Pros and Cons of a Free Trial in your SaaS Product
A free trial feels like a mandatory for anything sold online these days. We even expect to be able to have a free trial for physical products and then return them for free!
Around 80% of subscription software companies offer free trials and they see varying success rates. Is it always the best for your team? The answer could be yes or no. You have to weigh the costs and benefits, the pros and cons. You have to dig a little deeper than “better conversions” and see at what cost that comes and what other benefits you can see for you and customers to make the right decision.
We’ve actually gone ahead and done it for you.
Here are some of the most important pros and cons of a free trial for your SaaS product to consider:
You really have two ways to offer something “free” before users start paying for your service. You can adopt a freemium model with paid premium or a free trial model. A freemium model means you will always offer a baseline amount of features for free and users will have to upgrade to a paid plan for additional, higher level features. A free trial model is a straightforward trial period completely free and a complete stop of service if you do not become a paid user. You can either give it to them for free at first (freemium) and leave it up to them to upgrade or you can take their card info at the start of a trial and get them upgraded automatically to continue. What works better? Let’s analyze.
You have a user, not a paying one, but a user:
Paying or not, someone has expressed enough interest and seen enough value to go ahead and give your product a shot. This is great news for a number of reasons. First of all, it’s validation that your product has value and people see that through your marketing process. It also means that users will be further exploring that value beyond just a features page which is really where you have the opportunity to sell them and get them hooked on your product, granted your user interface design is competitive and intuitive. It’s hard to convert someone to a paying customer off a landing page with descriptions and photos alone so this interaction gives you a much better shot at closing a long-term paying customer with some additional features.
You have user data and can automate sales:
Both a free trial and freemium can be valuable for you as well. You get free data on your product! Free users can give you a ton of information on how well your product is designed and what needs to change or what features you should add. You can track how users interact with your product and use that data to determine what changes need to be made in the future. You can use heat mapping software to determine friction points in your interface and the on-boarding process so you can improve it. Even if customers bounce, you get important information. With freemium, you can spend a longer time determining which features exactly push users to want to pay for the service where you are limited with a free trial period.
Pros of a free trial without required payment info:
You give them time to explore the features:
Instead of one cold pitch call or a few seconds on a landing page with a trail or freemium, customers can take the time to discover the product, its features and its value. Your team has more access to the customer and can step in to ensure product success so they are more likely to convert. Your team can offer to jump on calls with bigger clients to help them learn how to use the product or offer to run demos for other team members so adoption is easier. You can also send regular emails and notifications within your app with tips on how to use it. This is called feature discovery. This can really help users explore your product and discover all the features so they can find what is most useful for them. This way, they are more educated and likely to stay after the trial and or upgrade.
Beamer is the perfect tool for feature discovery and engaging users both within your app and beyond. Beamer is a newsfeed that sits within in the interface of your app. Users can open it by clicking an icon and discover a whole feed of updates and messages from your team. Beamer is used to introduce new features in an intuitive, self-discovery way. You can add photos, demo videos, and GIFs to your updates to better explain. You can also segment updates so different users at different stages of their free trial get different, more targeted updates. To reach users when they’re outside of your app, you can send push notifications to bring back users who may be slipping away. It’s perfect for keeping engagement high during the free trial period to ensure product success. You can use Beamer to showcase premium features to a freemium user base as well to drive conversions.
Pros of a free trial with required payment info:
If they enter their payment info, users are much more likely to convert to paying users:
Expanding on a few things above, even if they see value in your product to give it a try, SaaS is unique because your revenue model requires that they become happy, engaged, paying users always. Because SaaS products are meant to work into existing systems of users, there is definitely more of a learning curve. It may take much longer for users to see the value for them in the product. A freemium model allows them to figure that out at their pace and discover further value rather than stay skeptical and not convert at all. They can explore all features and determine how they are going to use the product. Users are more committed if they have to input their card info during the trial sign up process as well.
You may spend more time on the sales process:
When you have a ton of free trials running, it’s up to your team to make sure, even after they’ve converted them to a trial user, to keep them engaged and onboard to becoming a paying user. A lot of SaaS tools require a decent learning curve that your team has to help speed up to get users seeing the value in the product. This takes time and resources. With trials, your team will be working the whole trial as well to try to get users to convert to paying. It’s essentially like trying to get them to convert twice: one to try and once to buy. The time and effort in between may become too much to be worth it. If they already entered their credit card into, it’s more likely to be automatic, especially if they don’t want to lose the service. This is also an important thing to watch. With a freemium model, they’re already continuous users so all you have to do is slightly nudge and show the value of premium over any length of time to convert. This could happen in a month or a year but you always have the option.
Even if is software and there is no physical product costs, you are always paying a cost. There are overhead costs for every company and opportunity costs in terms of time and energy put into selling and marketing. Particularly with software, you need to think about data. Are a ton of free trials going to onload a ton of data you don’t yet have the capacity to process quickly? Are you going to experience lags as a result? This will lose you paying customers or you will end up paying more and more to support freemium users that may or may not convert. There is also support team resources necessary when you have a base of free users on your platform to consider. It’s important to analyze how worth it, revenue wise, your trials are based on conversion rate and overall cost.
Cons of a free trial without required payment info:
With a responsibility-free trial, you may get an influx of leads that are not serious. As a card is not needed, they may sign up just to explore and won’t take the time to really get the value of your product. This costs you money in overhead costs and is not an effective use of a free trial. You may have your team wasting their time following up with leads who are not and never were serious. To avoid this, it is good to have a little barrier to entry like card information or make sure you automate the sale process as much as possible.
Cons of a free trial with required payment info:
Of course, with that barrier to entry, you may have some users who will not choose to upgrade or sign up. This may cost you potential customers who are more risk-averse. Additionally, you run the risk on your end of payments not going through after the trial period with invalid cards. You also have to be careful with timing. Too short of a trial may cause users to watch the time and jump off your trial to avoid being charged without ever really giving the time to explore the features and value.
“Do not offer a free trial when your customer can’t get a complete picture of how your product benefits them during a reasonable free trial period.”
– Wayne Mulligan, Co-founder of Crowdability
If a free trial or freemium model isn’t a possibility for you but you don’t want to give up on converting customers right away, there are some more options you can try:
- Live demos with your team scheduled through your site
- Demo videos and GIFs
- Self-guided demos
Take a look at all of these different factors and determine whether a free trial or freemium serves your end goals and is worth it for your team. If not, look to other options for conveying your products value. For an easy way to engage users and potential users, try Beamer on your site and within your app.