In this bonus section, you'll get access to previously recorded live expert workshops and Q&A from PLG experts such as Todd Olson (CEO of Pendo), Tara Robertson (CMO at Teamwork), Nelson Joyce (Co-founder of Tettra), and more.
Wes:
All right. Welcome, everyone to the second expert series for the product lead growth program. So today we have Nelson who's joining us from Tetra. And I'm really excited about this topic, because two years ago we had Kirsten from Tetra really just share how Tetra was going through their transition from a free trial model to a freemium model. And so, what's great about this session is we're going to see two years later, how has that actually impacted their business and moving from their free trial their free model. So it's going to be a lot of fun. So, while everyone is joining, I have a little question for Nelson. So what has been one hobby you have picked up in the last six months due to this whole pandemic situation?
Nelson Joyce:
Good question. I would say, I've spent a lot of time setting up my video stuff. And my script, my Zoom setup, basically. I'm not as good as Ramley, but he's my idol. Yeah, look at that setup. Beautiful. But yeah, I'm also a avid Twitch streamer watcher. I'm not a streamer, but I watch Twitch streams a lot, so I'm really interested in how people set those up and the tools they use. And my prediction is that Twitch streaming is going to bleed into the B2B world, as I'm sure you think so too, Wes.
Wes:
Yeah. Absolutely. So for everyone who just joined the question I just asked Nelson is, what is one hobby you have picked up in the last six months due to this whole pandemic. So I'll go for one of the ones I've started doing quite a bit, is just afternoon walks. I used to not walk a lot, but ever since this pandemic and not being able to meet up with a bunch of people. That's just something new that I'm still doing quite a lot more. So put in the chat. What are some other hobbies you picked up during this whole pandemic situation? And then, we can just see what else you've gone through. And so, we will kick this off in the next minute, but I'm curious to see what else you've been up to. Walk and drinking. Yes. Pretend to play guitar. That's good. Not a new hobby, but doing more biking. Yes, Scott. That is something I want to do more of too. Bought a piano for the family. That is fun, guys. I remember I used to have to play piano. It's good.
Nelson Joyce:
We're also having our first baby in December, so I would say our hobby has been buying baby stuff and setting up our house. Getting ready for that. [crosstalk 00:02:57].
Wes:
I didn't know that.
Nelson Joyce:
Yeah. Thanks.
Wes:
Awesome. Yeah. That is a ton of work. My sister she has just... I think a couple of kids in the last couple of years. And every time, even if it's your second kid, it's still a ton of work just getting everything ready. So, awesome. Well, looks like the majority of us are here, so I'm just going to kick this off with a quick introduction around who Nelson is, and why I'm really excited about this topic. So, Nelson-
Nelson Joyce:
Let me share my screen here.
Wes:
Yep, go for it. Alrighty. So while you're doing that, yes, Nelson is the co-founder of Tetra, as you can see below there. But they have, over the last two years moved from free trial to freemium. And so, what's going to be great about this presentation is you're going to see some of the back end side of it, what were the results? What were some of the big risks they took around this? And you're going to see the inside out of it. So feel free as Nelson is going through this, add questions in the chat. He's told me, I can interrupt him, and he's not going to get mad at me. So feel free, ask those questions, and I want to make this as interactive as possible. So with that, Nelson, why don't you take it away.
Nelson Joyce:
Yeah. Thanks, Wes. And thanks everyone for being here. Hopefully, I can give you a very transparent view of what we've learned switching from free trial to freemium. We like to share a lot of the data, so I think you're going to be interested in want I have to share. So like Wes was saying, looking back two years ago, this decision we made was probably the hardest decision we ever had to make as a business. It was also really risky. So scary decision, really risky, and it's good to look back at it now that we know what actually happened.
