Choose Your Weapon - Free Trial, Freemium, or Demo

Decision-Making for Models: Choosing between free trial, freemium, or demo models is critical and must be done with caution.

• Free Trial: Limited-time full or partial product access.
• Freemium: Unlimited time access to a portion of the product.

MOAT Framework:

1. Market: Is your strategy dominant, disruptive, or differentiated?
2. Ocean: Are you in a red or blue ocean business?
3. Audience: Is your marketing top-down or bottom-up?
4. Time-to-Value: How quickly can you demonstrate value?

Market Strategy Types:

• Dominant Strategy: Superior product at a lower cost. Freemium works well if the Total Addressable Market (TAM) is large enough.
  • Is your TAM large enough to support a freemium model?
  • Does your product solve a specific job significantly better and at a lower cost than anything else on the market?
  • Can your user realize significant ongoing value quickly with little or no help from company personnel?
  • Do you want to be the undisputed market leader in your category?
• Differentiated Strategy: Specialized product for a niche market. Free trials and demos are effective; freemium often isn’t suitable due to complexity.
  • Is your market made up of underserved customers?
  • What is your TAM?
  • Is your Annual Contract Value (ACV) high enough to support a low- or high-touch sales team?
  • Your potential customers may experience an “Aha!” moment during a free trial?
• Disruptive Strategy: Lower-priced, simpler product for over-served customers. Freemium thrives here by attracting customers with lower costs.
  • Is your market full of overserved customers?
  • Are you competing in a hyper-competitive market?
  • Is your market big enough to support a freemium model? (Tip: Look at your competitors to gauge market size.)
  • Do you have the resources to support a freemium model?
  • Can your onboarding be completely self-service?

Key Considerations:

• Determine TAM and market needs.
• Ensure the product can quickly show significant value to users.
• Align model choice with growth strategy and market conditions.

Questions to ask when deciding on your go-to-market strategy:

• Do you want to offer the best solution at the lowest price? (Dominant strategy)
• Want to offer the most personalized solution at the highest price to underserved customers? (Differentiated strategy)
• Do you want to offer the simplest product at the lowest price to super-served customers? (Disruptive strategy)
• Or are you planning to use a hybrid strategy?

5 Actionable Insights:

1. Identify Your Growth Strategy: Assess if your SaaS business aligns with a dominant, differentiated, or disruptive growth strategy to guide your model choice.

2. Evaluate Market Size and Needs: Understand your TAM and whether your market consists of underserved or over-served customers to determine if freemium, free trial, or demo is suitable.

3. Focus on Quick Time-to-Value: Ensure your product can quickly deliver significant value to users to enhance conversion rates, especially for free trials and freemium models.

4. Assess Resource Capabilities: Determine if you have the resources to support a freemium model, including self-service onboarding and customer support.

5. Monitor Competitors and Market Trends: Keep an eye on competitor strategies and market trends to adjust your approach and maintain a competitive edge.

Summary from Book: Product-Led Growth - How to Build a Product That Sells Itself