Freemium is known to be a great launching strategy. Giving your software away is a great way to attract early users and spread the word about your solution.
However, scaling a freemium model is hard, very hard. For 99% of us, it’s clear that isn’t a sustainable model when it means tens of millions (if not hundreds of millions) of users.
That’s partially why, 12 months ago, we decided to change our positioning and target customers. We moved away from our freemium model (targeting prosumers) to a classic free trial model (targeting SMEs).
Easier said than done. It required tons of work. And we’re not even done yet.
Since we made the change, we’ve tripled our MRR. And that wouldn’t have been possible without it.
Here are the 4 changes we made to increase MRR:
1. Revamped our pricing model
Pricing is awesome. You can change it overnight to adjust to your new positioning. Targeting a prosumers market? You need a free plan. Enterprise market? No self-serve onboarding, only demo requests.
On our side, pricing was the first thing we changed. Specifically, we did 4 things:
- Killed our (too) well advertised “free plan”: Having a free plan tells users a lot about your positioning and can impact a lot the perceived value users get from it (especially companies).
- Moved away from the “pay per seat approach”: Since we want as many people in the company (remember, we target SMEs now) to use Mention, every new plan offers a package of users available.
- Unbundled features: It used to be all or nothing at Mention. Either you pay and you have everything, or you don’t and you don’t have much. We changed that and unbundled features across our new plans.
- Added an Enterprise plan: As bigger and bigger companies became interested in our product, we naturally added a plan to fit their need.
Following our pricing changes, our average revenue per account increased by 296%.
Takeaway: Pricing is a quick and great way to change your positioning. However, it’s not constant and should always be tweaked.
2. Validated our inside sales model
At Mention, we’ve always had 2 types of sales:
- Transactional sales: customers that don’t speak to us directly, everything is fully automated (pricing ranging from $29 to $299).
- Inside sales: customers that we’re in contact with for a demo, personalized onboarding, and account management (pricing ranging from $99 to $1,500+).
The process behind our inside sales hasn’t changed much. But the results speak for themselves:
- Previous ARPA: €28
- Closing ratio*: 17%
- New ARPA: €170
- Closing ratio*: 35%
* Upgrades from phone demos
Clearly, our new pricing skyrocketed the average deal size handled by our inside sales team. On the other side, better leads coming in means a much higher conversion rate. All in all, our move to the SMEs market validated our inside sales model, and this is very important for what’s next.
Takeaway: Your pricing structure can make or break your inside sales model. Run the numbers: ARPA, conversion rate, and numbers of leads.
3. Changed our product to accommodate our new market
Targeting a new type of users (SMEs) means your product needs to change to increase the value for your new customers.
Before deciding what to build, we conducted customers interviews, surveys, and NPS analysis to get a better feeling of what our SMEs customers wanted.
For us, it meant shipping 3 things ASAP:
- Analytics: Not surprising, but we discovered that our SMEs customers were addicted to data analysis. We needed to make their life easier on this side, so we revamped our analytical panel.
- Improved notifications: Previously, every alert would have its own stand-alone notification email. Imagine when you have 30 alerts? Notifications craziness. We added cross-alert notification. You can have 30 alerts and receive only one notification email.
- Influencers: Companies receive a lot more mentions than individual customers. That’s why we needed to make their job easier by spotting the most important mentions to take care of. For that, we introduced an influencer score that gives information on how much influence a Twitter user or website mentioning you has.
Changing your product to address your new market takes a lot of time and it’s a never ending story.
The first few months are usually harder as you change your pricing, but not yet increased the value your new customer gets. That makes it a harder sale.
But stick to your product roadmap and run as fast as you can.
Takeaway: Your product is the hardest thing to change, but it’s the one that matters most long-term.
4. Refined our marketing messaging
How you market your company will define who you will attract to your virtual doorstep. Needless to say, a lot of work was needed on that side, and it’s still in progress..
Before moving to the SMEs segment, we marketed Mention in 2 ways:
- FREE: We would always say that we were “100% FREE!!!”
- Google Alerts on crack: We were defining Mention as a Google Alert replacement.
As we changed to the SMEs market, we banned the word “free” and stopped comparing ourselves to Google Alerts.
Here are are a few things we have been focused on to translate our change:
- Inbound: This isn’t new at Mention, but we had to adapt to our strategy. What topics we write about, our distribution channels, external publications, partnerships, etc.
- Automation: With limited resources, we always try to push our automation further and what we’re doing with our lead nurturing is a good example (we’ll write a post about this soon).
- Paid: With our previous funnel, paid acquisition was unthinkable. Now we’re starting to test a few things.
Takeaway: Don’t judge your marketing efforts by only looking at the top of the funnel. Drill down to MRR and churn metrics. You don’t want to attract churning customers, do you ?
Where we’re going next
Those four big changes at Mention made it possible to triple our MRR in less than 12 months.
However, there’s no such thing as growing “fast enough.” Tripling your MRR is great, quadrupling it is better.
Here’s what we’re focusing on next:
- Customer success: With several thousands paying customers and only 3 team members actively taking care of them, it’s a big room for customer success growth at Mention.
- Acquisition: Testing new acquisition channel and continuing to release standalone products.
- Product: Ship more, ship faster.
- Talent: Of course, you can’t triple your MRR without talent! And guess what, we’re looking for more talented people to quadruple it. 🙂 View current openings and apply.