Ron Johnson’s plan should work.
Because he had done it twice before, the veteran retail strategist knew how brick-and-mortar stores could be customer magnets. This was even as foot traffic declined and sales fell across the country.
He joined JCPenney to pursue coupons, which is one of the most popular American retailers’ programs.
This was the pitch: Customers wouldn’t have to waste their time searching for deals. Prices would instead be always low.
Why is this such a strong reaction to pricing changes?
It’s very difficult to sell your products at full price once you have started discounting them. Even if the full price is still low, it will be extremely difficult in the future. Your customers will expect discounts and sales, and that’s when they will buy.
It might seem a bit excessive to hear someone say that they are “traumatized” by a company changing its pricing strategy. Kevin Hillstrom says that when you change the rules for pricing, it is like breaking a promise. Broken promises can break hearts.
It’s because of this, I ask you to not send discount emails to users who do not upgrade after their opt-in free trial.
This is a huge discount of 50%
Discounts are a way to close deals. You’re teaching your customers that discounts should be an expectation as part of their relationship, just like JCPenney.
You might be able to attract some potential clients who are eager to make a deal. It comes with a price. Price Intelligently smart people claim that discounting can reduce SaaS customer lifetime value by up to 30%
This is the most difficult part of this. You’re losing revenue by discounting while your best prospects won’t allow you to discount. Gieskes, Riley, and Doctors estimate that less than 24 percent of customers are at risk because of price.
And this is how it works:
If you send discount emails, you are likely to ignore the approximately 76% of customers that don’t need or want a discounted price but instead want something else.
Instead, find the roadblock and remove it
Some of your best prospects may be willing to pay 10X the price you offer.
However, if you don’t address the true barriers that stand between your customer (or the upgrade button) you will still lose them.
This is how to create data-driven, research-backed trial messages that work.
Step 1: Analyze your data
Before you close the trial, take a look at your non-converting active users.
Consider areas where prospects may be stuck or behave differently than other users who upgrade.
Perhaps your prospects aren’t converting…
Click the Upgrade button, but do not enter payment information.
Customers who upgrade the app can use it differently
…failing to achieve certain milestones of success despite consistent use
End-of-trial emails ignored
Stay the same!
…set up something incorrectly
It will be useful to identify the areas where people drop. But what you need is to understand why this happens.
Step 2: Interview your trial participants
Let’s say that you found out that active trial users clicked through to the checkout or pricing page at the end… and did nothing.
“A-ha! “A-ha!
Please, I beg you to resist the temptation to send an email with a discount or any email before knowing why your best prospects are still lingering.
They could have been lingering on the price page for a reason, after all
They were downstairs, and their wallet was upstairs
They need to show their boss that they are dependent on your app
They solved a small problem in the trial, but don’t see any long-term benefits.
Each of these objections to price pages requires a different message to be overcome.
Interview your customers to find out what is going on inside their heads.
These are JTBD questions that you can ask your trial users, who haven’t upgraded:
- Please tell me how you searched for the right product to solve your problem.
- Which solutions have you tried? Or did you not? Or not?
- How was it when you discussed purchasing the product??
- Did you ever imagine your life with the product before you bought it? What were you thinking when you thought this?
- Was there any anxiety you felt about purchasing the product? What was the most frightening thing you heard about the product? What was it? What made you feel so nervous?
These are the JTBD questions that you can ask new customers ( via Claire Suellentrop, and Kissmetrics).
- What would you say about your job title and role at work?
- What happened in your life that caused you to sign up at [PRODUCT]
- Was there anything that happened during your trial which convinced you that PRODUCT was the right choice?
- Was there anything that you were unsure of or anxious about before you signed up for [PRODUCT]?
You can record your conversations to get exact transcripts or audio of your customers’ conversations. This tool is known as ” voice customer data ” (or the voice of customer information ) and it’s one of the most powerful tools you have in your copywriting arsenal.
Interviews take longer than other customer listening methods. It doesn’t if you consider all the time you save on the backend and the richer insights you will find elsewhere.
