The Economics of Freemium Marketing

Most of us like a bargain, but ALL of us like getting something for free...
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by | Jul 27, 2018 | Blog

This is why the freemium model (where companies offer basic products or services free of charge with an added premium for additional features) is growing more and more popular every day. But of course no business can make a profit from giving away free stuff, so how do companies benefit from freemium? By first understanding that they are dealing with a completely different customer.

he Rise of the Savvy Customer

Thanks to the ease and access of social media, people have more control over the buying process than ever before. They want everything at their fingertips and they want it now – and preferably for free. Building a successful freemium model involves understanding the psychology behind the purchasing habits of these savvy social-media obsessed customers. And the first step towards meeting their needs is through your marketing funnel.


During this phase, your main goal is to attract attention to your business not to sell. You might do this through regular posts about your products and services, asking your customers questions (and making sure you provide timely responses), and using clever images to capture attention. When done well, you will not only increase brand awareness, but also create a set of potential fee-paying customers.


Once you have attracted the attention of potential customers it’s time to generate some leads. This involves engaging with your customers with a view to inspiring them to buy your products and services. Remember, your key objective here is still not to sell, but to generate enough interest to turn a casual browser into a viable lead.


When you have generated leads, don’t ever let them go! Nurture them and build a relationship with them to inspire loyalty in your brand. For only then will they be tempted to become life-long customers. Do not try and give them the hard sell during this phase – remember, building any relationship takes time and attention. After all, how many people get married on the first date?


Now that you have successfully attracted an audience through your freemium model, and generated and nurtured your leads, it is time to convert them into fee-paying customers. You might do this through promotional programmes, or providing limited offers to create a sense of urgency. Remember: the more you know about your customers’ buying habits, the more likely you are to convert them into paying loyal customers.

The Future is Freemium

Thanks to your marketing funnel, you now have a greater understanding of your customers and how they buy. So what is the best way to promote your freemium products and services?  Facebook is a popular place for businesses to try out the freemium model – with careful positioning of your product or service, and a well-placed message, the returns can be huge.

For instance, through Facebook, you can create an attractive landing page or an app to draw attention to your products and services. The more visible and active you are on Facebook, the more ‘likes’ and shares you will receive. Building knowledge, likes, and trust are key drivers to not only converting people, but enticing them to buy from you time and again.

Today’s marketing is not about selling or giving away stuff for free – it’s about understanding how people buy and engaging with them in ways that capture their interest and meet their emotional needs.  However you choose to do it, whether through Facebook or another medium, there is no doubt that, when done in the right way, the freemium model can be a powerful way to attract customers and generate serious profits for your business.

Harness the power of Behavioural Selling Strategies™

If you’d like to discuss further how you could blend a mix of behavioural psychology, digital marketing strategy and software technology to deliver similar results for your business we’d love to talk…

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