Nelson Joyce:
So more background about me, I'm a product designer by trade. I used to work at a company called HubSpot from 2011 to 2015. And worked on the first freemium marketing product that HubSpot launched there back in 2013. And then founded Tetra in 2015. And then like Wes said, launched their freemium in 2018. So I've had some experience launching freemium stuff in a couple different places. And just more background on Tetra itself. We're B2B knowledge management tool. So businesses use our software to write down documentation about their procedures, their processes, so that employees can answer their own questions, find out how to basically do their jobs, like a help center for your customers, but it's for your internal employees.
Nelson Joyce:
And we've raised $1.5 million, not 1.5 dollars, $1.5 million between 2016 and 2018. We have 550 around SMB customers, we have just shy of one million ARR, but I'm going to round up. And we run cash flow positive, mostly because we have a tiny team. And for more context, we don't have salespeople. So that's important context for this talk. And like Wes said, it was in 2019 we last presented this information. I think it was at the PLG Summit in January 2019. And it was only five months in, and we shared why we did it and the early results. So with that today, I'm going to recap why we switched to freemium, our thought process behind it, and then update the numbers, and more of the stuff that we've learned in those two years.
Nelson Joyce:
So without further ado, why did we switch to freemium. So back in 2017, we had this 15-day free trial model, pretty standard, good, better, best pricing, no credit card required up front. But yeah, the trial was capped at 15 days. So basically, the realities of our product as we worked within that model, and talked to our customers, and talked to more prospects who lived in that world. The reality is, because it's a knowledge based product, it takes a lot of setup. You have to import a lot of your data, you have to wrangle people to write stuff down, you have to train people how to use it. Another important thing is that, the tool is a multiplayer tool, you basically can't use it by yourself, you can't get value out of the tool unless your team is using it with you. So that requires people to get buy in. So they have to literally get someone to give them the money to buy it. They have to train people on it, they have to get others to jump into this system and learn it.
Nelson Joyce:
And 15 days really wasn't enough for people to do all that stuff. So what ended up happening was, in this 15-day free trial model, we would basically have to ask for money before we could provide any value to people, which is hard to do. So what we wanted to do instead was first provide value than ask for money, especially since we didn't have salespeople, this is a much easier pitch to make people once they've already gotten value out of the product. They're much more likely to actually give you money for it.
Nelson Joyce:
So ultimately, why we switched to freemium was we couldn't provide value quickly enough in the trial period. Whether it's 15 days or 30 days, we really felt like we couldn't provide enough value to get people to give us money, essentially. Anecdotally and interesting, I included it here because I thought it was really interesting that we've learned this, was that people are actually scared to start trials because they didn't think they were going to be able to make a decision in 15 days. So they saw that 15-day number and they were like, "Well, I'm not going to be able to pick a knowledge management system in 15 days, so I'm not even going to try to start a trial. Maybe I'll do it later." And then they will disappear and never come back, essentially.
Wes:
And Nelson, to add to that too, did you ever think of extending this to 30 days? Tien was just wondering that.
Nelson Joyce:
Yeah. I mean, even 30 days it didn't feel like enough. I guess it just felt arbitrary to just pick a higher number and just keep picking a higher and higher number, instead of just saying, "Use it until you've found value." Because some people it takes one day, some people it takes 90. And we've had customers that it's taken almost a year before they buy, and now they're some of our best customers. So if they only had a 15-day free trial, they probably would never become customers, or they may not have. So it just felt arbitrary to pick a random number out of a hat, basically. So yeah, that was our thinking there.
Wes:
Okay. Awesome. Thanks for explaining that.
Nelson Joyce:
Yep. Yeah. And then, like I said, we don't have salespeople, so we really didn't have the person power to go into hand-to-hand combat with people and convince them that they wouldn't get value, if they just gave us money first. And going back to that second point, someone having a free account is much more valuable than them never starting a trial in the first place, because we can teach them over time, via automation, via courses, with technology, basically. So that's why we went with this freemium.
