To charge or not to charge, that is the question often asked by customer facing teams when defining and delivering services for customers. While the debate persists, there exists another avenue worth exploring: the “freemium to premium” continuum. This approach delivers increasing levels of value for your customers while bringing in revenue for premium services to keep your team thriving.
There seems to be a stigma to charging for Customer Success services, and an assumption that customers prefer not to pay or seek to minimize costs. According to The State of Customer Onboarding 2024 Report by Rocketlane, nearly 60% of companies do not charge for customer onboarding and implementation services, and around 78% of organizations still consider customer onboarding to be a cost center. I continue to be baffled by this approach especially because I successfully charged for customer success, onboarding, and enablement services over 10 years ago. With profitability and efficiency being top goals for 2024, it is time to explore the continuum.
Embracing the freemium to premium continuum.
The distinction between free and paid services is not in the absence or presence of cost but in the perceived value offered. There is still a cost for using free products and services. To illustrate, as a consumer you have options such as Gmail, iCloud, Hotmail, Yahoo!, and Outlook for free email providers. While they are all available at no charge, you still evaluate them based on the value you receive, including their features, security, and user experience. You want the solution that delivers the most value for your investment of time and effort.
A premium offering, on the other hand, implies superior quality and enhanced value propositions, which entices customers to invest their precious funds. Despite the assumption that customers don’t want to pay, research by PWC finds that 86% of buyers are willing to pay more for a great customer experience a good customer experience means they will spend more. In fact, the more expensive the item, the more they are willing to pay.
Creating and delivering a freemium to premium continuum of offerings ease you into charging for the value you deliver as well as easing customers into paying you. It seems customers are more committed to reaching the agreed upon milestones and deliverables when they pay for your services. By aligning value with pricing, you create a culture where customers willingly pay for the services they perceive as valuable.
Were you swept up in the Taylor Swift Eras Tour?
As a consumer, you are already familiar with this free to fee hierarchy. If you were swept up in the Taylor Swift Eras Tour, like I was, you experienced freemium to premium at first hand.
For free you watch reels and snippets of Taylor on tour, as well as Taylor’s highly produced music videos.
The next stop on the continuums is to invest about $10 per month for a music streaming service to listen to Taylor’s full discography on repeat. Plus, most streaming services allow you to create and share playlists as well as download music to your local device to have on hand for your next road trip.
If the Eras Tour did not come to town, you could see the concert in your local movie theater, like I did, for $19.89 (to align with Taylor’s birth year). The three-hour sensation I enjoyed with my local “Swifties,” is now available to watch in the comfort of your own home for a rental fee under $20.
As a dedicated fan, you move toward the premium end of the scale by spending hundreds if not thousands of dollars to see Taylor in person, depending on travel distances, seat locations, and food and beverages along the way. I didn’t make the exodus, but it sounds like the event was an extraordinary experience.
An even superior encounter includes a private concert with Taylor for you and select family and friends to celebrate your birthday. This unforgettable day likely runs from three to 10 million dollars to cover the artist, venue, travel, and security.
Freemium to premium in Customer Success
Let’s explore similar options for delivering the freemium to premium continuum when onboarding, enabling, and engaging your customers.
Like the music industry, free videos and webinars drive user adoption and increase the conversation rate from trial to paid products.
Full access to a self-paced learning library or academy with persona-based learning pathways provide additional benefits for a fee of hundreds to thousands of dollars per user per year; adding certifications provides additional value and fees.
Instructor led courses allow people to ask questions, engage with fellow participants, and receive hand-on experiences. Depending on the course length and location, in person versus virtual, instructor-led courses run each participant hundreds to thousands of dollars. For example, in my Orchestrated Onboarding® Masterclass I keep each cohort size to ten or less participants to ensure the interactivity is high so participants can collaborate and commiserate with their peers and me. I also include options for one-to-one coaching sessions with me to deliver personalized value.
Many companies provide tailored events and courses for specific customers, where users are trained on their unique instances of your product, including all the customizations made during the implementation. The fee for these events comes to thousands to tens of thousands of dollars, depending on whether custom materials are included and the length of the engagement.
Implementation and Professional Services teams provide one-to-one deep dives and engagements with technical experts for higher hourly, daily, and project fees.
Premium packages provide everything customers want and need in a bundle that renews every year, along with the license.
Stop volunteering your team away.
Most Customer Success teams are regarded as cost centers from a business perspective, especially when valuable services are given away. Even though your efforts increase customer retention, budgets are cut, and teams must do more with less. As a result, you are unable to deliver the value customers want and need. The shift to charging for your services allows you to invest in better resources, which delivers a greater impact for your customers. It’s a virtuous cycle.
Ready to charge?
Andrew Gazdecki, the Founder and CEO of Acquire.com, emphasizes in a Forbes article that, “Going from free to paid is a judgment on value. Since value is relative, you must first understand who benefits most from your product or service. These customers will perceive the most value in what you do, and it's to these customers you must charge a premium.”
When you move toward the premium end of the continuum, rather than fixating on the fees to charge and worrying about whether customers will pay them, the emphasis should be on articulating and delivering tangible benefits that justify the premium pricing. Contrary to the assumption that customers resist paying, research indicates that exceptional customer experiences drive increased spending. Customers exhibit greater commitment and engagement when they invest financially, leading to improved collaboration and accountability throughout the service journey. Therefore, focus on the value delivered first and the price will become apparent. Using my go to market plan as a template to define the who, what, why, how of the offering, the price will become apparent as you understand the efforts required to deliver the needed services. I also recommend working with your financial teams to finalize the fees and needed margins. Once you do determine the pricing, it’s critical you ensure your premium services are not discounted away. Otherwise, you will be back where you started from.
Maximize your value delivery.
Transitioning from freemium to premium involves a shift towards delivering increasing levels of value to your customers and charging appropriate fees. When customers invest in their journey with your solution, you experience enhanced customer satisfaction and retention rates. By understanding customer needs and aligning pricing with perceived value, you unlock new avenues for revenue generation while fostering deeper customer relationships. Embracing the freemium to premium continuum empowers you to deliver value that resonates with customers and secures their long-term loyalty.
DONNA WEBER is the world’s leading expert in customer onboarding. For more than two decades, she has helped high-growth startups and established enterprises turn new and existing customers into loyal champions. Her award-winning book is Onboarding Matters: How Successful Companies Transform New Customers Into Loyal Champions. Learn more at donnaweber.com.
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