Why Free Trials & Freemium Are Terrible Growth Strategies For Startups

Your number one priority as a startup is:

To find breakthrough growth as soon as possible

Breakthrough growth is the point where growth comes easy and paying customers come flooding into your business at an ever-growing rate.

It doesn't matter whether you are a full-time bootstrapped or funded founder or an indiehacker working on a side-project - if you want to succeed then you need breakthrough growth.

Why?

Because not finding breakthrough growth is the reason why over 90% of all startups fail.

They get stuck in this long, slow growth phase where growth is hard & they don't make enough revenue to be a viable and thriving business.

Eventually, one of two things happens:

1. They run out savings/investment and are forced to shutdown
2. They (wrongly) believe that this lack of growth is a sign that the business isn't viable and therefore voluntarily shut down

Why Does This Happen? Why Do 90% Of Startups Fail To Find Breakthrough Growth?

Because founders have been sold a lie.

That lie?

That the key to finding breakthrough growth is their product.

This leads them to make these two mistakes that make it incredibly difficult for them to find the breakthrough growth that they need to succeed.

Mistake No. 1: Too Much Time Perfecting Their Product

Because they believe that their product is the key to creating breakthrough growth, they get stuck in the trap of spending too much time perfecting their product and not enough time marketing.

They never market their products enough and this makes it highly unlikely that they will find breakthrough growth.

Mistake No. 2: Using An Ineffective Growth Strategy (Selling Only Their Product)

Because founders believe that their product is the key to breakthrough growth, when they do market, the only thing they are selling to their potential customers is their product.

But this is an extremely ineffective way to grow a business and makes it extremely difficult for startups to find the breakthrough growth they need.

Why?

There are many reasons but the one that is most relevant to the topic at hand today is:

Selling only your product triggers sales resistance in potential customers, causing them to ignore your marketing & dramatically lowers conversion rates.

Why.

We all instinctively understand that trying to sell a product to someone is not a very effective way to actually convince them to buy.

The actual scientific reason for this is because being sold to triggers a cognitive bias in our brains called “loss aversion”.

Loss aversion means that we are more motivated to take actions that help us avoid losing what we already have than we are motivated to take actions to help us gain what we don’t.

By selling a product, you trigger this loss aversion in your potential customers because you are trying to “take” their money.

As a result, your marketing messages get largely ignored, conversion rates plummet & it's really hard to find breakthrough growth.

The Key Then To Finding Breakthrough Growth Is Avoiding These Two Mistakes

If you want to dramatically increase your chances of finding breakthrough growth then you need to avoid making these two mistakes.

And that's the problem with freemium & free trials:

They don't help startups avoid either mistake

They force you to spend too much time on your product

For both the freemium & free trial business model to work, everything about the product needs to be perfect. The product needs to be perfectly set up to help the users understand the product, use it and keep using it, get enough value out of it to love it but not enough value where they don't need/want to upgrade, etc. etc.

In other words, to make the freemium or free trial model work you have to work a lot on your product.

This makes it incredibly likely for you to make mistake number one - focusing too much time on your product and not enough time marketing.

They still create sales resistance

Whether a product has a freemium offering or a free trial offering, at some point, the customer NEEDS to buy your solution in order to get the full benefits of what you offer.

In other words, the product is not an optional tool to help them. They understand that they HAVE to hand money over to you in order to really use what you are offering.

As such, there is still sales resistance created and your marketing & sales messages are far less effective & persuasive than they could be.

A Superior Alternative

What we need is a way to:

1. Avoid falling into the trap of working too much on our product
2. Avoid triggering sales resistance at any point during the sales cycle

And the way to do this is to use what I call The BLUNT Method.

The BLUNT Method

The BLUNT Method, is a marketing strategy that involves promoting a specific type of belief in marketing and sales messages - a BLUNT belief.

BLUNT is a mnemonic that describes a belief with five characteristics:

• Brand New - the belief is brand new to its target audience & contradicts what they believe is the best way to achieve their desirable outcome
• Leading - it leads back to the company's (PAID) solution only
• Unfamiliar - it introduces an element of unfamiliarity into the target audience's life
• No Product Required - it doesn't require a product to implement
• Traction - the product type the company sells already has existing demand (something that 99% of startups are selling even if they think otherwise).

How It Overcomes Both Problems

1. Product Not Required

The product is largely irrelevant when you use this strategy.

You can have no product and find breakthrough growth using this strategy. (as Bullet Journal shows us).

And you can even have a terrible product & still find breakthrough growth (and, counter-intuitively, build a happy & passionate customer base at the same time) when you use it...

Example: HubSpot Found Breakthrough Growth (And Built A Happy & Passionate Customer Base) With A "Bad" Product

In 2007, internet marketing software startup HubSpot made $255,000 in annual revenue.

In 2008 it started promoting a BLUNT belief in its marketing and sales messages. By the end of the year it had generated $2.2 million in revenue for the year, an increase of 762%.

HubSpot had found breakthrough growth.

