Free trials are one of the most effective ways to get new users to check out your SaaS product. In an increasingly crowded marketplace, the free trial sales model is becoming more popular as companies struggle to find ways to acquire enough users to keep up their growth rate without sinking their budget.
Something that’s commonly overlooked with free trial plans is the strategy behind them that moves the non-paying customers to paid plans. After all – it’s not much of a sales model if none of your subscribers are going to pay you.
Companies often implement a free trial sales model without considering best practices for building and maintaining a profitable SaaS free trial conversion rate. Without considering different strategies for using free trials to effectively move non-paying customers to paid plans, many SaaS companies prematurely abandoned free trials altogether.
Let’s take a look at the ins and outs of the free trial sales model and how to improve your SaaS free trial conversion rates.
Is a free trial sales model right for you?
Before we talk about how to improve your SaaS free trial conversion rate, it’s important to determine if a free trial sales model is right for your company. It’s human nature to want things for free. Free samples, buy one get one free – we’re almost powerless to resist. When it comes to acquisition, startups are quick to leverage the power of “free” to get more sign-ups in the hopes they will convert to paid.
Giving away free things in any industry is a proven way to build a relationship with people who don’t know, like, or trust your company yet. In the B2B SaaS industry, building trust is essential as choosing the wrong product can have a negative impact on many areas of a customer’s business.
While many SaaS companies see incredible results with free trials, every business is different, and in some cases, it might not make much sense to implement a free trial strategy.
For instance, if your SaaS product can’t deliver clear results during a reasonable free trial window or the customer can’t get a complete picture of how your product benefits them during that time, you should probably think twice about offering free trials at all. The purpose of offering a free trial is to show prospective customers the value of purchasing your product, and if that isn’t something you can show them during the free trial period, you’re likely going to have a low free trial conversion rate no matter what you do.
Another example would be enterprise-level software, or a complicated SaaS product that requires in-depth training to be used properly. If your product is too complicated for users to pick up and learn on their own, a free trial isn’t going to work well when it comes to converting them to paid customers. Instead of offering free trials, it might make more sense to offer free demos to the decision makers of businesses you consider prospective customers.
The downside of free trials
Many SaaS companies have huge success with offering free trial subscriptions, but equally as many end up with low free trial conversion rates and feel that it was a waste of their time and resources in terms of acquisition efforts.
Free trials can attract a lot of users that sign up for your product with a passing interest, only to forget about it shortly afterwards. Maybe it was the weekend, or something else came up. They were going to get back to it, but – you know. Life gets in the way.
This is the reality for 40-60% of the people who take up free trial offers. It’s a significant percentage of potential recurring revenue, and it’s these people who you need to take into consideration when you’re figuring out how to capture user attention, demonstrate value, and improve your free trial conversion rate by moving users from free to paid subscriptions.
Structuring your free trial
If you’ve decided that free trials are the right move for your business, it’s important to do some planning, thinking, and testing to make sure this sales model is getting the best conversion rate possible.
The most common elements in a free trial model are:
Opt-in with no credit card
Opt-in with a credit card
Limited functions/features
Limited users
Limited trial time
Opt-in with no credit card
This is everyone’s favorite method of free trial – from a user perspective anyway. There’s low friction and instant gratification.
It’s so easy, in fact, that many of the people attracted by this free trial model only have a passing interest in a product and were never serious about it as a solution, let alone a solution they would pay for. Free opt-ins can generate more leads, but they won’t necessarily be better leads.
Opt-in with a credit card
This model can cause a lot of friction for a trial user. Many of us have been burned at some point by entering our credit card details into a “free” service, then forgetting to actively opt out of the trial account – only to be stung with a hefty bill when the new month rolls around. Psychologically, this is viewed as being a bit of a sneaky tactic. If you’re looking to build trust in a new customer from the outset, credit card opt-ins can be a sticking point for a lot of people.
Free trials should be as frictionless as possible, and having to give away sensitive information up front isn’t one of the best ways to start a relationship.
On the other hand, the people that are willing to give up their credit card details on a free trial are more likely to be serious about upgrading to a plan once their trial is over.