Nelson Joyce:
We thought it's much easier to ask for money after you've provided value. So this is what we switched to back in August 2018. We still had the good, better, best pricing, but we had that freemium plan that you basically started on, literally called the plan starting. And the one CTA was just to create a free account. And then, will be limited the free account on, you can only have 25 pages on the free account. So you could learn how to use it, get people in the system, start writing stuff down. Start getting value out of it, but you really couldn't really use it. You couldn't really roll it out to your whole team with only 25 pages in there.
Wes:
How did you decide on that number? Because a lot of folks here are thinking about, we have to restructure our pricing as part of this move from sales lead to product lead. But do we just pull a number out of a hat, or how do we do this research? What is the best way to look for that value metric?
Nelson Joyce:
Yeah. I mean, definitely look at the data. When we looked at the data, it was basically a linear increase in conversion for every new page we added. Actually, it grew pretty fast one to four pages, and then at five it flattens up first. Straightened out, I should say. So what I'm saying is that, for every new page you add during your trial, the chance that you would convert would go up in a linear fashion. So I mean, for us was just the data because it flattened at five, it was like... I think what we actually did was, we give you five for free, and then you can unlock more by doing stuff in the product, which I'm not going to dig into.
Nelson Joyce:
So we gave you more pages for free up to, I think it was 25, by inviting users, by creating content, by actually doing stuff in the product. So we use that as a carrot to get people to keep doing stuff in the product too. Yeah. So like I said, August 2018, we made this switch. So in making this switch, our hopes were that we could increase signups because people wouldn't be afraid to start trials, and then we were hoping that we would get more upgrades because people would set a solid foundation and upgrade over time versus trying to get all the money upfront.
Nelson Joyce:
And we were afraid that support would be swamped. All these new people coming in, trying the product. Hopefully, maybe support would be swamped, and we were also afraid that new MRR would tank since that 15-day cut off wasn't there. We were afraid that maybe there wouldn't be enough incentive, maybe your time to close would be so long that we couldn't keep growing.
Nelson Joyce:
So without further ado, let's dive into the data here. So the first question, will support be swamped? We look at the data. You can see that we switched to freemium. This is total support tickets per quarter, starting in Q1 18 and then Q3 18 is when we made the switch. So as you can see we did have a pretty good increase in support ticket right after the freemium switch, and then over time we actually have been able to decrease the support load. So the lessons learned here was, you got to prepare for increased support when you make this switch. But over time, it forced us because we couldn't just hire more support people, it forced us to get better at support.
Nelson Joyce:
So we really had to invest in our help center, and support automation. And then over time, that's why... If I go back to this, you can see it actually starts to go down again. It was a forcing function to force us to get better at support. And then, this isn't the product of us hiding support stuff from people and are not allowed to come talk to us either. So a silver lining in this is that, because... So I'll say 40% of support is from freemium right now. But the silver lining is that because all those people in freemium are talking to us, it lets us leaning into helping us selling. So all these people in the freemium accounts, we can teach them how to use the product, get them set up in their accounts well, so that they will eventually convert later. So they're actually talking to us which is good.
Wes:
And Gareth had a question about that around, did you ask your free users to help each other and build that community around solving some of those support tickets as a little more scalable, versus you having to do all that support?
Nelson Joyce:
We have not done that yet. No, it's mostly just us getting smarter around support, just being better at it, having better help docs. We'd haven't done any community support, although it would be cool.
Wes:
Yeah. Awesome.
Nelson Joyce:
All right. So the second hope, or I guess the first hope was, we could increase signups here with the freemium switch, which we definitely have. So before the freemium switch, we were doing 1000 new accounts per quarter, and then after this switch we've had this great rise, basically more than doubled, sustainably doubled signups. And this is not doubling in traffic either, this is a straight conversion rate increase, basically. So lessons are in here was that we sustainably doubled signups, more than doubled, I guess. [inaudible 00:17:44] this, just that more people are willing to try a product that's tough to set up. They know they have more time. It's not like we're forcing people to give us credit cards for the trial, it's both free trial and freemium, were both free. And we had the same amount of traffic, the difference was people knew they had more time.
