Why do we offer a free CRM account?

We’ve written about free CRM accounts before, but we haven’t really covered the reasons why we’re offering such a free CRM account. This blog entry is talking candidly about our reasons to give out a free limited CRM account.

Number 1 – Conversion

Free to paid account conversion. There’s no beating around the bush about it, this is the number 1 reason we and all the other companies out there give out a free account, irrespective of the type of application, CRM or anything else. This business model is called Freemium and it works by giving out a limited version of the application, in the hope the free users will end up paying for more advanced features or plans. While this comes as no news to you, what’s probably not immediately obvious is that this model doesn’t work fantastically well. The reason is that, traditionally, conversion rates across various industries have been very low (10% if you’re lucky). So, if it was just for this, we probably wouldn’t give out a free plan. Which leads into our…

Number 2 – Brand exposure and referrals

This relies on our free users spreading that sought after “word of mouth”, either in the traditional sense of the word, or on social media. Nowadays, there are so many CRM applications and so many applications doing the same thing, that getting in front of potential customers can be really tricky. In a crowded market, picking up a product that’s right for you either involves a lot of research (and while that’s doable, it takes a lot of time and time is money) or a referral from someone you trust. We’d like our free users to refer our product, so that’s a very important point for us, which is why it’s important for us that our free users are happy with the product and the support they receive from us.

Number 3 – Help small businesses

We’re a small business too and we know starting up can be hard. Any help you can get at those initial stages is very important. Our free CRM account is our way to help out small businesses in the early stages. We hope this initial help will be the beginning of a long term relationship and as businesses grow, very often they will turn into paying customers as they realize we have a good product and great, responsive and helpful support. It’s our way of helping out and yes, get our “foot in the door”.

Number 4 – Product management

Our free users help us define the direction for our products, the features that we should prioritize and so on. While we’re prioritizing feature requests received from our paid users, the truth is, with every freemium business model, you end up with many more free users than paid accounts. It gives us a wider user base to help us discover new requirements, see the demand for certain features and so on.

Number 5 – Beta testing new features

Having a wider user base helps us find volunteers and users more interested in helping us beta test new features. Inevitably only a small minority of users are early adopters and the vast majority of users like a stable, mature product. However, as new features are added, the early adopters fill a critical role in helping us beta test the new features.

To answer a few common questions about our free account:

1. Will the free account offering be stopped if the conversion rates to paid accounts are low?

No. As we’ve tried to explain above, it is much more than conversion rates that we’re getting out of our free CRM accounts. We’ll never stop offering them and so, if you want a free account forever, that’s fine with us.

2. Do you pressure people into converting to paid customers?

No. We don’t believe in pressuring customers into doing anything. If they love the product and need more, they will upgrade, if not, we’re fine with that too. So, to that respect, we don’t pressure free CRM account holders:

  • We don’t limit the free accounts further
  • We don’t email incessantly about upgrading (we might email about new important features, but we do that very rarely – maybe once or twice a year)
  • We don’t call unless you explicitly ask us to

3. Do you plan to give more on the free accounts?

Not currently. We might introduce new features as we upgrade the product, but ultimately we are running a business and we need paid customers in order to stay afloat and be a sustainable business, which is what we’re trying to achieve.

 

Free CRM

If you keep an eye on Twitter, Quora or other online forums, you regularly see requests for free CRM, generally coming from small businesses that are looking to make an entry into the CRM market. The free availability of information on the Internet nowadays and the plethora of free apps in the wild makes requests like these reasonable.
When I say reasonable, I really compare that with other types of requests for “free cars”, “free houses”, “free tangible assets”. You don’t see those very often and those would be unreasonable in my book.

Producing software can be done effectively and the cost can be kept low or, if done by enthusiasts, then the cost is not even an issue (see open source). You can get really good open source CRM like SugarCRM and not pay a penny if that’s your goal.
Of course, that brings other challenges with it, as you’d essentially be on your own or have to pay for support, custom development for customizing the CRM to meet your business objectives.

But it is an option and we should all be grateful that we have it. Imagine a world controlled by a few powerful software houses (that shouldn’t be too difficult!).

The problem with free CRM or free anything really is that nothing is free. Someone else has to pay for it, in one way or another. The open source enthusiasts absorb the cost by putting in their time because they enjoy it. Companies offer CRM for free or other services for free either as a “freemium model”, to get their foot in the door and hopefully entice customers to upgrade to paid plans, at some point. Other companies give it away for free in order to get consultancy or professional services business from their “free customers”.
And others do it to get exposure, get the word out, compete differently in a very competitive market.
The point is, someone else is subsidizing your free services.

Why should you care?
Generally, as a consumer, you should not care. Every once in a while you get to read in the press about a scandalous invasion of privacy from big companies like Facebook, Twitter, etc. trying to monetize their services at the expense of their users’ privacy. Yes, they are trying to monetize their “free services”. Are you more eager to pay with your money or with your privacy?

As a business, you probably care more, as some of the services you use are vital to you. It’s not just a matter of stop using Instagram and going on with your life. Many times, the free services make the difference between being in the business or not. A life and death situation, to put it slightly melodramatically (after all, I don’t want you fall asleep reading this).

So the problems with free services tend to affect you more. As a business owner, free services concern me because I know they’re not sustainable so:

  1. The companies can go under as they do not have the means to continue. I’m left committed to the services but on my own. If you’re dealing with a SaaS company (hosted CRM, software as a service CRM, that kinda thing), then the whole application goes away when the company goes away as they cannot host it anymore. Ensuring your suppliers stay afloat is a BIG BIG issue for businesses.
  2. The companies can always stop giving away the services for free or change their business model dramatically which puts me, as a small business owner, at risk as I cannot plan. Going for a sustainable business model and paying for it gives me peace of mind.
  3. The companies supporting free services do not have an incentive to provide free support or enhance the product further. Not for free. In a few years time, you can end up with an outdated product on your hands. Then what?
    If you have problems with the product, what do you do then? Do you pay someone for support? Paid support can be more expensive than the original software

Don’t get me wrong.
I still think free is good, I think open source is fantastic and we use open source software here at Clevertim.
As a startup, especially if you’re bootstrapping, free can be an essential lifeline for your business. But, as your business grows, you should try to revisit the issue of free, just to reassess whether you’re exposed to too much risk, needlessly.

At Clevertim, we do have a free CRM plan for the customers looking for free CRM. We do subsidize it and this free plan will never go away. But it is limited in terms of functionality and what’s available to it. You get a limited number of contacts and opportunities and no files. If that’s not enough, have a look at our other CRM plans.