The 2012 SaaS Free Trial, Freemium and Pricing Benchmark
Today, I’m happy to announce that Totango has analyzed the customer engagement and optimized the sales and customer success interaction with more than one million prospects!
We sure learned a lot from our beta stage and this is the place to thank all our wonderful customers who were taking part of our beta stage.
Out of the massive data we’ve gathered, here are 4 main conclusions that could help sales and customer success teams to understand where to focus in order to increase revenues: from new sales, expansion sales and renewals.
What can I do with that information?
SaaS sales teams could use this insight by focusing their time and close more deals
What can I do with that information?
This proves that timely and contextual engagement with prospects results in more sales
What can I do with that information?
Have customer success team focus on the non-active paid users and the sales teams to focus on the frequent users to increase upsell
What can I do with that information?
SaaS customer success teams could use this insight to configure alerts for inactive users and to pro actively reach out to these customers and offer help
Click to Tweet this Infographics
By definition, SaaS companies should be able to see their critical usage metrics clearly and easily – in real time.
However, in practice many companies are experiencing blurry metrics that don’t provide a clear picture for their trial and conversion performance. Use our infographic to learn how SaaS businesses are (or aren’t) using metrics to see the “Big Picture”.
This infographics is based on the SaaS Metrics Survey conducted a few months ago. The survey helped me understand the SaaS industry’s best practices in regards to key business metrics (download full survey results).
Feel free to right-click to copy use this info in your website/post!
Totango – Real Time Customer Engagement for SaaS and Web App
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Do you know how to measure your Customer Engagement?
Our SaaS Dashboard can easily do that for you!
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Lately there is an obvious increasing demand for user friendly cloud based apps and a tendency to prefer low touch and zero touch sales approaches, where there are as little sales involvement as possible.
In my latest article: 8 ways digital will improve b2b sales in 2012, published in Mashable lately, I tried to predict what would be the customizations that B2B sales would need to embrace in order to survive in this competitive and evolving market:
Are you running a B2B sales or inside sales organization?
Do you have a freemium or free trial in your service?
Are you considering a low or zero touch sales model to increase velocity of your sales funnel?
These modern sales models are somewhat evolutionary as the official enterprise sales model is just not the customers first choice anymore.
Today, in my last “Best of 2011″ post series, I’ve gathered all the videos and posts from which you could learn about low and zero touch sales models and about free trial and freemium best practices so you could go ahead and build your ultimate sales machine!
>>Read other posts in this series<<
Often I meet with SaaS companies who have a lot of good will but simply don’t know where to start. Even very successful SaaS companies sometimes need some guidance and some tips & tricks to become even more successful as many businesses are accommodating their sales model to comply with contemporary requirements.
Below are our top posts on these topics to help you get oriented in our Best Practices for SaaS and App Vendors:
Speaking with hundrands of SaaS businesses I grew to learn that this topic specifically is lots of companies’ weakness. Some don’t know how to conduct a Cohort Analysis, some wouldn’t know which metrics to measure and some are even not aware to its importance for their business success.
This is why I’ve grouped together our Customer Analytics material which could help in building a more solid background on these topics:
Tomorrow I’m going to review all low touch & zero touch sales tips and free trial and freemium best practices
Want to know which metrics other Sales Executives use?
Download SaaS Business Survey Results
Take a step back and you’ll realize user-engagement is the single most important metric in any SaaS business.
In a world where customer evaluate your offering at their own pace, and can cancel their subscription at any time, the best way to maximize your business potential is to make sure users are engaged and see value in your offering.
And the best way to ensure that is to create a metric which can be monitored for change and improvement on an on-going basis.
It has been somewhat surprising for us to see that most SaaS companies (and we’ve spoken to hundreds by now) are somewhat at a loss as to how to actually measure their user’s engagement with their offering and application. In fact, when pressed many admit that, important as it is to their business, they actually *don’t* measure user engagement. Simply because they could not figure out a systematic way to!
Since we’re here to help SaaS companies do better in this area, here’s our 3 step guide to getting started.