Nelson Joyce:
All right. Negative was that, there are definitely more tire kickers, which we call them, which is just people check out the product with no actual intent on buying it. Which is draining the resource a little bit, but that's okay. And then, with all these signups it allows us to use automation to keep people engaged, keep teaching people over time, keep growing a base of users, and a community, and people.
Wes:
And I want to touch on that tire kicker part. Because Gareth asked a question earlier, and I think it ties into this really nicely. So whenever I hear a lot of companies say, "I've launched freemium, there's a lot more tire kickers." I'm like, "Yeah, that's what you'd expect." But sometimes people will say, "Well, here's the solution. We ask for people to sign up with their credit card. This will solve this problem." So did you ever consider asking people to sign up with their credit card initially to get rid of those tire kickers, or did you find that the overall benefit of having some more tire kickers around wasn't all that bad?
Nelson Joyce:
Yeah. I mean, we've never tested it. It might be better. I don't know. I mean, I intuitively think the conversion would go down, but I can't tell you that for sure. So I don't know, because we never tested it. But I mean, it feels worth it. Even if that person is a tire kicker they could... We have a lot of people who've never actually used the product, but tell other people about it on Twitter, because they just set up an account and they know about us. They have an account that they don't actually use, but then they go tell someone else about it. So I would say the more people that have a freemium account is better in general, just because of those things that can happen even if they never become customers. So I would say it's net benefit.
Wes:
Okay.
Nelson Joyce:
But I guess I will say, you can add a credit card in the product before you buy, and it goes back to what I was talking about with unlocking more pages. All right. So we have a getting started checklist that stays on your dashboard in the product, and you can't get rid of it until you put a credit card in, so some people actually just put their credit card in even if they're out paying just to get rid of that getting started checklist, but I don't actually have the data on whether that helps or not. So it's always interesting to bring up.
Wes:
I think there is a bunch of different ways you can incentivize people but that is a new one. And I think if it is helping them get through the getting started checklist, if it is going to be a step they have to do it anyways there's no harm in it, as long as it's not too enforceable.
Nelson Joyce:
You can collapse it.
Wes:
Yeah.
Nelson Joyce:
All right. So looking at revenue now. We were afraid that new MRR tank would tank. What I mean by new MRR, is new MRR from adding customers not from upgrades for existing customers, new MRR from net new customers. So if you look at the MRR, we actually did a pretty good decrease. And I will say, the three quarters on the end are very COVID influenced, so the next two charts are going to be weird at the end there, but notwithstanding. We definitely did have a drop off in the new MRR which is sustainable even lower. But we were hoping for more upgrades. That's a tradeoff of making them. We're just trading off new revenue in the short term for upgrades in the long term. And if you look at upgrades, we actually have had a massive increase in upgrades.
Nelson Joyce:
So yeah, after that switch, we've basically, what is that? Almost more than tripled. Is that a triple? Yeah. We tripled the amount of upgrading we were getting per quarter. And as you can see Q3 was actually our best quarter in upgrades. So we have at least net for now covered from the last couple of quarters.
Wes:
Just so everyone is on the same page, can you just quickly differentiate what you mean by the difference of new MRR and upgrade MRR? Just because I know the difference but I'm sure maybe there's one or two people that might not quite understand.
Nelson Joyce:
So new MRR is basically MRR you get from a new customer, essentially in their first month. So if I become customer in October and I pay you a total of $1,000 in MRR, that would be $1,000 of new MRR. And then, if in month two I upgrade or add two users at $5 a user, I would have $10 upgrade MRR in the second month. Do you think that is a good enough explanation?
Wes:
Yes. No. Thank you for explaining about that. I can definitely clearly see on the upgrade MRR part, when you explained adding more users why this is obviously so much higher, and keep going up.
