Friday, February 10, 2012

Free trials don't always make sense

Free trials are one very popular technique for marketing software-as-a-service (SaaS) solutions, especially for relatively inexpensive ones. Think Constant Contact, salesforce.com contact manager, or Carbonite.

But before you take the leap and offer your own free trial, think carefully.

Free trials can't work without follow-up

For a free trial to work, it needs to be part of a overall customer acquisition plan. A free trial without a well-constructed follow-up effort to convert the free trialers into paying buyers isn't worth much.

You should also have a plan for people who tried but didn't buy. They should be part of your target audience for on-going marketing programs.

Free trials do cost money

With a free trial, you are essentially extending the sales cycle by the length of the free trial. Most buyers won't pay you until they need to. That will require more working capital.

Depending on your infrastructure and hosting platform, it will cost you money to host and deliver your solution to free trialers. The cost of computing and storage may be low, but it's not free.

If your solution requires support to get the free trialers up and running, in the form of telephone or chat help, or online tutorials, factor those costs into your calculation.

For some applications, a free trial could essentially give away all the value of the solution. If it's a solution that helps manage a task done once per year, for example arrange the annual user group conference, why would the prospect actually pay for the solution once that task is done?

Does a free trial really show the value?

Consider whether the free trialer will truly see the full benefit of your solution during the course of the free trial. If you're helping them manage a process that takes 6 months, for example, the trialer might not see much value in a 30-day free trial.

Just because a trial is free doesn't mean that the prospective customer will put in the time to learn how to use it. In fact, if it's not immediately obvious how to use your solution, a free trial might actually deter prospects from buying it. "Free" does not compensate for a poor product that's difficult to learn. (See "If it's hard to use, it's hard to sell")

"Free" might not really matter

A trial might show prospects the solution's features and functions for free, but it won't necessarily address concerns about security, reliability, deployment, and integration. For buyers within large enterprises, these other issues may be more important than price.

Alternatives to a free trial

Before you automatically opt for a free trial, think about alternatives:
  • A "sandbox" demo would allow the prospective customer to work with the software in a controlled environment. It might provide access to all functionality or it might limit the user to certain features. For example, it might not allow printing or emailing reports.
  • Videos could be used to show off the key features of the solution, explain how it would be valuable to the prospect, and demonstrate how easy it is to use.
  • A money back guarantee would allow someone to purchase the solution and, if they are not satisfied, cancel their subscription after some period of time to get their money back.
  • A no-obligation contract would allow a paying customer to cancel their subscription at any time without penalty. They are under no long term commitment.

With these alternatives, prospective customers can get some experience with your solution. And you might avoid some of the downsides of a free trial.



Creative Commons License

This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.

4 comments:

  1. Peter,

    A nice example of a sandbox demo is stripe.com. They allow prospects to test the software in a controlled environment, isolated from other prospects, giving them the option to save the current state of the account by providing username and password.

    Thanks for the post. =)

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  2. Great article. Here is another "truth" about free trial best practices: if you are doing a free trial, make sure you know who are your most active trial users and make sure to focus your inside sales team on those prospects. There are only so many hours in the day and too often not all trial users receive a phone call. We found that trial users who are still active on the trial on day three of the trial are four times more likely to convert to paying users. And calling those active users increases their conversion rate by 70% as compared to leaving them on their own. This is like a retail situation where a representative will always great you with a "can I help you". It works. You can build the intelligence needed to track user activity during the trial yourself or you can use a solution like www.totango.com. Yes, I admit that I work there.

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  3. I agree with the article especially about free trials extending the sales cycle. I have found that with prospects a 45 minute 'simulator' ride of the product has been very beneficial in focussing on their issues and allowing them at first hand to see how the system can solve their issues and how easy it is to use the system.

    We use the simulator after we have stablished we have a prospect and to speed up the sales cycle.

    The prospects have never found it inrusive having an instructor sitting with them on the session. In fact a lot of their questions are answered during the session because the hands-on approach stimulates questions that they would not have thought of if they were trying to put to together their requirements in a document.

    The simulator is done as a web session so the costs are kept to a minimum in meeting and travel time.

    I must stress that this is a tool that suits our sales cycle for what we are trying to sell. Free trials for us proved to be the wrong approach as most people were so busy that when you went back to them they admitted that they had not had the time to carry out the trial.

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  4. Well, I think free trials are still useful for the user to determine if it suits to his preferences and it might not really work for him. But due to the fact that you explain something about free trials, I'm now having a thought if it can be useful.

    Good Job Peter

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