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AnswerIQ Blog

Free Vs Paid Users: A Guide to Customer Service Business Models

What is Freemium ServiceBridging the Support-to-Conversion Gap With Freemium Users 

If your customer service business model incorporates what is commonly referred to as a freemium service (free to all in the hopes of converting some to paid users), you’re almost certainly underestimating the challenge of supporting these free users, especially if your goal is to offer the same experience paid users enjoy. But, pulling resources from  free users isn’t the answer. You can't, and really shouldn't discriminate, it’s almost impossible to say which of your free users that reach out will have the highest chance of converting.

How Customers Feel

Customers of all stripes have a deep love for great service. In fact, 70 percent of buying experiences are based on how customers feel they are treated. Today, freemium users expect the same degree of customer support as paying customers — as they should — regardless of their long-term intentions.

The free to paid model is a proven business structure that works when the provider offers basic service to all but a holds back a select set of key premium features (usage/storage, etc.) only for the paid level. As solid as it sounds, it could be killing your bottom line. From a sales standpoint, a freemium user’s value is only 15 percent to 25 percent of that of a premium subscriber, according to Harvard Business Review. If you’re allocating precious resources to all freemium users, 75 percent to 85 percent of that value isn’t driving results.

Convert your Freemium CustomersTechCrunch found that among all the freemium users that subscribed in Q1 2011, conversions within that group took one year to rise from approximately 0.75 percent to 1.25 percent. Freemium providers can justify that slow growth rate in most cost areas, but not in customer support.

The goal is clear: stymie long-term support cost increases even as your freemium population grows and maximize conversions via your support channels. Your agents alone can’t support and convert your freemium customers, all while minimizing costs, but they can with the help of AI-based automation and deflection. 

Bridging the Support-to-Conversion Gap 

Bridging the Support-to-Conversion GapSupport teams caring for freemium users are unique in that they must treat them as both prospects and customers. According to Destination CRM, “Customer care agents for freemium businesses have an incredibly high standard to meet and ultimately drive business success…The business challenge is to build a customer care team that breaks the  traditional call center boundaries.” 

Customer support costs per ticket/incident decline sharply from voice and chat to email-based support. The average cost of a phone-based ticket is >$8-15, a chat ticket is $6- 12 and email is anywhere from $3-8. Numbers don’t lie: email support is the only option for these businesses, in addition, they really need to get the email channel optimized in order to bring down the cost per incident to make business sense.

Businesses need to position support teams to best meet the needs and convert freemium users, even while reducing the long-term costs of support. AI-based automation and deflection can provide cost-effective, quality support that scales with populations at minimal cost. 

Automated deflection tool: Self AssistIt all starts with improving self service and strengthening the content/resources that help people find the best answers to their questions. Automated deflection tools like Self Assist can understand customers’ needs and independently access the right solutions from your content resources, enabling users to quickly self-discover. Self Assist can scale for informational content even as populations of free users grow; deflection takes the human component out of appropriate support requests and delivers the information users demand. Think of Self Assist like an Alexa or Siri for all email-based tickets.  

Aligning Users With Agents Who Convert 

As you’re meeting the needs of customers by automating the discovery process, you can focus on unique support efforts that drive the best prospects down the conversion funnel. An automated triage solution further distinguishes customer requests so that each is directed to the most suitable representative. This smart solution can identify which freemium users are more likely to convert, and then send those tickets to the strongest/best-suited agents within your support team. Destination CRM describes this best practice for freemium customer support:

Aligning Users with Agents Who Convert“Bring on board agents with sales backgrounds, who are skilled at confidently educating customers on the value of the product or service, leading a call, and reselling a customer on the value. In addition, incorporate formal personality profiling to identify what top performing agents have in common and work to assimilate those characteristics throughout the team.” 

Companies like Thumbtack that provide large-scale support without guaranteed business benefits are already seeing  triple-digit growth in ROI thanks to automation and deflection. Automating triage alongside a growing user base, maximizes the business value of existing human support. Most importantly, it gives customers exactly what they need — be it simple information or an involved human interaction, with just the right support rep for the job.  

Automation based on Type of IssueAutomation based on issue type: Support organizations cannot scale quickly unless they have a way to respond to customers with consistency, accuracy, and speed. The key to success lies in building content that leads to a single or first contact resolution (FCR). Designing logical decision trees and templates that can support incoming questions with minimal changes to the template, are critical to scale.  

AI-based solutions like Automated Response can learn from agent behavior of template usage and automatically respond to customers. Automation for free users is all about the usage of email templates/macros to answer all informational questions with high accuracy and speed.

Agent productivity for ScaleAgent productivity for scale: Finally, augmenting your customer service business models and your agents with suggestions to improve average handle time is critical to improving productivity that enables support organizations to scale. Agents can resolve hundreds of cases per day by using Agent Assist, a tool designed to serve up the top three response suggestions for any customer query that comes in. The options are available to them as soon as they open a ticket.

No matter where the ‘right’ solution lives—your knowledge base, templates, or forums—Agent Assist will source and present it to your agents for speedier issue resolution, freeing up valuable time to focus on creative problem-solving and customer connection. 

Customer Support for Users: Free or PaidIn summary, you simply can't scale your customer support for users—free or paid—without automation in place. It won't replace your cadre of incredible, hard-working agents, it will augment their skill set and make common tasks surmountable.

Come give us a try! 

Topics: self assist, agent assist, freemium, automation, templates, content, Trends 2018, AnswerIQ, Customer Support, Artificial Intelligence