Nelson Joyce:
Yeah. Okay. So to go back, we've traded one for the other but is the net positive. So if you look at the net, and stack them on top of each other. Again, ignoring those two bad quarters or three bad quarters there, it is a step change improvement in the freemium switch, where we're just adding a lot more MRR per quarter because of this switch. And so lessons learned were, we did have a small slowdown at first. So you can see Q3 and Q4 were actually lower than Q1 and Q2 because of that switch, took some time to spin up the flywheel there, and then... But we have sustainably increased conversion in the long term, so this definitely takes more patience. This type of model, for sure.
Wes:
Nelson, just to answer one student's question and Claudia was asking in the chat, is that the average MRR per quarter that you're showing, when you combine both the upgrade and new MRR?
Nelson Joyce:
This is like the additional MRR added if you... Yeah. We're adding over. So those three quarters we added 10,000 more new MRR on top of it. So we went from 30 to 40, or something. I don't know what the actual number was.
Wes:
Okay. Awesome.
Nelson Joyce:
If that makes sense. Yep. The actually MRR number would be the accumulation of all these different things [inaudible 00:25:23].
Wes:
Awesome.
Nelson Joyce:
Okay. So I don't think I had this on the hopes list. But ultimately, we're all trying to do in SAS businesses is increase our retention rate. This is the number one thing we're all trying to do, retaining customers, having them upgrade more. So this chart is a little bit hard to read, but I'm going to do my best to explain it. So if you look at the left column there, starts at June 2017 and goes to August 2019. So this is each month, the new MRR we've added right next to it going through time. And then, each column to the right is that cohort of people who sign up in June, the amount they paid us relative to the initial MRR.
Nelson Joyce:
So as you can see, let's look at that top line. We added 1300 and 92 in new MRR. And in the first month after they... Or I guess, the first month after they became customers, they paid 105% of the 1392. So basically that's upgrades you're seeing. And so, if you look down to July 2018, was when we switched to freemium, you can see basically every cohort before we switched to freemium, months 8, 9, 10, 11, 12, 13 we actually ended up with less MRR than what we started. So that we churned out all that MRR and those cohorts actually started shrinking.
Nelson Joyce:
And then if you look at after July 2018, almost every cohort after July 18 actually grows, and in some cases grows a lot. If you look at that July 2019 line, second from the bottom, at month 13th it's 178% from that initial $2,500. So it's almost doubled that cohort of users all from upgrades. So this chart makes sense. It's hard. If you haven't looked at cohort charts before, it's hard. Any questions on that?
Wes:
I will definitely add, because I remember just yesterday we were going through this one piece around, how does being product lead help with retention. And I believe this is a perfect fine example to dig into if you want to pull up the screen, and screenshot this because this is just a living case study of just how it does. And maybe I like to hear on your end too, why you think this is contributing to better retention on your end.
Nelson Joyce:
Yeah. So I think one thing is that because you're not forced to make a decision to buy, you only buy if you want to buy it. And if you want to buy it, you're going to retain better, because you basically are motivated to buy the thing. Where sometimes what can happen in a free trial model, and this definitely happened to us, and I figured from other people, people will just buy at the end of a trial so that they can keep trialing it. It actually happens a lot. It's basically, they just want to extend the trial out a couple months, and they're willing to throw some money at it to figure out. And that's not a good customer. Some percentage of them will become good customers, but people who are just adding a credit card to get a few extra weeks, or a few extra months of a trial, on average is going to be your worst customer.
Nelson Joyce:
So you basically can weed those people out completely, your retention is going to be better. So it's almost gamifying it a little bit, or gaming the number a little bit by not even letting people, or not even giving people a chance to do that. So I think that's one factor. I don't think that's the only factor. I would say it's not just freemium too here, it's also I think our pricing just got better, in general. The way we were pricing was much more aligned with value, also the product gets better over time, and we get better over time. So there's a lot of things that compounded here. [crosstalk 00:29:43].
