What is the Freemium Model?

The freemium model is a marketing strategy that offers a limited version of a product or service for free, typically supported by a business model that charges for premium features, functionality, or virtual goods. In the freemium business model, business tiers start with a "free" tier.

Freemiums as a business strategy have been around since at least 1980 and are highly popular in today's booming software industry.

Benefit 1—Free Offerings Generate Leads & Incentivize Brand Engagement in Marketing Campaigns

The first benefit of using the freemium model for SMS subscriptions is that it lets you generate leads and build brand engagement. A lead is someone who has shown interest in your product or service by providing contact information, such as an email address.

When you offer a free version of your SMS subscription, you can generate leads and get people to sign up for your service. Someone who signs up becomes a lead. Being able to distinguish between a member of your audience and a lead helps you better understand who is interested in your product or service and how you can best engage with them.

The second benefit of using the freemium model lead generation is that it allows you to upsell your audience. Upselling is selling a more expensive or premium version of your product or service to someone who has already expressed interest in it or to someone who is actively engaged in it.

Freemium models can also help you build brand engagement. This is because people who use the free version of your service will be more likely to interact with your brand and tell others about your product or service. In addition, free products are non-threatening, which makes them more palatable to your current audience. Finally, building trust with someone is easier when they don't have a direct financial investment in you (and vice versa). Ultimately, for the freemium model to work, companies must ensure their premium users can access full features, such as increased storage or customizations, and additional customer service.

Customers who have a relationship with a brand, such as a subscription,  spend as much as 30% more with that brand than their non-subscribed counterparts.

Benefit 2—Free SMS Memberships Expose Your Target Audience to the Value of your Product

Free SMS memberships give subscribers access to a product or service that they otherwise wouldn't have had access to, and this exposure allows them to experience first-hand what they can gain by upgrading. Converting a free user to a paid one is at the crux of many businesses' dilemmas. Especially when a business' longevity is hinged on converting users, there can be additional pressure to "upsell" their free users and make a larger margin of profit off them. Every firm has to use SMS marketing messages to flourish in the marketplace.

Communicating the value proposition of some products or services can be challenging for some products and services. The best way to sell those products and services is to allow your audience to sample them or use them for a limited time. The Freemium model is perfect because it will enable you to offer a taste of what you have to offer without offering up all of the value.

Considerations: Be sure that the features and content you make available for free are high quality and valuable enough to give your audience a good taste of what they can expect if they upgrade. Secondly, ensure that your paid features and content are enough of an upgrade to warrant a subscription fee. If not, you may have difficulty convincing people to pay for something they feel they can get for free elsewhere.

If you will be using some version of a free SMS membership to deliver your service or product value, it's worth looking into offering a free trial model. Free Trials' distinct value over Freemium memberships is that subscribers will often automatically convert to a paid membership after the trial period concludes. Additionally, when you structure this product, you will offer your members or subscribers the complete offering of value rather than withhold some key features or content.

Benefit 3—Free Texting Services Build a Bridge, Not Barrier, to Client Connection

Establishing and maintaining customer relationships is one of the most important things you can do to ensure success. As competition is rising across all markets, everyone from freelancers to corporations should focus on customer retention and increasing brand loyalty.

The best way to build a relationship with new customers amongst all the digital noise is by genuinely connecting with them via the most direct form of communication or through cell phone. Opting to stick to DMs and emails can leave your interactions with your audience feeling flat and unoriginal, assuming you are even able to reach them in this capacity.

Offering a more first and instant form of customer service over SMS is one way to make a lasting impression that will increase brand loyalty and result in more customers.

Benefit 4—Free SMS Subscriptions Offer a Direct Platform to Cross-Promote & Upsell

A strategic way to optimize freemium SMS subscriptions is to use the free subscription to drive traffic around the web. In addition, because you are offering valued content on your free subscription membership, it is an excellent place to do any cross-promotion, as it would otherwise likely irritate some of your paying clients. They are already financially committed to some of your products. 

For instance, if you have a blog, you can use your membership text messages to send links directly to your latest articles—and even offer discounts on paid products or services like software tools for freelancers. Likewise, if you are active on social media, immediately following the publishing of a new post, you may want to send that link to your free members - encouraging them to like, share and comment. 

It would help if you leveraged your most engaged audience, using a near instant deliverability channel, to promote your products and new content across the web.

The freemium model can help you increase paid subscription conversion rates and the number of paid subscribers, ultimately increasing your small businesses revenue through paid plans.

By allowing your audience to try out a facet of your service for free, you essentially "get your foot in the door" and can begin to pave the road to a paid conversion. Free-to-paid conversion rates on average, anywhere from 2%-20%. When crafting freemium subscriptions with conversion in mind, be wary not to provide too much value for free or will run the risk of attracting more "free seekers" that will never convert to a paid subscriber, no matter the value they may gain. 

Consideration 1— How will you promote your freemium SMS membership to your audience?

While some companies can rely on word of mouth, social media, and influencers, others may want to consider paid advertising or email marketing. Paid advertising can be an excellent way to quickly reach a large number of people to increase your freemium SMS subscriber count. If you have a high-value Freemium product, conversion off paid advertising may be easier than if you were advertising a paid product. 

Consideration 2— What level of SMS membership value will you provide for free?

As mentioned earlier, balancing the value you provide in your free SMS membership can be a delicate balance. Offering little value will not convince subscribers of the value they can gain from a paid membership. But on the other hand, showing too much value can limit your conversion rate because the additional weight is unnecessary. 

Consideration 3— How will the value to customers increase with a paid SMS membership in Text message marketing?

You must build on the value of your free offer and turn it into something worth paying for. For example, if you have an introductory offer that includes access to exclusive content, then your paid membership should provide even more exclusive content. 

Consideration 4— Do you have a conversion plan for freemium SMS subscribers?

Without a proper plan for converting freemium subscribers into paying members or customers, they could end up costing you money instead of generating it. Ensure that the cost of offering the free trial will result in either a return of future revenue or an increase in brand awareness and loyalty before launching one.

Consideration 5— What is your goal conversion rate for freemium SMS subscribers?

When considering the freemium model, defining your goal conversion rate is essential. Once you know your free-to-paid subscription conversion goal, track how many SMS members achieve it over time. Monitoring this data will give you the insight necessary to reform your products to support your conversion goals. 

This article on Pricing Your SMS Subscription Product can help you set SMART goals for your text membership. 

Implement Free & Paid SMS Subscription Products with Subflow

If you're ready to offer a freemium subscription to your audience, Subflow's web-based SMS platform is designed to help you do just that. With 1:1 text capability, SMS broadcasting, and audience segments, Subflow users can easily manage and maintain a freemium text product that can work to convert subscribers to paid memberships. Our mission is to connect you with your audience in a more successful way with text messaging.

With a low entry price and affordable SMS rates, Subflow offers free memberships that are less costly and more effective than other marketing methods such as email campaigns or social media ads. 

When you're ready to convert your $0/month subscribers to paid members, Subflow partnerships with Stripe makes revenue collection a breeze. With automatic payment collection and direct deposit into your bank account, Subflow users can worry less about administration and more about customer conversion. 

To understand more about offering free SMS memberships with Subflow, speak with a Subflow representative and start working towards generating income from subscriptions today.