Should You Give Away Your Product? - Forbes
...and it amazed me how those following points fit in perfectly in internet marketing.
Real Value: The free offering must solve real problems for customers. If not, then it is really a free trial. "You need to treat free users as you would paying customers," Koon said. |
Marketing: Giving away a product essentially is a replacement for traditional marketing. Ivan said it easily would have cost YouSendIt more than $100 million to get its current user base. This would have been from aggressive spending on search engine marketing (SEM) and other paid channels.
"The cost of getting a user under the freemium model should be near zero," Koon said. "It also needs to be viral. This means a free user should lead to even more users and eventually paid users."
Conversion: The industry standard for free-to-paid is about 2%. This means you generally will need millions of users to get any critical mass with the business model.
YouSendIt has a conversion rate of 7.3%. Then again, this has taken a lot of work, such as experimentation, engagement with the user base and ongoing innovation.
Word of Mouth: This is key for success. To this end, YouSendIt uses the Net Promoter Score (NPS) to measure the enthusiasm for its offering. This asks users a simple question: Would you refer the service to your friends and colleagues?
A good NPS is over 40%. YouSendIt is around 68% to 69%, which is within the range of companies like Amazon.com (Nasdaq:AMZN), eBay (Nasdaq:EBAY) and Apple (Nasdaq:AAPL).
"To make the freemium model work, you need to have highly satisfied users and customers," Koon said. "And this must be a constant focus."
The "big boys" seems to be following this routine. If that's not enough reason to convince everyone here, I don't know what will.