The signals engagement for a trial user that has just signed up vs. an established customer is very different. Trying to come up with an engagment metric that applies throughout all lifecycles is practically impossible. Consider the following (in a fictitious SaaS application):
User1: Signed up last week, has logged in 5 times, created a project with some content and reviewed our knowledge-base 3 times
User2: Paying customer for a year. Last week logged in 5 times, created a project with some content and reviewed our knowledge-base 3 times
Clearly User1, as a new trial user, is exhibiting a good level of engagement, where-as the behavior of User2, a year into their subscription, is concerning at best.
We recommend you break down user lifecycle at least into the following stages. We also suggest some ideas of things you’d want to look at as you compute engagement at each stage
You’d want to apply a different engagement metric to users depending on where they are in the process.
Engagement is not a binary metric. Users are not either engaged or unengaged, but rather fluctuate on a scale. We recommend creating the following buckets:
The time window to measure varies. we typically suggest 14 days – 30 days, depending on the application’s complexity.
For a top-line view, you eventually want to end up with a dashboard similar to that shown below.
The chart shows, number of total, highly engaged and lightly engaged users overtime. For convenience, we overlay important milestones (product releases, marketing campaigns, etc.) so we can see their affect on our users.
For example, we see a good pickup of total activated users after launch . Growth is mainly in lightly engaged users however.
Important milestone 1 made almost no impact (maybe it wasn’t that important after all? 
Important milestone 2 on the other had, clearly increased the number of highly engaged users (we should do more of that)
Your engagement metrics should not be static but evolve over time. You should constantly “test” them against users eventual decision to purchase or cancel their subscription. If they don’t provide a good enough prediction as to what a user is likely to do with their account, the metric and its underlying formula should be tweeked.
Specific Examples:
Measuring engagement can be tricky, but is absolutely essential for success in a SaaS environment.
A corporate-wide engagement metric helps:
It should be part of every SaaS organization’s core-competency. Get it implemented in yours today!
Do you know how to measure your Customer Engagement?
Our SaaS Dashboard can easily do that for you!
Try it now for FREE
Today I’m going to share another interview with Tracey Kaufman, VP of Customer Experience at cloud9.
Tracey was watching the Totango demo and then answered some questions about what she thinks of the application from a Customer Experience point of view.
Tracey believes that anyone who has trial period in the SaaS business or has the need, like herself, to understand users activities and prevent churn, would want to actively know what customers are doing in their application during that trial period.
It is very important to understand users behavior – especially at the trial period in order to proactively prioritize customers to refer to during that time. This way you could know who is potentially at risk because they’re not using the product or – the opposite – you can spot customers who are using the product well and you can use them as a reference or a case study.
Tracey especially likes the integration Totango has with salesforce and the fact that sales people are exposed to information that shows the level of customer engagement. This will allow them to determine the priority of their calls – for example they can first contact the users who are actually evaluating the service and try and move them up in the sales cycle.
To read the full transcription of the video, click here
Q: Hello, who am i speaking with here today?
A: Hi, my name is Tracey Kaufman, I’m the a VP of customer experience for cloud 9.
Q: Since we just went through the demo of Totango, can you give me your first reaction and who do you think should look at the Totango product and what’s cool about it?
A: So i think, actually, you know, certainly any one in the SaaS business who has recurring revenue or has trials, whereas anything to do where they need to understand the activities of their users and really try to chart from the time that you say OK, we’re going and we’re deploying and I’ve launched you, then what happens?
If you have a trial it’s absolutely critical to understand what is your leave conversion? Right who using this trial. Because what are you going to do? You’re going to call. You’re going to say, here you go, have this 30-day trial. And then you sit and you call them 30 days later so if you are a sales VP or a marketing VP and you actually want to know what happens, and you want to get a proactive look at some key trick so that you know when to call them or when to send off an email.
You know, if you’re like me and your running customer experience and you want to understand churn, and you want to understand who is potentially at risk because they’re not using the product or on the other side, obviously, people who are really using the product and gang busters and you can use them as a reference or case study think, you know, marketing, sales, customer experience, i mean, product, what part of the product you’re using. So i think it’s widespread usage, actually.
Q: That’s great. What do you think is the most sticky feature of the product?