Step 3: Transform your data into customer messages
We have the data to help us ignore the discount sirens.
You have analyzed your data, and identified and fixed any bottlenecks caused by in-app issues.
You have conducted customer interviews.
How do you convert what you have learned into messages that get results?
Each app is different. Here are some common emails that you can send to prospects in three common scenarios.
Scenario 1: Help your readers to get buy-in if they hear “I’m not a decision-maker” or, “I need to ask my boss first.”
Ben Horowitz and Leadfeeder offer advice for prospects who need to overcome bureaucratic hurdles to continue using your app.
If the primary user is not a credit card-authorized person, you can still use your trial emails to assist your active users.
Follow Upkeep’s example to send your readers all the information they might need to convince their bosses to use your app.
This is a good starting point. If I was optimizing UpKeep emails, I would test a presentation that included pre-written email messages and a presentation written from the user’s perspective.
Scenario 2: When you hear “I don’t see the value”, then show it.
Your prospect might not be ready to pay even if they have reached all the milestones that usually precede becoming a paying customer.
“Value” could be used to refer to anything, from “making/saving money” or “reason to get off the couch and find my wallet.”
You can help your readers understand the concept in several ways. The first is to tap into our natural aversion toward loss. Loss Aversion refers to the psychological theory that losses are more intense than gains.
You can do this by testing an email reminder that reminds users what they will lose if their app isn’t upgraded. You can tailor the email to reflect the app’s success so far. You can sign them up later but they will lose their progress once the trial ends. Give them the answer to the question: So what?
This Yesware reminds users of the features they will lose. If I were optimizing this email I would compare it to a customer-centric one, pointing out more benefits and outcomes such as the first bullet.
You can also look at the user’s results to show the value. Your app’s limitations might mean that your user won’t see a significant win in a 14- or 30-day trial.
If they have already taken the first steps toward getting to where they want to go, social proof can be used to show them their destination. This example is from Hubstaff.
This email is full of social proof and marked CTA. If I were optimizing it, I would consider using CTA language that is more directly tied to the immediate result of the click and/or telling a story about the case study right inside the email.
Scenario #3 – If you hear “I don’t have time” or “I am overwhelmed”, it’s okay.
Your prospects will still need to work hard to get started, regardless of how much-hidden work is removed from your onboarding process.
These cases allow you to test the end-of-trial messaging, which offers support such as this ActiveCampaign email.
This email provides a variety of ways to contact ActiveCampaign for support (which I have found to be excellent). It would be great if I could test an email that provides support for specific setup issues, rather than general support.
It’s possible, however, that the real obstacle is that starting a project can be incredibly difficult and messy. Prospects might feel that upgrading is difficult because there’s so much work involved.
If you feel this is the case, and if you have the resources to do it, you might consider providing real support. To make it simpler to switch to another email provider, Convertkit or ActiveCampaign provide free and paid concierge migration services.
Dashboard-builder app Klipfolio provides a variety of paid “Ninja Services”, to help customers get started and help them promote it internally.
This email is a great way to get started. It includes a lot of loss aversion as well as extra support. If I was optimizing this email, it would be to decide on one goal: “Get extra support from our Ninjas” or “Buy now”. It might also be useful to know what “Ninja Services” is.
Do not make discounts your main selling point
Johnson was fired shortly after launching his JCPenney strategy.
JCPenney returned to discounting.
Customers were thrilled.
However, analysts continue to debate what should or could have been done.
The moment that things became difficult was years ago if you ask me. This happened when Penneys first began offering discounts. The discounts were what Penney’s customers wanted more than the merchandise.
Your app could be the same if you offer your customers unasked-for discounts as soon as they enter the door.
Instead of promoting discounts, find out why your customers aren’t upgrading and then create your messaging around that.
Keep 30% of the revenue that you would otherwise have lost.
About the Author: Alli Blum helps SaaS companies build messages that get customers at howdotheygetcustomers.com. Get her free interview invitation template pack today and get started interviewing customers.
