How to Build a Funnel that Will Grow Your Subscription Business the Fastest

How to Build a Funnel that Will Grow Your Subscription Business the Fastest

Lars LofgrenMarketing Analyst - June 2012 info@kissmetrics.com - Confidential - Do not distribute

@larslofgren #KISSwebinar

We’ll cover...

What is activation?1

4 levers for industry domination2

Common pitfalls of testing3

WHAT ISActivation?

Your SaaS funnel

Not only do people need to create an account, they need to start using your

product.

Are people using your product?

No value = no sale

Activation = the critical step people need to take in order to get value

from your product

How to define activation

Facebook Activation

Evernote Activation

Instagram Activation

Basecamp Activation

It’s the most important part of your funnel and everyone forgets it.

Make sure to track activation

FUNNELLevers

A change to the funnel that helps you maximize users or revenue.

What’s a lever?

Free Trials

Lever #1

Trial Funnel

Visited Site Trial Sign Up Activated Upgraded

Basecamp Free trial

You have a limited number of days to make the sale. Don’t waste them.

On-ramp program is critical

The new user experience (NUX) should be completely different than

your regular program.

What’s your on-ramp program?

Shopify NUX

14, 30, or 45 day trial?

Try replacing your free trial with a 30-day money back guarantee.

Replacing the free trial

Freemium

Lever #2

Freemium Funnel

Visited Site Free Sign Up Activated Upgraded

Freemium is where you want to be.

Looking for user growth?

There’s a balance between offering enough so people sign up but not offering too much so they never

upgrade.

What do you limit?

Common Freemium Limits

Dropbox = 2 GB of Storage1

Evernote = 60 MB of Uploads2

MailChimp = 2,000 Email Subscribers3

MailChimp Freemium

Very difficult to track changing behavior over time with a long-term

funnel.

Freemium users take forever to upgrade

Cohort reports help a lot with freemium

Lever #3

UP-FRONTCredit Cards?

At account creation or at upgrade?

When do you collect credit card info?

Fewer people will create an account but a LOT more will upgrade

(especially if the upgrade is opt-out).

Credit cards up front

Much easier to get people to create an account, much harder to get them

to upgrade.

Credit cards at upgrade

AWeber $1 Trial

If users, try no credit card. If revenue, try up-front credit cards.

Maximizing users or revenue?

Lever #4

MONTHLY OR ANNUALBilling

Monthly gets more users, annual gets more revenue.

Users or revenue?

CrazyEgg used to be monthly

Your Funnel Levers

Free Trials1

Freemium2

Credit Cards Up Front3

Monthly or Annual Billing4

Test different levers for most growth

COMMONPitfalls

WHAT TO FOCUS ONFirst?

What step is a serious roadblock for people?

Look for bottlenecks in your funnel

Very few people go from Activation to Upgrade

Use levers to fix bottlenecks

ARE YOU ONLY TESTING THEFunnel?

Variation B performs the best in this funnel

Variation A gives the most revenue

SHOULD WE TESTRandomly?

If you just start testing without first understanding user behavior, you

won’t be learning.

Why did you get your results?

Once we understand our users, then we can work the levers for the best fit.

Do you have qualitative data?

Talk to your customers.

Where do we get qualitative data?

Other options?

Q&A Time!Lars Lofgren

llofgren@kissmetrics.com@larslofgren