(4 min read)💰 Sprig's Pricing Strategy
Who are Sprig?
After being the founding PM at 4 companies Ryan Glasgow started Sprig in 2018, a company designed to help solve the fact that whilst he understood how critical open-ended, qualitative feedback from customers was, he also vividly remembered how painful it was to manually collect, categorise, and analyse the data.
Sprig’s USP is that it eliminates this work with microsurveys displayed contextually in the product and then uses machine learning to categorise the responses, pulling out interesting themes.
To better enable people to get started Sprig’s team have now templatised the process. Stuck and don’t know the right questions to ask? Templates include PMF test, tracking NPS, evaluating new product ideas and countless more.
The Problems with Sprig’s Incumbents
Sprig certainly didn’t invent the idea of qualitative customer feedback. Large companies like Qualtrics ($11b), SurveyMonkey ($3b), Ipsos ($2.7b) and Medallia ($5.5b) already exist in the space and have done so for decades.
But what Ryan Glasgow realised is that while a lot of other tools in a modern startup’s tech stack had evolved to be collaborative, include a free plan to demonstrate the product’s utility and enabled teams to get up and running with 1-2 days the process for buying and implementing qualitative research software was still fundamentally broken.
To get up and running still required weeks of researching vendors, scheduling product demos, waiting to receive a price quote for your requirements and then 3 months of work that involved rigorous survey design, email surveys with with 1-3% response rates, and tons of manually tagging responses before an exec decision could be made which was no longer sufficient in today’s market of increasing speed and competition.
Instead, Glasgow & Sprig decided what many other founders in the 2010s did, that a product-led growth model was key to fixing the industry. Unlike Qualtrics or Medallia, Sprig’s pricing page isn’t hidden and displays a transparent usage-based structure, with a free plan meaning anyone from a Seed-stage startup to a lone PM at an enterprise can get started immediately.
Why does this matter?
By reducing barriers to adoption with a product-led model and lowering the skill required to set up a survey through pre-built templates Sprig is enabling any function from product to marketing, sales, and customer support to become a user researcher.
This repositioning around a product-led user research tool for the entire organisation has a couple of major benefits:
Expanding from team to another (e.g. product to marketing) is a significantly easy process, with Sprig already being a pre-approved vendor
Becoming a continuous user research tool & expanding the ICP to include marketing, sales and others massively increases the number of surveys, and thus events that Sprig can charge for, vs having user research be a siloed activity that requires months of planning for each project
Increasing the number of teams that use Sprig within an organisation also creates greater numbers of product champions, and arms Sprig’s inside sales teams with usage data making a multi-team enterprise sale a far easier task than if they were to try and justify ROI with a traditional sales-led approach
Before users can even schedule their first sales call with one of the sales-led incumbents, they can have Sprig up and running at no cost
Freemium Isn’t For Everyone
Yet, despite what many founders may have you believe Freemium isn’t a silver bullet. Whilst Sprig is certainly far easier to set up than their incumbents it’s still not a small task to get a free user embedding Sprig’s code onto their organisation’s site and choosing the right survey for their needs and requires technical know-how.
Equals’ CEO, Bobby Pinero, recently wrote a fantastic article detailing the problems surrounding freemium and how his company, building a next-generation spreadsheet struggled to properly activate users and almost died when they decided to transition from a sales-led approach to freemium.
Whilst the team came to the conclusion of trying freemium by listening to their users who were begging for a lower friction, free experience which didn’t require connecting a data source it ultimately ended up proving very costly, as they struggled to properly activate new users.
The Equals team ultimately turned it around, not by reducing friction wherever they could by trying to build a user’s momentum in onboarding in 2 key ways:
They reverted back by requiring users to set up a live data source. “The allure of seeing a new product is the strongest motivator a new user has to complete complex setup tasks. If you need your users to do something that you believe is fundamental to their seeing value from your product, don’t let them skip it. Their motivation to do it will only decrease.”
Forcing users to make a commitment, in the form of a 14-day trial before a paid plan adding urgency to get set up and properly making use of the product. A free plan does the opposite.
The results? Despite increasing barriers to set up the number of deeply engaged users went up.
My Verdict on Freemium
Ultimately I think freemium is a great lead-gen method. As Bobby highlighted himself it’s a brilliant form of product marketing because instead of boring e-books you’re giving users access to the actual product and enabling them to test out their specific use cases. This becomes critical as you scale and move from your core ICP of early adopters, to users who are less motivated to adopt new technologies.
It’s also powerful for expanding into a team/enterprise sale because it helps you identify product champions and arms your inside sales teams with real usage data from that company, making the discussion around proving ROI much easier and more tangible.
Obviously for some companies it works. Notion, Figma, Airtable, Canva, Miro, Loom, are all multi-billion dollar companies that without freemium may never have taken off.
But…
Freemium can be extremely difficult for companies with longer or more complex times to value like Sprig & Equals because properly activating users is make or break. Whilst most software startups of today adopt a PLG model and then layer on sales-assist later it may actually be wiser to run a sales-assisted or sales-led model for the first few years, giving yourself the necessary time to nail activation and only open up the top of funnel when needed.
And…
Freemium by itself isn’t really sustainable. The reason every PLG company (including staunch PLG players like Zapier & Figma) eventually layers on a sales-assist model is that it’s a go-to-market method, not a business model. Only a small fraction of active companies will ever convert to paid plans in a self-directed manner and most products don’t naturally spread virally within companies.
To continue growth you need to increase the LTVs of each client, and whilst freemium gives you the data, it doesn’t facilitate account expansion in the same way inside sales does. The next key to growth once you’ve sorted top of funnel is identifying the right users to get on calls with and understanding which companies have the highest willingness to convert.
That’s it for today folks, it was a little different in terms of format so please let me know any feedback you have or if you enjoyed it - I’ve loved hearing from you on this new content over the last month or two.
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