Generally speaking, we can expect a higher SaaS free trial conversion rate from the “opt-in with a credit card” model when directly comparing to the “opt-in with no credit card” model, but we can also typically expect fewer leads altogether from this model. With that being said, testing your trials with and without a gated credit card entry point is the best way to analyze the number and quality of the leads coming into your free trial.
Limiting features on a free trial
Some companies prefer to limit the features on their free trials – dangling their paid premium features just out of reach of excited new subscribers. The problem here is that a new trial user will never get to experience the full value of a potentially amazing product before they buy. It might be these very features that could sway their decision to upgrade to a paid plan.
On the other hand, if the rest of your product is working as it should and free trial users can not only see the benefits but also feel confident that your premium features will work just as seamlessly, they may be more inclined to pay for these premium features solely based off their experience with the free trial.
Limiting users
Full features but limited users for a trial is a popular option, especially for SaaS products built for teams. If one person in a business gets to experience the benefits of a product, it can be a simple step for them to upgrade so the rest of their team can start using it as well.
Trial times
Some companies make the mistake of having a trial that’s either too short or too long. 7 days is often too short for people to build a habit of using a product, and 30 days can be overkill – especially if the onboarding process is weak or stops after the first couple of weeks.
By checking your analytics to see how many users are logging in over the course of your free trial, you can begin to make educated guesses about how long your trial should be. Close.com recommends a 14-day free trial as being the best choice for 99% of B2B companies. Then again, different SaaS products are going to have different metrics, and so trial length should be customized for your specific product – ensuring it’s at least long enough to deliver results and show the user the full benefits of the product.
Analyzing competitors to structure free trials
It is always a good practice to research how your competitors have structured their free trials and take note of any factors that might influence potential customers who are weighing out the pros and cons of each trial option. Looking at things like length of trial, features offered to free members, and whether they require credit cards can help you structure your own free trial promotions with a slight advantage. The reality is that most startups have one or two main competitors in their market, so a person seeking solutions to a problem is likely to trial the product with the easiest sign-up.
SaaS free trial best practices: user onboarding
Once you’ve decided on the structure of your free trial offering, it’s crucial to get your onboarding process right. The whole point of this sales model is to move your trial users to paid plans – otherwise, it’s not much of a sales model. The effort you put into your onboarding needs to be equal to (if not greater than) the effort you put into your acquisition.
The moment you launch your free trial, you should have a robust strategy in place for moving these new users to upgrade. A thoughtful and structured onboarding process is the key to getting your customers to happily pay for a plan, and it’s also the point where your long-term retention process starts.
Out of all the people that subscribe to a free trial, up to 60% of them will leave because they:
Can’t understand how to use the product
Fail to see the value in the product
It’s your job to give people quick wins so they can get to the “Aha moment” of your product as fast as possible and start building a habit of using it. By improving a customer’s sense of success, you improve your chances of retaining them as a long-term user, which goes a long way towards improving your free trial conversion rate as well.
Onboarding emails
You need to get people to experience your product fast, and the first two weeks after sign-up is the most critical time to do this. Don’t be afraid to send to more emails than you think you need to during this time period.
Think about segmenting your onboarding emails. Not all users want the same things from a product or use it in the same way. You could look at segmenting your emails to create different tracks that take into account what a user has done with the product so far. You could also send trigger-based emails when users interact with your product in specific ways during the trial period.
Onboarding no longer has to be an automated mass send. Modern email software allows for flexibility and deep personalization that can make the onboarding process feel more intuitive for people as they learn how to use a product. By finding a way to “reward” your free trial users as they respond to your emails, they are more likely to get hooked into investing more time in your product.
This might take the form of triggered onboarding emails or notifications showing a user how much time or money they’ve saved over the course of their free trial. Whatever you can think of that will make a user feel good about using your product will be an important part of improving your free trial conversion rate. Once a person experiences and understands the value of your product, the next logical step is for them to upgrade.
Final thoughts on improving SaaS free trial conversion rates
The free trial model is something that most startups will try in their startup phase. Testing the trial structures that work for your specific business is important, but the key to successfully maintaining a profitable SaaS free trial conversion rate lies in your onboarding process.
Without a strategy to help new users quickly find value and success with your product, they can easily drift away to the competition. Having a well thought out onboarding sequence is crucial to help people enjoy and build habits with your product so they’re both willing and happy to move to a paid plan.