Wes:
Yeah. And I guess for everyone listening to I want to, I want to hear who here has more than once signed up for a trial, then they run out of time, and then you decide instead of paying for it, you just use a different email, or something to continue to get access to that product? I can't be the only one here. Raise your hands, or press one, if that has been you. Yeah. Clearly everyone here has, this isn't something terrible to do. If you want to not feel forced from this timeline, it's so common for so many people to do. So thank you for pointing that out, because I'm with you Nelson that when you have freemium, you're not forcing people to make this jump to become a paying customer too soon, it's really on their timeline, whereas a free trial is often on the company's timeline, and that's why it puts a lot more pressure, can be good in some senses, but when it comes to retention, it's hard to argue with those results.
Nelson Joyce:
Yeah. Another thing I'll say... Excuse me. Another thing I'll say is, we were getting asked for trial extensions constantly, all the time, and it was annoying to do on the back end, took time and support. So that's gone completely now. So that was another good thing. So I also want to look at a business that doesn't have freemium. I saw this tweet from a founder Amar, who I can't remember what his business does, but it's a SAS product. So he has a complete opposite model, which he requires a credit card upfront, and it's a trial that auto converts. It just charges you at the end of the trial. So it's basically the complete opposite end of the spectrum from freemium.
Nelson Joyce:
And what you see here is the value of the cohorts starts really high. My cohorts are 2,000 and 1,000, but his there's five, 6000. But he churns out these cohorts really fast. I don't know why, I haven't talked to his customers. But when you're talking about credit card upfront, this is what your charts are probably going to be like. And so this is my chart, the same chart. The cohorts are smaller, but they grow over time, they don't shrink over time. So it's basically like building on quicksand versus building on bedrock, you're always trying to fill a leaky bucket, basically.
Nelson Joyce:
So lessons are in here. Got a lot of their retention. And we're in the model where we have small numbers that grow versus big numbers that shrink. I guess you could argue either way, but I would much rather have small numbers that grow versus big numbers that shrink, and that's probably the tradeoff you got to think about here. So I guess, at the end of the day the question is, was it worth it? And I'm curious what you all think, do you think it was worth it? I mean, obviously you don't have all the data, but who thinks it was worth it?
Wes:
Yeah. Just put in the chat box [inaudible 00:33:23]. Do you think going freemium in this case made a ton of sense for Nelson? Just type a yes or two if that's quicker for you?
Speaker 3:
Can I ask a question? Nelson, you showed that for a couple quarters there you were down, and so you didn't see any of the results just yet. I'm just wondering, how did you stay cool during that period of time, and how you stayed focused in believing like, "Hey, yeah, we made the right move." And you didn't go back and say, "Oh, shit, we just screwed it. We have to roll back in and go back to where we were before."?
Nelson Joyce:
Yeah. I think-
Speaker 3:
How did you handle that?
Nelson Joyce:
Well, when we went into it we said, we're going to give it a year no matter what happens. So we were in a position to be able to do that. But yeah, I would definitely say we're doing this for six months or a year, we're not going to switch it no matter what happens. Because it also forced us to fix things that were wrong. Like that pricing I showed you, that we switched to, the freemium, we've changed it multiple times because of what we were learning, what we were seeing. I would also say what's going to happen is because there's a lot of work you have to do that you're not going to think of until after you switch, and you're like, "Oh yeah, we got to change the onboarding. We got to change the billing screens. We got to change how the billing works. We got to change log in."
Nelson Joyce:
There's all this stuff that cascades out. "We got to change all the help docs, we got to change all the website pages." So that stuff takes a while to fix and clean up too. I mean, that's the way we operate anyway. We just launch stuff and then fix stuff as we go in the true startup fashion. So yeah, my point is it takes a couple months or quarters to actually fully realize what your freemium machine is actually going to look like.
Wes:
Yeah. And Gareth was adding to that as well, what other pain or maybe even cost did you realize throughout the entire organization as you went through that transition? Because you mentioned help docs, onboarding, what were some of the other big things that you had to change?
