Freemium, Trial or Demo: Which Onboarding Journey is Best For Your SaaS?
Introduction
Choosing which onboarding model isn’t about taking a wild guess and hoping for the best; what works for other SaaS companies doesn’t mean you should follow the same model (even if they are in the same market).
Why is that?
Every SaaS company has entirely different types of users regarding how comfortable they are with using software, level of motivation, specific challenges, roles in the company, time, and more.
Below, it will show a proven framework and insights to each onboarding model to help you find out which will work best for your SaaS.
The “MOAT” Framework
To make it simple for you, we will use a framework called the “MOAT,” coined by Wes Bush, Founder of Product-Led.
Here’s how it works:
The “MOAT” framework has crucial sections that will help you determine which type of SaaS you are, such as market strategy, ocean, conditions, audience, and time-to-value.
Below, it will give a summary of what they represent with questions you should ask yourself:
1. Market Strategy: Are you looking to be the dominant, the destructive or the differentiated in your market?
- Dominant: Creating a better solution at the lowest cost in your market.
- Differentiated: Creating a better solution for an underserved specific market.
- Disruptive: Creating a better solution for an overserved specific market.
2. Ocean Conditions: Are you a blue or red ocean business?
- Blue Ocean: Creating demand in an untapped market, giving you the opportunity for highly profitable growth, making competitors irrelevant.
- Red Ocean: Creating a solution in a shared market, forcing you to build a product for one or two specific markets.
3. Audience: Which market are you going after? Who will be using your product? Who is deciding whether to buy or not? How tech-savvy are they?
4. Time-to-value: Which onboarding model will show the value of your product/give your users their desired outcome faster? To answer this question, you need to know which type of user you’re currently dealing with.
- Mission Impossible Users: Low motivation and finds it hard to use your product.
- Rookie Users: Highly motivated but finds it incredibly difficult to use your product. It usually pops up when employees have to use existing software or have no alternative solutions.
- Veteran Users: Low motivation but finds it easy to use your product. They know what easily but could leave if you have too many friction points.
- Spoiled Users: Highly motivated and finds it straightforward to use your product.
Answering these questions above will give you an idea of which type of SaaS you offer.
Now, let’s take a deep dive by seeing the three types of onboarding models.
Freemium Based Onboarding
Let’s say you’re looking to be the dominant company in your market with over + 50 million users, and you can do it at a very low cost ($1-$20 lifetime or monthly recurring), then freemium MIGHT be the better option.
Keep in mind, acquiring freemium users isn’t going to make you money magically. There needs to be a time where they do have to pay.
Slack, for example, is one of the handfuls of SaaS companies that mastered the freemium model perfectly.
Rather than targeting executives and managers, they focus on going from the bottom up by acquiring individual users, making sure they love the product first and then converting into a paying user once they upgrade for more critical features.
Patrick Campbell, Founder of Profitwell, explains this perfectly in this video:
Another good use case is Webflow, whose pricing plan starts at $16/m and is currently the dominant website builder for advanced web designers (whose users are very tech-savvy).
While freemium users have access to many features, they are also restricted with a maximum of two projects, no custom domains, and a watermark on the bottom right of the user’s website.
This way, it gives their ideal user the ability to build a cool-looking website. Once they finished their first project, invested a lot of time with the product, got used to it, and brought them to achieve their outcome, it’s hard for users to switch platforms, which increases the chances of becoming paid users.
Whatever your solution provides, your goal is to make your product as easy as possible for the market you’re targeting.
Trial Based Onboarding
Trials are the most common onboarding model for SaaS companies.
Like most people, they want to try the product first and see how it works before deciding whether it’s a good fit or not, similar to buying a car.
These users often know their pains and know what they need to solve them, so your goal should be mapping the shortest path to their desired outcome minutes after signing up, increasing the chances of choosing you as their solution.
Trials commonly fall into the red ocean and the differentiated category. Like we mentioned before, differentiated means you’re focusing on one or possibly two specific niches rather than going board like most freemium tools.
Suppose you have a CRM for real estate agents; While ClickUp, which uses the freemium model and is an all-in-one CRM, it is generally suitable for any business and underdelivers key elements for specific markets.
This way, trials might be the better option for this market. Not only you’re solving a solution for a mid-to-high tech-savvy market, but you know precisely what consultants need for a CRM.
PS: It also gives you the ability to charge at a higher price, which we will discuss later in this article.
Demo Based Onboarding
Opposite to the freemium model, demo-based onboarding often focuses on the top-down strategy, making your ideal user in a much higher role in a company (manager or executive).
While you will get fewer signups than the freemium or trial model, you will, however, outperform in closing sales exceedingly the more narrow your target market is, and the more expensive your SaaS is.
Why?
Since managers or top executives are focusing more on growing the company, they don’t have a lot of time playing around with tools and see whether it’s a good fit (especially if they’re not tech-savvy). They instead want someone (often a salesperson) to explain why and how it will remove their bottlenecks.
If you’re in the early stages, heading into a new market, or current solutions aren’t solving your user’s pains the right way, a self-serve model won’t magically turn them into experts.
It would be best to spend time talking to your ideal user, understand how they approach solving their pains and educate/demonstrate how your solutions make it easier for them, which will also build your authority.
That way, if it’s a truly massive problem they can’t solve, the price of your product matters less.
As an upsell, you can also charge an onboarding setup fee to make even more money. If you have a product that costs $3k ARR or more, some of your users want you instead to set everything up for them, happily pay between $500 to $2,000.
Need Help Finding Out Which Model Will Work For Your SaaS?
Let’s hop on a quick 30-minute call to learn more about your SaaS and see which model will work best.
