Recruit your customers to be marketing agents

In an earlier post about freemium business models, I talked about how customer acquisition investment ROI is amplified when you can leverage the inherent social aspects of the problem your product solves. I think of this as recruiting your customers to be your "marketing agents". Customers become marketing agents when they are doing the heavy lifting to attract new people into the product experience.

A customer's advocacy is far more effective at driving action than anything marketing can do by itself, so this approach can be highly efficient. Plus, the investment made to acquire that first customer can be spread across all of the people they eventually bring in -- increasing the effectiveness of ALL of your marketing investments.

While it is not easy to make this happen, there are some straightforward rules of the game.

Leverage what is social about your product
Your product's experience must take advantage of the social, viral behaviors inherent in the problem it solves. Stay focused on your customer's problem, remembering that social happens whenever one person shares an experience with another person and that social is not just Facebook, Pinterest and Sh#t Silicon Valley Says meme videos. Understand how people interact together in order to address the need today and insure your product experience takes this into account.

Lower the bar to sign up
It must be drop dead easy to sign up. No one wants to inconvenience their friends/coworkers, so they will not invite others in unless their own sign up experience was friction-free. Spend the time to optimize that experience and it will absolutely pay back with increased viral growth.

And if you utilize social sign up (and you should), make it clear what data you will be accessing and that you would never post or share without their permission. Users like the ease of social sign up (not another user name and password to remember!) but fear having their privacy comprised or unwittingly spamming their friends.

Make the free experience valuable
It's not enough that you make it easy to sign up. All new sign ups must quickly see the value provided and, ideally, personally feel the benefit. This is especially true for those users who are invited in by other users. Invited-in users are influenced by their relationship with the person who invited them to check it out, but their tolerance for any speed bumps in the getting-started process is lower so their 'time to value' needs to be short and sweet.

And when they experience the benefit, it is positive feedback for the user who invited them in because his experience just got better.  And with positive feedback he is that much more likely to continue to being your marketing agent.

Activate, activate, activate
A solid nurture and engagement strategy is another necessary element for success. You must encourage adoption of those product features that best address the user's need and which benefit viral, word of mouth sharing. In-product, triggered messaging as well as email and social channels must all work together to make it happen.

The benefits of turning your customers into your marketing agents are significant and worth the investment of your and your team's time. You'll be a hero with your CEO and CFO as well as in your customer's eyes.

Freemium is a "little black dress"

There are so many benefits of a Software-as-a-Service (SaaS) subscription model that I'm not surprised that it's become the darling of the start-up set. And now even Enterprise software is moving in this direction.

The most attractive business benefit of SaaS is the predictability of revenue -- and in today's business environment, that is nothing to sneeze at.

The secret to SaaS success.

Adding freemium to SaaS can be the secret ingredient that has a key business benefit: improved marketing investment ROI. And as a marketing leader, isn't this our holy grail?

Freemium is when you give away (free) some valuable part of your paid-for (premium) product. Free + Premium = Freemium.

Freemium as a category includes limited-time free trials. However, in my experience, it is when you offer a persistent free experience that the most significant marketing efficiencies are achieved. Why? Because with a persistent free product your existing customers become marketing agents for your product. And that allows you to amplify the investment you made to originally acquire that user.

Let's do the math: freemium ROI is real.

Let's say you invest $1,000 to acquire a new customer with a lifetime value of $2,500. That's already an ROI to be proud of. Now if that customer were able to bring you two other customers over his lifetime, your Cost Per Acquisition (CPA) is now $300 for each of those customers, for a total lifetime value of $7,500.  Wouldn't your CFO love to hear that?

Of course there isn't just one thing you need to do in order to successfully execute a freemium business strategy. In an earlier post I likened managing a freemium business to flying a plane because marketers must actively watch and calibrate many different 'dials' up and down the funnel, all at once. But one of the most important things you can to do is to build the product experience in a way that takes advantage of social behaviors.

Successful deployment takes advantage of social behaviors.

Your product must be built to take advantage of the social, viral behaviors inherent in the problem your product solves. Social behaviors aren't just what happens on Facebook or Pinterest, and viral doesn't just apply to grumpy cat videos. Social happens any time one person shares an experience with another person.

Take a business meeting, for instance. I would bet that your first thought about meetings isn't that they are "social" or "viral". But, think again. When I am organizing a business meeting with you, I am inviting you to interact with me around a relevant, common interest. During that interaction, content -- in the form of written notes or whiteboard photos -- are created and shared. Guess what? All that is social behavior. If you are thinking about freemium, you need to take a fresh look at the problem your product addresses and think about how the relevant social aspects can be enhanced.

To be clear, I am not advocating social "lip service". It is not simply adding like or share buttons into the product experience. The product experience needs to remain true to the need it is addressing and the experience should facilitate the social behaviors already occurring around that need.

Take that dress out of the closet.

Freemium and SaaS may be the current "flavor of the month" but success with this model still comes down to an understanding of the customer need and creating an end-to-end experience -- from marketing through product -- that meets that need and delights the customer. For me, Freemium is like the "little black dress" -- a classic, just being rediscovered.

Freemium - It's Just Like Flying a Plane

Earlier this week TechCrunch published another article about "freemium".  Written by Jules Matz and Daniel Barney, it addresses that pressing question of: Should Your Startup Go Freemium?

Having spent years running marketing for freemium, SaaS businesses, I love reading and talking about this very topic!  And this article does a great job of walking through the various metrics and levers that need to be thought through before selecting a freemium business model for your business.

I often compare what it takes to manage a freemium, SaaS business to a pilot flying a plane. The pilot needs to watch all of the dials and levers in the cockpit at all times as each provides insight into one key function that is helping to keep the plane in the air.

Similarly, with a freemium business, there are multiple areas  - across product experience as well as up and down the marketing funnel - that need to be actively measured and managed. The business can't over-correct on any one element to the exclusion of the others else "the plane" will fall out of the sky. Of course different areas may need more attention than others at any given time, but in the end, it all needs to work together.

Future Deep Marketing Thoughts posts will cover each of these areas in more detail.