Nelson Joyce:
I guess another one was we had to combat some spam type stuff. People were using our tool for phishing, or email spam, so there was that that we didn't really think about, that we've had to spend some time on. I don't know. There isn't really a big infrastructure costs, because freemium accounts are usually smaller and don't really eat up a lot of technical resources, so I wouldn't say that really mattered so much. Yeah, I will just support just those things I mentioned, spam, and fraud stuff support.
Nelson Joyce:
I guess another one you got to think about is, if you're out there trying to get feedback from customers, you're going to get a lot more feedback, and a lot of it is going to be from not target customers, so you got to learn how to filter through your feedback and make sure you're listening to the feedback that's actually relevant to you, and not just listening to some. Because at least with our type of product, it's general ish, so people try to jam a square peg into a round hole and say, "I want to use it for this thing." Which is not really meant to be used for, so you got to filter out that feedback. So while you're trying to use it for something it's not built for, I'm not going to change the product to support that use case.
Wes:
So we've got two more questions around tire kickers. I saw your question a while ago, Henry, but just wanted for this time. So Henry is actually planning right now to force SMS authentication on account creation to avoid tire kickers. Any thoughts on whether this would work well? And also love to hear how you added to what you do right now to verify users.
Nelson Joyce:
Yeah. I mean, it depends on the product probably and the user. You probably know better than me. But what we do is we just basically severely limit the account until you've added a credit card, in terms of what you can put out to the world. So you can't send a bunch of invites until you've added a credit card, you can't share a page publicly until you've added a credit card. So that's basically what we use as validation. I mean we've had people use stolen credit cards to get around that. But we also have some automated scripts that look for things that are suspicious to keep us in the loop, and to manually go through them when we see them. So yeah, using the credit card as validation and manual process via automation that looks for stuff.
Wes:
Okay. And let's say someone signs up for your product, a year, maybe two years go by, they're not logging in, what do you do with those accounts?
Nelson Joyce:
Yeah. So we delete a lot of stuff out of the accounts. My cat is coming to say hi.
Wes:
Yeah. Hi.
Nelson Joyce:
Yeah. We delete a lot of their data. Delete their search indexes and stuff. And we haven't done a lot with it, I'd like to do more. I'd like to actually try to reach out to those people. I mean, they stay on the product updates list, so they see new updates that are coming out. But yeah, we don't do enough, I would say. Mostly just product updates, clean out some of their crap, so it doesn't cost us money to host it. Yeah. I'm trying to think if there was anything else we do. No. That still has some value. It has more value than someone just visiting your website and disappearing forever. So emails are currency.
Wes:
Yeah. Absolutely. And there's some really good questions from Anton and Scott around just, how did you decide what goes into freemium? Because there's always this balance, freemium is a customer acquisition model. But as part of that, there's pricing, there's your revenue model, and it all ties together. So how did you decide, this is what we're going to include in free, and this is what's going to be required for someone to pay?
Nelson Joyce:
Yeah. I mean, we didn't want people to downgrade, obviously. I didn't get into this still, but we didn't think about that a lot. So I mean, it wasn't scientific, it was more based on what we knew about our customers, and about the product. So we asked ourselves, "What is the threshold for getting value, but not being able to really use it in the way it's intended?" So we decided on pages at first, we've switched it since then, it's now users. But initially it was, if you're really using this thing with your team, it's going to be really hard to only have 25 pages. And some people really did only have 25 pages, and we're still using it to get around it.
Nelson Joyce:
But yeah, you just got to ask yourself, what... You're going to make it basically impossible for, or we're going to make it really hard for a current good customer to switch to it. That's a good model. It would be impossible for our best customers to downgrade to the freemium plan is how we thought about it. And I feel like that is a good tipping point, or a good balance point to think about. Yeah. I don't know. That's all I got on that.
Wes:
Okay. Yeah. And I guess, how did you decide that's good enough? We're going to give away 25 pages, this is going to help people experience the value of the product, and be just enough that they're going to decide once they hit that limit it's time to upgrade.
