Software Executive Magazine

August/September 2017

Software Executive magazine helps software executives grow their businesses by showcasing the business best practices of our readers, executives from established and innovative software companies.

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entire team to progress toward go-to-market. Trainings and demo scripts/videos will be required. A new website will need to be built, and marketing and sales collateral will need to be refreshed. Focus on educating existing cus- tomers and partners about the difference between the free and the premium product editions. LESSONS LEARNED Now that we have launched TestArchitect Team, which is a freemium edition of our product, we are seeing an ex- pansion in our customer base and growth in adoption. In the process, we have also learned a great deal: ▶ It starts with the why — clearly understand why you want to change. The answer will be different for each business, but defining your motivations is essential. ▶ You need to know which customers are price-sen- sitive. This is the basis of how you will design the freemium versus premium edition. ▶ Again, find your Goldilocks — know the value of the freemium version as well as the justification for upgrading to the paid edition. You are defining the upgrade path in the process. ▶ It is essential to build and deliver an easy-to-use product. Offering the product for free does not mean that you get adoption. The users must have a meaningful user experience to adopt your product. ▶ You also need to understand what makes the prod- uct offering viral; then you have to market it heavily to keep the momentum going. ▶ Freemium customers are real customers; treat them as such. The freemium product is a real prod- uct; treat it as such. ▶ Conversion rate expectations and optimization represent a continuous improvement program. We make an on-going effort to try different options and know our data analytics. Then it is easier and more realistic to set expectations on conversions. Similarly, the game of promoting the upgraded version will require continuous improvement. The real payoff occurs when customers upgrade. RECOMMENDED READING Free: How Today's Smartest Businesses Profit by Giving Something For Nothing by Chris Anderson. S alternative pricing model consisting of a mix of free and full-priced products, or freemium and premium prod- ucts. Designing a program targeting both with a seamless transition point is key. The essential piece to this mod- el is a clear understanding about which customers are price-sensitive and which customers are not. FREEMIUM DEFINITION CHALLENGES As we made the decision to move forward, there were some challenges to overcome. ▶ Finding our Goldilocks: What features should be included in the freemium model? The offer- ing must be substantial enough to deliver the functionality and clear value to attract targeted customers without cannibalizing the premium, full-priced version. ▶ Keeping it simple: At first, we started looking at taking our lowest priced edition (we carried four different editions) and offering it for free. After much discussion, we ended up with a much simpler model. We now offer only two editions: One is free or freemium and the other is full priced or premium. ▶ Know your upgrade path: While a free version already delivers great value, you must offer more substantial value in the premium edition so it makes sense to justify/pay for the upgrade. We clearly differentiated the freemium versus premi- um versions. In our case, it made the most sense to limit the volume of test cases (up to 100), and the number of users (two node-locked users). In our experience, we know that even with limitations, the freemium version will be useful for many small teams with small projects. ▶ What is the maintenance and support model? We needed to determine how to handle support for freemium customers and define what paid support/maintenance looks like. We decided to sell maintenance support separately. Given our experience, customers enjoy and gain extra value with our coaching programs. It's been the key differentiator in our offerings. A majority of our cli- entele have cited our expertise in our tool, coupled with our automation coaching and professional services, as the reason for their purchase compared to going with other vendors. EXECUTION CONSIDERATIONS The major work will be coordinating across functions to build out the new product editions and building the infrastructure to support the new model. Your product manager will work with engineering, sales, marketing, fi- nance, support, IT, and operations to bring the project to life. Hold weekly meetings to sync up statuses and get the H U N G N G U Y E N is the CEO at LogiGear, which he founded in 1994, where he is responsible for strategic direction and executive business management. He is also the co-author of the top- selling book in the software testing field, Testing Computer Software. 37 SOFTWAREEXECUTIVEMAG.COM AUGUST/SEPTEMBER 2017

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