If there’s a major theme that will emerge in 2013, it will be the need for startups to focus on generating revenue as opposed to just having a lot of users.
It’s Business 101 but we live in a world where too many startups have embraced the “offer it for free and they will come approach” without giving much thought to how enough revenue will generated to create a viable business.
This reality, however, will abruptly change this year as startups scramble to drive sales at a time when funding may become more challenging. As result, do not be surprised to get an email from a startup that has decided to move to paid from free or freemium.
Case in point is Crowdbooster, which recently made the “very difficult” decision” to stop offering its free social media service. In a blog post, the company went through the impact on existing free users and the various pricing options going forward. It wasn’t until the end of the email, however, that it mentioned the benefits of the service.
Two words: Big mistake.
Truth be told, while many online service users love free, many of them know deep in their digital hearts there is no such thing as a free lunch. We’ve all been gorging at the all-you-can-eat buffet for a long time, but things are coming to an end – something should not be terribly surprising, even for people who believe free is a digital right.
For startups moving from free to paid, marketing is going to play a key role in managing the process and, at the same time, not alienate existing users.
So while messaging needs to begin with the move to fee from free, the information that follows must be about the benefits. Forget about digging into the reasons behind the decision or the pricing options. Instead, tell people about the value your service delivers and the great features they enjoy.
In other words, remind them why they’re using your service in the first place.
By kicking off with benefits and features, the conversation starts with a positive spin. It’s about the user rather than you. It’s about what they get (a great service), rather than what you need (revenue).
Then, you can explain the pricing options for existing users. This is when more marketing can happen with discounts and offers that will make it easier for existing users to keep on using the service, and feel like they are getting special treatment.
Some Users Will Leave, Many Will Stay
While some users will leave a service if it’s no longer free, many users will stick around if they like the service and believe the new pricing offers bang for the buck. For startups, this is where good marketing can be a make-or-break proposition.
While the decision to go from free to paid can be painful, it will become a financial necessity for many startups that must become businesses. With the right marketing approach, startups can successfully manage the transition AND still have a large number of happy customers.