough, some will eventually turn into paid users.

At least, that’s how the theory goes. In reality, getting free users to upgrade to a paid account can be very challenging, with average conversion rates falling between 1 to 4 percent.

So how can you design your freemium software to maximize the chances of an upgrade? Here are four effective techniques you can use:

 

Seed your software with restricted premium actions

One powerful way to demonstrate the value of your premium solution is to show free users exactly what they’re missing.

You can do this by including restricted premium actions in your free software. When your users click on these actions, they are presented with an upgrade prompt informing them that the feature is only available in paid accounts.

This is a very effective conversion technique, as the user can see the specific benefits he gets when he upgrades. And psychologically, including a button on the free software but not allowing people to use it can create a very strong desire to unlock the “full experience”.

Project management platform Asana provides a great example of this with its restricted Timeline feature. This feature allows teams to visualize their entire project workflow on a visual timeline that includes time blocks for specific tasks.

When a free user clicks on the Timeline tab, he sees this page:

 
Asana Timeline for free users into premium users

There are a number of elements that make this upgrade prompt especially effective:

  1. A clear and succinct benefit statement explaining what the feature is, and why you need it
  2. A visually appealing explainer video that shows the feature in action
  3. Two clear calls-to-action – an “upgrade” button for people who are ready to take the next step, and a “learn more” link for those who require more information

All this makes for a very compelling prompt, capable of converting many users on the spot. And even if it doesn’t, the user is likely to come away with a better understanding of this feature, and why it might make sense for him to unlock it in future.

 

Ease the Transition with a Soft Paywall

The transition between a free and paid account is not always a smooth one.

People naturally become a little annoyed when they have to pay for something they were previously using for free, and often that psychological hurdle is too big to leap in a single bound.

So don’t force them to. Instead, consider gating certain features behind a soft paywall that does not require an immediate payment. By requesting that users perform an intermediate step before forking out actual money, you can make the psychological transition between a free account and a premium one a lot smoother.

Streak CRM does a great job of this with their Saved Views feature. When you try to access one of Streak’s built-in saved views, you get a popup explaining that the feature is only available on a premium plan:

 
Steak CRM upgrage to premium

But instead of asking for a payment right away, Streak encourages the user to activate a free 14-day premium trial – and they’re careful to specify that no credit card is required.

This approach has two advantages. First, it increases conversion rates by beginning the transition to a premium account with a smaller, non-paying step. Second, it allows Streak to better understand the user’s level of engagement with the software. If the user signs up for the trial but declines to upgrade at the end of the 14 days, Streak knows that either the feature was not compelling enough for the user, or the price was too high. That intel can be very helpful when making future design decisions.

 

Create a Sense of Urgency with Limited-Time Discounts

Everybody loves a good discount. A well-timed special offer might be just what you need to convert users who are still on the fence about upgrading. However, you shouldn’t just give them out to anyone. New users are not likely to be swayed much by discounts if they haven’t had a chance to fully familiarize themselves with your solution yet. These offers work best for users who have already demonstrated some degree of engagement with your software.

Additionally, limited-time offers also create a sense of urgency with your free users. This is a major advantage for SaaS companies looking to shorten their sales cycles and outpace their churn rates.

Grammar checking app Grammarly was able to accomplish this with a special two-day 40% off promotion on their premium offering:

 
Grammarly update to premium

While a 48-hour time limit might seem a little short, it’s actually more than enough time for an already-engaged user to make a decision. The email also lays out the most important features offered by the premium edition in a clear, side-by-side comparison chart. Essentially, the user is presented with all the encouragement and information he needs to take the next step.

 

Nurture Free Users with an Email Drip Campaign

The email drip campaign is an absolutely critical component of any freemium conversion program.

These nurturing emails have three main goals:

  1. To maximize the value your users get from your software
  2. To maximize the chances of them upgrading to your premium product
  3. To keep your brand at the top of their minds

Of these three goals, the first one is most important. If your users don’t get good value out of your solution, it’s highly unlikely that they will upgrade, or even stick around as free users. And this is not something you can depend on the user to figure out for himself. Instead, you should be offering active guidance at every step of the way, through a series of carefully sequenced onboarding emails.

Once the user has been educated on your software and is fully engaged, you should start sending promotional emails to encourage an upgrade. These can include:

  • A “checking in” or feedback request email
  • A case study or testimonial email
  • A discount or special offer email
  • A trial-expiration reminder

Bear in mind that people’s inboxes are overflowing with drip emails these days, so you have to work extra hard to be noticed. Start with a strong subject line, and follow through with eye-catching graphics in the email body.

Meditation app Headspace stands out by using bright animated GIFs in their drip emails:

 
Headspace Upgrade for 3 months off

Not only is this attention-grabbing, it is also a simple way for Headspace to delight users with their marketing and raise the value of their brand.

 

Convert Users Into Payers

While a rapidly growing user base is nice, at the end of the day, your results are measured in actual revenues. In order to maximize those results, you have to figure out an efficient way to turn your free users into paying customers. Start with the techniques in this article, tweak accordingly, and watch as the improvements show up directly on your bottom line.