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3 Business Models for Your Product or Service Business

Today I want to discuss customer acquisition strategies for a subscription style product. We’ve spoken about why making your offers risk free is so important in today’s sales environment – in order to reduce any anxiety and objections your prospects might have about buying your product and to reduce the downside they face.

Users won’t just sign up to a 6-month subscription to your service without trying it first, and with that in mind, there are three models that service or product based businesses usually use as part of their strategy. Here they are…


1. Free Trial

The free trial model lets users try out your product for a set period for free, so they can verify the value of the product before committing to purchasing. The free trial is almost the default option for software products at this point, but may not be appropriate for other services like premium forums or courses where users because in that case unscrupulous users can download or pirate the information without paying.

Most free trials also require users to enter their payment details up front so that payments can begin once the trial period is over. Although in some cases this will put users off the trial, it will also undoubtedly lead to higher signups as users let their risk free trials roll over into the paid version. Some sellers will even prey on the forgetfulness of their user base and hope that their customers forget to cancel their free trial, but this isn’t a tactic I can recommend because it leads to unhappy and uncommitted customers who don’t love your product, and a headache for you as you have to process many cancellations and refunds.


Also, guys, think outside the box with the free trial model. I know freelancers who will offer parts of their service for free in order to win clients too. Examples of this would be marketing specialists bringing you a set number of leads for free, or a graphic designer offering a free proposal or design idea to get a flavor of his or her work. The strategies I’m discussing here aren’t just for software businesses.

2. Freemium Model

The freemium model is one whereby the basic version of your product is free (the so-called ‘lite’ version), but paid versions offer more features. This is usually a tiered system where users pay more to unlock tiers with more functionality – think of Linkedin for example, where users who wish to send more messages or view more profiles can pay more to do so, but the basic version of Linkedin is still free for everyone.


Another way to structure the tiers is by volume, with users unlocking more credits or units per month, but the basic version allowing a small number of credits every month. Email software providers like Mailchimp (the most popular global email software) prices itself like this, with the free plan offering 12,000 emails a month to a list of up to 2,000 subscribers, with paid plans offering higher volumes.

Depending on your product, you may also be able to monetise the free version of your product with advertising, meaning that you’re making money across the board.

3. Demo

This third category isn’t as common but is still going to be useful for certain products. There are certain sales where the free trial or freemium model just aren’t appropriate, so some sort of demonstration is going to be the best way for you to let your prospects get a feel for your product without purchasing. The classic example of this would be any software product that requires a lot of effort to install or set up, in which case a free trial may not be practical, but you could also include more general demonstrations in this section, like ‘explainer’ videos, which show how your product works, or ‘digest’ style emails where users get a to glimpse a small section of the premium content.

In this case, the line between these trial models and traditional sales methods becomes blurred, but the important takeaway is to think about how you can let users see the premium version of your product providing value without necessarily using it themselves. The added benefit is that sometimes you’ll be able to sell them on the premium version during the live demonstration itself.

Tying it all together

I’ve discussed three ways you can incentivise your prospects by offering ways to try out your product risk-free. If you own any subscription style service offering, I hope your mind is whirling away with ideas about how you can implement these ideas into your business model, but these strategies work for other products too.

You may even be able to combine two or more of these ideas together. LinkedIn offers tiered plans as well as free trials on premium plans, and, a niche vendor statement reconciliation tool for accounting teams, offer a free trial, a live demo via webex as well as a free basic version of their product, meaning they really have their bases covered when it comes to customer acquisition. The key here is to address the objections the prospect might have and make the offer as risk-free and as simple for them as possible.

Have fun guys and let me know how you get on in the comments!




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