And, by 2011, it was generating $29 million in annual revenue and had a passionate and happy customer base.

But, during that whole time, it had a product that, the founder and CTO himself admitted “sucked”.

What’s more, it did so during the middle of a global recession that hurt their potential customers (small-to-medium sized businesses - SMBs) the worst.

Of course, HubSpot eventually had to fix its product to maintain its breakthrough growth, which it did in 2011. But, this was 4 years and $29 million later in revenue when it has the time & resources to do so.

Had HubSpot focused on working its product first, it wouldn't have found breakthrough growth & generated enough revenue to stay alive long enough to fix its product.

What was HubSpot's BLUNT belief?

Inbound marketing.

The BLUNT belief that HubSpot created and started to promote in 2008 was called inbound marketing.

This belief said that, in the new internet era (this was 2008), people didn’t want to be interrupted with adverts, cold calls and emails (what HubSpot called “outbound marketing”).

Instead, if SMBs wanted to generate more leads and sales (their most desirable outcome), they needed to stop doing outbound marketing and start attracting potential customers with valuable content, capture their contact details and nurture them with more helpful content until they bought.

This belief was:

• Brand New - whilst creating helpful content was not new strategy (John Deere started doing it in 1895), the belief that the internet made advertising, cold-emailing and cold-calling ineffective was new to small-to-medium sized businesses. Nobody else (including HubSpot’s competitors) was saying this to them and it contradicted what SMBs believed was the best way for them to achieve their most desirable outcome of more leads.
• Leading - this belief led back to HubSpot’s PAID solution only. Only HubSpot’s solution at the time allowed SMBs to do all aspects of inbound marketing (creating landing pages, blog pages, capturing email addresses, email auto-responder etc.).
• Unfamiliar - it introduced an element of unfamiliarity into SMB’s lives that they could see happening - the internet. The internet was clearly changing the world in ways that they could already see and threw everything that they once knew about marketing into doubt.
• No Product Required - although the belief led back to what made HubSpot’s solution unique, SMBs didn’t have to buy it to implement it in their lives. They could stop doing outbound marketing and start creating valuable content, capturing leads and nurture them with more content without HubSpot’s product. The product was just an optional tool to help them implement the belief.
• Traction - although HubSpot changed the name of its product from internet marketing solution to inbound marketing solution, nothing about its product had changed. It was still an internet marketing solution and these products already had existing demand. Businesses had already been buying products to help them do internet marketing for a number of years by the time HubSpot launched.

2. It Avoids Triggering Sales Resistance

Thanks to the characteristic of No Product Required, HubSpot's target audience of SMBs could FULLY believe in and FULLY implement inbound marketing without needing to buy a product.

HubSpot's solution was a completely optional tool to help them implement this belief in their lives.

As such, HubSpot's marketing messages (which focused on selling this belief to SMBs) triggered little sales resistance.

This (along with other elements that we don't have space to cover in this article) meant that they were highly likely to listen to HubSpot's sales & marketing messages & adopt this belief in their lives.

Now, once they adopted this belief in their lives, the fact that they didn't need to buy HubSpot's solution made it (counterintuitively) much more likely that they would.

Why?

Because of consumerism.

We live in a consumerist society and we've all been conditioned to buy products to help us do the things that are important to us - even when we don't really need to.

When our innate & natural sales resistance is not triggered, this conditioned consumerism is free to come out and we end up buying things that we might not necessarily need.

This is where the expression "we love to buy but hate to be sold to" originates from

And, so, without their natural sales resistance triggered, SMBs sought out products to help them implement this new belief of inbound marketing that HubSpot had sold them. And, thanks to the characteristic of Leading, this belief led back to HubSpot's paid solution (and nobody else's).

Hence HubSpot's rapid growth from 2008 onwards.

How To Use The BLUNT Method For Your Own Startup?

Unfortunately, this strategy has been understood by most people, including even the companies that have used it like Apple & HubSpot.

It's why I've created thebluntmethod.com. Visit the website to:

• Read the case studies of other companies (of all shapes & sizes - from bootstrapped indiehackers to funded startups like HubSpot & others) that have used this strategy when they were startups to create breakthrough growth.
• Learn exactly how The BLUNT Method makes sales & marketing messages more persuasive, creates more word-of-mouth growth, increases the size of one's target audience, enables businesses to sell more things to existing customers and create unbeatable long-term differentiation.
• Learn how to apply this to your own startup to create breakthrough growth.

About Chris

Chris has spent nearly two decades (and counting) marketing and selling products, services and software, both on and offline, in multiple countries around the world.

He has worked with businesses of all sizes – from startups to companies like Microsoft, Google, SAP, Oracle, Groupon and others, and has also created, marketed and ran multi-million dollar industry conferences in many different industries and countries around the world.

Chris is also, an accomplished writer, having written for numerous publications including The Times, one of the United Kingdom’s most well known newspapers.

Chris helps startups find breakthrough growth using The BLUNT Method.