Demand Curve - The Growth Newsletter #070

The Growth Newsletter #070

Welcome to the 570 new marketers and founders who joined last week!

This week we're covering ecom pricing psychology, webinars, and freemium/free trial models.

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Big news:

If you've been with us for a while you've likely noticed we started taking on sponsors.

That wasn't a decision we took lightly. We only work with companies we feel can add a ton of value to our community—often through exclusive deals and perks you can’t find anywhere else.

So we're proud to formally announce our first sponsor: mParticle.

mParticle is one of the leading customer data platforms on the market. The CDP that powers companies like Venmo, Airbnb, Postmates, and many of the top B2C companies.

We’ve teamed up with mParticle to offer you a new package deal—only for Demand Curve subscribers. Claim it and you’ll get:

• One year free or $25k credits of mParticle (depending on your company stage)
• 20% off the Demand Curve Growth Program
• 20% off the Demand Curve Job Board
• Over $25k in savings on marketing tools (like ClickUp, Airtable, and Notion) via our private deal book

Just a heads up, this deal will only be available to the first 1,000 people to sign up.

You can claim the deal here.

1. Four pricing psychology tactics to increase conversion

Insight from Northern Comfort.

Shoppers don’t perceive prices or buy rationally.

Because of this, seemingly minor pricing tactics can have an outsized impact on conversion.

Take a look at this example:

The product on the right should convert better than the one on the left.

Why? Simple pricing tactics proven through behavioral psychology studies:

1. Use a smaller font for the reduced price. It makes the item feel less expensive compared to the original price.
2. Place the prices horizontally, not one on top of the other. And show the higher price on the left and the lower price on the right. Since we read left to right, this helps shoppers understand the price reduction.
3. Choose prices so that the sales price's right-most digit is lower than regular price's right-most digit. For example, £295 should be reduced to £250, not £249. Because shoppers read numbers to themselves, the lower right-most number makes the whole reduced price seem lower.
4. Separate the two prices physically by a distance—don’t include them right next to each other. This separation helps shoppers internalize the difference between the two prices.

While creating pricing pages and ads, consider testing these tactics to see if they increase conversion.

2. How to get more out of B2B webinars

Insight from B2B Bite.

91% of B2B buyers rank webinars as their favorite content format.

But webinars have grown stale over the last several years. The problem isn't the format—it's that marketers have allowed the medium to become boring.

Try these tactics before, during, and after your webinar to get more out of the event:

Before: If partnering with guest speakers, create a joint promotion plan that leverages their network to increase attendance.

• Don't make it a one-off event. For greater impact and longevity, cover the topic from different angles over the course of a series. People who show up to multiple events become prime SQLs.
• Ask your audience to help define the agenda. Instead of assuming you know what your audience wants, survey them to find out what topics they're most interested in. Curate your webinar sessions accordingly.

During: Choose a personable moderator. Someone who can comfortably manage the ebb and flow of the conversation and get the audience involved.

• Turn your speech into a discussion. Use live giveaways, Q&A, and breakout groups to turn passive listening into active participation.
• Take advantage of the chat feature. Webinar chats panels either feel like ghost towns or they’re filled with sales pitches. Task a colleague with acting as the host—have them engage in discussions, ask and answer questions, and get feedback in real-time.

After: Follow up. Include a link to the webinar recording, thank them for their attendance, and encourage sharing (a one-click tweet works well).

• Repurpose and distribute: Repurpose the webinar into assets for your marketing channels to drive traffic back to the original (i.e., blog post, Twitter thread, podcast, YouTube clips, LinkedIn post, etc.).
• Consider avoiding the word "webinar" in your promotion. It's boring. Masterclass, Seminar, or Expert Talk are better alternatives.

Webinars should feel more like live courses than product demos. Keep tabs on how top internet creators are building live courses. They usually nail “edutainment”—the sweet spot between entertainment and education that leads to high engagement and high perceived value.

3. Should you offer a freemium plan or free trial?

Insight from Demand Curve.

Should you offer a freemium plan or free trial?

It’s a tough call for many SaaS businesses. Here are the pros and cons.

