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How product-led organizations convert users into customers

This is an excerpt of “The Product-Led Organization: Drive Growth by Putting Product at the Center of Your Customer Experience,” released by Wiley in September 2020.

One of the interesting dynamics that’s evolved in recent years is the advent of so-called do-it-yourself, or DIY, customer attitudes. In other words, customers love when companies give them more power to control their own outcomes.

Here’s one case in point from the product team at Citrix. They wanted to convert free trial users of its ShareFile® file-sharing product to paid ones at a faster clip so they set a goal of increasing their trial conversion rate by 10 percent. They wanted to get trial users to that “aha!” moment as quickly as possible.

The team conducted a cohort analysis of ShareFile users in order to understand the behaviors of trial users who converted the fastest. Then they developed product walk-throughs to drive trial users to that optimal trial usage pattern. They also used product usage data to learn what content was most effective in driving behavior and doubled down on it.

The Citrix team exceeded their goal with a 28 percent conversion rate, which helped drive an increase in revenue over the next year. By using insights from product usage data, Citrix showed users exactly what to do to have a successful trial and convert it to a paid user.

A key lesson the team learned came during onboarding: If you show users exactly what it is they want to do in the fastest, simplest way possible, users will find value and stick around. Here are some ways that you can measure and optimize conversions:

  1. Track product usage to understand the behavior of users who convert better. By beginning to track the point at which prospects or customers convert, and how often, you can identify opportunities to improve the experience or insert messages or tooltips to help the right user discover new opportunities.
  2. Set benchmarks for customer health. This likely includes some combination of feature adoption, feature retention, and NPS.
  3. Determine the leading indicators of conversion, renewal, and expansion.
  4. Develop a playbook for in-app messaging, including custom messages.
  5. Measure what content works and what doesn’t.

Converting prospects into customers

A big part of the “why” in offering a free trial product is to eventually convert those users and product qualified leads (PQLs) into paying customers. And, in a product-led world, you should be using your product to help drive those conversions. With the help of the data and metrics, you shouldn’t rely on any one-size-fits-all approach to encouraging your customers to convert. Here are a few approaches that you might take:

1. Usage limit

The New York Times offers a good example to explain this tactic in practice. As a free user of its online edition, I can get 10 articles a month. If I want to read more, I need to sign up for a subscription. Once I begin to near my 10-article limit for the month, that might trigger the site to send me a personalized note that encourages me to sign up for a subscription. For instance, a note might go something like: “Hi Todd, it looks like you’re enjoying reading our paper. Unfortunately, you only have one free article left to read this month. You can upgrade to a full subscription, and we’ll even give you the first month free!”

While this works for the Times, it’s important to understand your market. If they have a clear alternative, you could run the risk of alienating your users and sending them to a competitor if your action is too abrupt or irritating. To this point, it’s important to warn the users in advance if a trial is ending. The Times tells you how many articles you have left each time you read one. You know what you’re signing up for, and there’s no surprise when you reach the limit.

2. Heavy usage

Another potential product-led trigger that you can employ is when a user is clearly using your product a lot. That might show up in the metrics as:

  • Logging in multiple times over a period of time
  • Spending multiple hours with the product
  • Using all of the features available multiple times
  • Installing add-ons that you might have made available

In this case, your product could message the user to let them know that there are even more powerful features available in the paid version of the product.

3. Advanced features

TurboTax is a great case study on freemium conversion, as they’ve employed and experimented with a number of techniques. Tax forms that can be filed via the 1040EZ used to be free to all users. This is generally a simpler form targeting individuals with a less complicated financial position. These individuals are also less likely to pay for tax services, so they likely aren’t “losing out” on much return. Now once those users buy a house and want to file a mortgage tax deduction, they will be forced to itemize and graduate to the 1040 form and hence convert or pay. This strategy is all about giving away lower valued, more commoditized features and monetizing more advanced capabilities.

4. Product results

One of the most powerful ways to encourage free trial users to convert is by tracking and showing the results they’re getting from using your product. If your product is an e-commerce platform that helps sell widgets, for example, and you see that the user sold a widget using your software, this can be an apt time to reinforce the benefits of your product while also encouraging them to upgrade to the full version. Maybe they get an in-app reminder about how the full version of the software offers even more features that makes it even easier to sell widgets.

概要

While a sales team remains essential for turning leads into customers, product-led companies recognize the power of the product in driving conversions too. You can turn your product into a sales engine by measuring user behavior and developing automated triggers that encourage users to commit to becoming customers.

But, once you’ve converted a customer—or even just brought in a new user from an existing customer—it becomes essential to get them up and running inside the product as quickly as possible with a goal of maximizing their experience.

For more insights on becoming product led, fill out the form below to receive a free e-book copy of “The Product-Led Organization” by Pendo CEO Todd Olson.