free trial vs demo for SaaS

Free trial vs demo for SaaS: what’s best?

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Spencer Coon
Jul 01, 2020

Your customers’ first interaction with your product is a make or break part of the sales and customer success process for SaaS. Most SaaS companies use some variation of a free trial or a demo to help sell the product and onboard customers. Which one works better? We’re going to explore how different SaaS companies are handling their sales and onboarding processes and take a look at the pros and cons of the different options available. 

SaaS subscription

Here are some ideas to consider when looking at a free trial vs. a demo for SaaS:

A free trial only: 

Offering a free trial is a great way to break down the barriers to a “purchase” decision for your customers. With a free trial, users get access to all premium features without needing to input a payment method which is a huge perk.  Customers don’t feel they are tied to a product they don’t fully understand the value of yet and they get the opportunity to test drive your product before they make the commitment to start paying for regular use. With a free trial type of sale process and onboarding, the focus of your marketing and sales teams’ efforts will be to get customers registering for free trials and allowing your product to sell itself in the longer run after the trial is up. The free trial process is a big component of a product marketing strategy. Learn more about product marketing here

SaaS Free Trial

  • Pros: 

The benefits of a free trial is that you can allow your product to sell itself. It takes the pressure off your sales team to get customers to start paying from your product right away. It also allows customers to discover the value of your product themselves. Customers are much more likely to sign up when they know they don’t have to pay right away. It gets customers in and using your product right away. 

 

  • Cons: 

You don’t get paid right away! Customers do not start paying to use your product until the trial ends and they decide to continue with a paid plan. You run the risk of customers churning out when you do ask them to start paying. If your product requires a lot to operate, this can be costly in the long run. One way to avoid this and ease the potential churning of customers out is to ask for credit card information at the start of the free trial and let them know that they will be charged to continue at a certain date. This can help eliminate that friction later on. However, it does add a bit of friction to a “free” sign up so it’s important to test this and weight up both options for your audience! Learn more about the pros and cons of a free trial for your SaaS product. 

 

Freemium model: 

An interesting solution that solves the free trial payment hurdle is by eliminating it all together and allowing customers to decide when they pay. A freemium model is where you allow users to sign up and use your product at a lower service level for free. They can choose to start using a premium service level for a price. You put the decision entirely on them. This allows users to make a quick decision on signing up for your product and gives your team time to upsell as they discover the value by actually using it. However, it can be costly to support and serve an entire base of free users in hopes that they convert. It’s important to weigh up whether this is cost effective or not for your product. We do this with Beamer. With Beamer, users can install Beamer and use it with our branding and limited features. Paid levels are able to use their own branding and open up paid features like segmentation and push notifications. 

SaaS freemium

  • Pros: 

The barrier to entry is non-existent. Users can join risk-free right away and stay on board as long as they are happy with the level of service. They make the decision when they want more and are willing to pay for a higher level of service. This takes pressure off your sales team and even gives you more time to upsell customers. Instead of trying to ensure they are willing to pay after a week or 30 days, you can continuously upsell freemium customers overtime with new features, etc. 

Beamer is a great way to upsell your premium features by continuously engaging customers when you announce new features and push updates. Beamer is an in-app changelog where you can announce any addition or upgrade to your product as well as share news and content with your users. All users have to do is click a “What’s New” tab in your navigation or an icon in your interface to open up the changelog in a native-looking sidebar. You can add photos, videos, and GIFs to your updates. You can also use push notifications to bring users back to your platform when you release an update. You can segment notifications to target paid and free users differently to better upsell your product and keep paid users in the loop with new features. 

 

  • Cons: 

It can be expensive. You may end up having to support and cover costs for a large free user base. You are not paid right away or until someone decides that your premium level of service is worth paying for. It can take extra work on your sales and marketing team’s part to get those customers paying. Users do not get to see all the premium features and may miss the complete value of your product. You can mitigate this risk by offering freemium and a free trial with the full features with a card required. 

 

A demo and then paid sign up: 

Another option is to allow or require a demo before signing up for a paid level of service. Some SaaS companies choose to make a demo mandatory to qualify and sell to users. Your team would assist in showing potential users your product and how it works and how it would be of value to them and then prompt them to sign up and begin paying to use your product right away. 

SaaS demo

  • Pros:

What’s great about this is that you can avoid having any free user base to cover costs for and you can somewhat help the decision making process with users through a free trial. This is a great option for a complex, intrinsic SaaS product for larger teams or companies that requires more explanation and personalization to really ensure customer success. With a demo, your team can show excellent customer support and also learn more about what users value within your product. 

 

  • Cons:

This is a lot of work and pressure on your sales team. It also requires more steps to actually get customers using your product. Potential users have to sign up for a demo, your team has to schedule and get on a call with them and they need to sell the product. Users then have to go through the process of actually signing up. This is not ideal for really simple products that should have a short sales process or can be used differently by different companies. You could lose a lot of potential users in the demo process. A way to combat this may be by giving them immediate access to a video recorded demo or interactive demo feature and speed up the decision making process and eliminate the need for work on your team’s part. 

 

A demo and freemium combo: 

One way to get the best of both worlds is to combine the two. You can allow for users to watch an interactive demo or even provide a personalized demo and then join a freemium version of your product with the option up upgrade later. This way you can show users what your product offers and also allow them to experience it themselves while entirely taking the pressure off your sales team. This is ideal for complex tools that can be used by both large and small companies. Larger companies are going to want to know what they are working with and if it is valuable before they spend any time and money on it, so a demo is necessary for them to review their own use cases before they sign-up for an account. Smaller teams are going to want an easy, simple sign up and to get started right away with the option to upgrade later. This offers both. For example, Hubspot offers both a demo sign up and a freemium model with multiple levels of paid service. This way, they cover all their bases and are able to sell differently to different customer groups without ostracizing or risking potential paying customers churning out of the sales process. This is a great option for versatile, complex SaaS products and platforms.

freemium + demo SaaS

 

So what’s the answer? It depends. 

It depends on your customer base, your product’s complexity, average ticket size and versatility, your sales team’s capacity to serve and convert customers, and your ability to take on costs. You have to pick a combination or option that fits your capabilities and also serves your customers while getting them to recognize and pay for value. For an easy way to engage both free and paid users as well as leads on your site and introduce your product’s updates and features, try Beamer today.