A: So, i really love the fact that, of course you’ve got these great analytics and you’ve got people who are individuals in executive positions who love numbers. But what I think is the best thing you talked to me about, was how you’re actually going to put the information back in sales force and that way your sales reps can go in and figure out “Oh wow, I have this trial customer and I don’t know whether they’re using it, but wow now I can find out who’s actually using the product. So now I know I’m going to call them, because they’re going to be hot. Because I’ve got these ten people who’ve started and tried using my product and I can call them and now maybe move them down the sales cycle. I just think that’s great.
In today video post, Tracey Kaufman, VP of Customer Experience for Cloud9, speaks about how a business should aspire to its customer’s success in order to become successful itself.
I agree with that saying. Furthermore, I think that if a business is constantly supplying an added value to its customers and focusing on the quality of its service rather than on sales (read: How NOT to Sell in SaaS and Increase Paid Conversions), that would lead to a win-win situation as both the users will get added value and the business will gain loyal customers.
Tracey is also talking about how to count active paying customers, referring to Jeanne Bliss book: “Chief Customer Officer“. How do you measure how many customers you have? Do you count your customer accounts? buy do you include cancelled account in this amount? and did you count how many of them have actually succeeded and how many are going to renew?
In this blog I mention the importance of the measurement of the key metrics that any successful SaaS business should have. There are measurements which sometimes look simple but takes several metrics to calculate. Also should also keep in mind, that measuring is just the first step – the second step, which is just as important, is to interpret these numbers into customer behavior and make the right decisions by them.
To read the full transcription of the video, click here
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Video Transcription:
Hi, my name is Tracey Kaufman, I’m the a VP of Customer Experience for Cloud9. In a lot of times, I think people look at, when they look at their customers, they say, “OK, well how do we know we’re done and if you have a product you know are they using that product? Have you deployed that product? Have you gotten them implemented?” But really you have to ask yourself–the question is, “What is the greater vision for that product?” Are you telling this customer that they’re gonna grow their business or they’re gonna gain more revenues or they’re gonna gain more forecast accuracy like we talk about.
And so I really believe at the beginning of an engagement with a customer, you have to dream. You have to figure out, what is it that they really want so it isn’t just the tactical, and then gauge success and come up like with a little success curve so you have key metrics along the way and you can have, you know, individual wins along the way but at the end of the day you’re really reaching high up, and that’s when you’re successful, when they’re increasing revenues, when they’re growing their company because of using your application.
Jeanne Bliss wrote a book called, “Chief Customer Officer”. And it’s really the Bible that I use for if you’re trying to do a customer success. disorganization. You really should read that book. It’s asking yourself the very basic questions of, how do you count your customers.
So many companies You ask them how many customers they have. And they look at their active paying customers and that’s their customer account. But you also have to know other questions like how many customer did you have now many of them actually cancelled? And how many of them are successful? And how many of them are going to renew?
So you have to be a lot more granular and segment your customer base and understand what your patterns are. If you had a hundred customers and now you have fifty customers, well that’s a problem. Because now you have a fifty percent turn rate. So it’s really being much more honest with yourself.
This week, I’ve interviewed Charles Hudson, CEO and Co-Founder of Bionic Panda Games about how he uses analytics system to increase free to paid conversion.
Charles indicates that they’re trying to find a pattern of the paying customer and try to build a profile around the way users behave and try to predict what they’d like to see in the game they’re going to pay for.
I like the way of finding a winning card and then replicate it and this is why it is very important to know what have caused to that engagement. Measuring the right metrics here are crucial to understand your customer behavior and a comprehensive research should be done on the route which caused the free user to convert into a paying customer.
Charles also talks about the advantages of the freemium model versus the enterprise – what can a freemium offer that Enterprises can’t? for the complete interview see below:
Is there a Pattern for the Free to Paid User? from Totango on Vimeo.
To read the full transcription of the video, click here
Video Transcription:
This is Charles Hudson from Bionic Panda Games. We use our analytic system internally to identify that subset of customers that converts and spends money in the game, and to better understand their behavior and we take that information and then go try to acquire more customers who look, behave like the ones we find that monetize well.
If you look at some of the really big freemium consumer success stories, part of what makes them work is that it allows customers who have a problem, to use your service without having to pick up the phone, without having to have a salesman so i think what enterprise companies can learn is that making your service free and available to consumers who have a defined need is a great way for customers to self-select.
Then you can always go back and follow up directly with the people who are using your service.