Pros of freemium/free trials:

• They’re product-led growth tactics for customer acquisition. They can reduce signup friction and get users to experience your product’s job-to-be-done faster.
• They provide an opportunity to hook prospects by delivering value before any money changes hands. When done right, by the time the user starts paying, they 1) understand how the product solves their problem, and 2) have developed a habit around product use.
• By analyzing data from thousands of SaaS and subscription companies, the ProfitWell team found that freemium cuts customer acquisition cost (CAC) by nearly half, and free trials had 15% lower CAC.
• The ProfitWell team also found an almost 20% improvement in net retention and a twice-as-good Net Promoter Score (NPS) for freemium vs. non-free.

Cons:

• Freemium and free trials are tough to get right. Unless you understand exactly what to charge for and how customers value your product, you run the risk of giving away either too much or not enough value in your product’s free version. It takes a lot of data to know how to strike the right balance.
• Those promising stats from ProfitWell notwithstanding, there is the potential for freemium/free trials to result in an increase in CAC and a drop in retention. If you decide to offer freemium or a free trial, make sure it works with your CAC and average revenue per user (ARPU) and provides a clear conversion path.

There are a few indicators that freemium/free trial could be a fit for your business. As you implement or refine your pricing strategy, consider:

• Low product friction: Your product is easy to get started in and experience value from.
• Product stickiness: The value of your product increases the longer someone uses it, making them less likely to leave for a competitor—and giving you more time to convert them to paid.
• Network effects: Your product’s value increases as more people use it. Both stickiness and network effects help maximize user retention. And the longer someone is retained, the more likely they are to upgrade eventually.
• Product virality: Your product has pull virality and word-of-mouth potential.
• Self-service: You don’t need to put many resources toward supporting self-service users. They can experience product value without extensive training or support.
• Market competition: You’re offering an alternative to a well-entrenched competitor or introducing a totally new concept. Both might benefit from a freebie nudge.
• Market size: Your product would be able to convert enough people to make the economics work. Which means either a bigger market or a higher conversion rate.

News and links

News you can use:

• Social audio is still around. As part of Reddit Talk, Reddit’s recently launched Host Program invites users to host audio group chats to win prizes and promote their communities. Worth trying to reach a wider audience.

• Google has begun rolling out ads in YouTube Shorts. In case you missed it, Shorts is Google’s TikTok competitor and generates 30 billion views per day.

• Still, TikTok continues to dominate. New research shows it’s on track to beat out YouTube in user time spent—45.8 minutes compared to YouTube’s 45.6 minutes.

• Also from Google: Beginning June 30, you'll no longer be able to create or edit Expanded Text Ads. Existing ads will continue running, and you can pause, resume, or remove them. But moving forward, Google advises companies to use responsive search ads.

What we’re working on: a new interview series with top marketers. We’ll be asking them about their growth experiences, tactics, and insights. Is there a top marketer you’d like to hear from? Please fill out this form to nominate a potential interviewee—and feel free to nominate yourself. We’ll share each interview with our 50k+ readers.

Top new marketing jobs

If you're looking for a top growth role, check out the opportunities below from our job board.

Something fun:

From @MrLovenstein

Want more growth tactics?

We're giving away our entire back catalog of tactics to folks who refer two friends to this newsletter. Here's your referral link to share: https://sparklp.co/385a143f. You can track your referrals here. We'll automatically email you the password-protected tactics page once you've referred two people.

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Who's Demand Curve? We’re who marketers and founders rely on to solve real marketing problems. We skip trends and fluffy stories and only share high-quality, vetted, and actionable growth content from the top 1% of marketers.

How we can help you grow:

• Read our free playbooks, articles, and teardowns—we break down the strategies and tactics that fast-growing startups use to grow.
• Enroll in the Growth Program, our professional course that will help you get traction and scale revenue.
• Hire our agency, Bell Curve, and we'll grow your startup for you.

• Engage with our audience by sponsoring Demand Curve.

See you next week.

— Nick, Grace, Joyce, Dennis, and the DC team.

Nick Costelloe

Grace Parazzoli

Joyce Chou

Dennis Buckley