Nelson Joyce:
I mean, we didn't know, we just tried something, and then looked at what happened. And it wasn't the right thing, we switched it. So we switched it to users. So I guess I would think about it, launch something and then measure it, and watch what happens, and listen to people, and then make changes as we go. The mental model I have really for freemium is that it's a free trial that doesn't have a time limit on it. At least that's what we do. You can just use the freemium product forever. You can just use the freemium product to figure out if you want to buy the product. It's a slight difference there, especially for us which we're B2B, team based product, you can't use it by yourself. Where a lot of freemium type products are like, you can use the freemium product forever and get unlimited value out of it, and then upgrade to the super plan, really.
Nelson Joyce:
But we're not like that, it's not like 90% of the value is in the freemium plan. We just want you to feel what it's like to be a user, and be a customer, get a taste of it so that you become a customer. You see that slight difference. It's not an addition on top of the product, the paid plan. The paid plan is the product, the freemium plan is, I guess, a subset of the actual product. It's a slight difference, but I think it's a good one to-
Wes:
Totally. And what I really love about this approach too, is I feel like a lot of folks, including myself sometimes for stuff in business, we're always looking for, what's the formula? How do we do this? Always a repeatable way for it. And whenever it comes to this decision, specifically around, what do we include for free? What do we put behind the paywall? Every time I talk to someone who's made this transition from free trial to freemium, or even from sales led to a free trial or freemium, it's always going to be at the end of the day, there's some level of, you got to go with your gut, decide what it is, and you can reevaluate.
Wes:
I don't know, Ramley, if you're able to, but there's also another presentation from the last product lead summit from Nathan Berry who runs ConvertKit. And so he did the same thing, when they went from a free trial to a freemium model, they initially started with giving away 200 subscribers, then they upped it, then they upped it after that. And so, they just wanted to see and try and test, does giving away more of this actually increase the amount of signups? Does it also increase the number of people paying for this? And so, you're always trying to balance that. And so, thank you Ramley for dropping that link. If you want to dig into another example of a founder who's gone from free trial to freemium, make sure to check out on our after.
Wes:
But this has been really incredible, Nelson. And I do appreciate you for being so open about this transition from just how you got that free trial realized. There's some issues here, people are asking for extensions, they are re-upgrading, enabling new email addresses, and all those fun things. But taking that chance on freemium is massive, and I really enjoyed even seeing the cohort analysis as well, because it just shows when you go freemium, you're not forcing people to make this decision around, "Hey, you need to upgrade now, because your trial is up." It's on them, the onus is on them to upgrade. And so, you're going to get a lot more high quality people signing up, might not be the gangbusters as amount as of what we want right away, but it does grow. It's the long-term strategy moving forward.
Wes:
And so I want to ask everyone listening, if there's any other questions you have for Nelson, now is the time to drop them in the chat. And what we are going to do to make sure everyone is aware. So last week, we rolled this session into the next expert series that starts at 1:00 PM. But we're actually changing that process, because we realized I went over time last time, and it wasn't a good experience for the onboarding program. So we are going to end this, but Ramley is actually going to put the link in the chat. So if you'd like to join next session starting at 1:00, there'll be a little break, so you can grab a coffee, grab some water, go to the bathroom, all that stuff, and they can join me into the next one. So from Tien, great question. What are your next steps on the PLG journey, Nelson?
Nelson Joyce:
Yeah. Good question. I would say we've been pretty on the bleeding edge of it, the PLG stuff. Mostly out of necessity and selfishness, not because we're some really smart people, is just how we're wired to do stuff anyway. Yeah. I would say, on a really high level, I think software onboarding and SAS onboarding in the next 10 years is going to look a lot more like video game onboarding does now.
Nelson Joyce:
And if you're not familiar with the way video games onboard people, it's very much... They're basically experts in onboarding, you have to... Video games don't have pop ups and things that explain how stuff works. They don't have onboarding emails that teach you how to use the product. It's an extremely complex thing, tons of controls, and they can teach you this stuff really quickly, and they teach you by you playing game. So-
