According to a recent study, 80% of subscription software companies provide free trials, but their success rates vary.
They provide users with access to premium services at no cost for a limited time, aiming to convert them into paying customers. However, free trials are a great marketing strategy, but they also come with some pros and cons.
In this article, we’ll cover everything you should know before offering free trials and helping businesses make informed decisions.
What Is A Free Trial?
A free trial is a temporary period, typically 7, 14, or 30 days, during which users can access a product or service without payment. It allows users to test all features and functionalities, providing a comprehensive experience of the product’s value.
Users must cancel their free trial before it ends to avoid charges, or they can convert to paid plans if satisfied.
Free trials are popular in the software industry. They offer potential customers a low-risk way to evaluate a product before purchasing it. This strategy builds trust and credibility, allowing users to see if the software meets their needs.
However, free trials can be costly for businesses, requiring investments in infrastructure, customer support, and marketing. There is also the risk that potential customers may not convert to paying customers after the trial.
Thus, it is essential to carefully consider the pros and cons before including free trials in your marketing strategy.
Free Trial Types
Based on recent research, 54% of SaaS companies utilize intent data tools such as UserMotion to track user intent during free trials. In comparison, 46% rely on sales notes to gauge user behavior and intent.
Before we go into the pros and cons, let’s understand the two common types of free trials:
- Limited-Time Trial: Users have full access to the product for a short period (e.g., two weeks or 30 days).
- Reverse Trial: Users begin with full access to the product for a limited time. Once the trial period ends, they are transitioned to a free plan with limited features.
- Free trial with credit card: This trial typically lasts for either 14 or 30 days. Users are required to provide their credit card details to access the trial. If users do not cancel their trial before it ends, it automatically converts to a paid subscription.
- Paid trial: A traditional free trial requires immediate payment, granting customers full access to the application’s benefits upfront for a reduced cost compared to the original subscription price.
Pros And Cons Of Free Trial For SAAS Products
Let’s now take to the good and the bad side with the pros and cons of a free trial to understand both sides of the coin.
Pros Of A Free Trial
Here are a few cons you’ll get if you are planning a free trial of your SAAS product:
- Attracts customers:
Free trials expand your potential customer base. When there’s no risk, users are more likely to give your product a try. Positive experiences during the trial can lead to conversions.
- Data collection:
To get a free trial, users have to sign up and create an account by entering their email ID and their business-related information. It helps to collect valuable data on user behavior, preferences, and pain points.
This information informs product improvements and marketing strategies. You get to know exactly what users want from your product.
- Provides feedback:
Sometimes, receiving negative feedback can actually be a good thing because it helps you identify and fix bugs in your product.
User feedback during trials is crucial for refining your product—addressing pain points and improving features based on real-world usage. It’s a valuable opportunity to make your product better suited to your customers’ needs.
- Reduce customer acquisition costs:
Having shorter trial periods, like seven to fourteen days, can help lower customer acquisition costs. This is because shorter trials require fewer resources to support free users during the trial period.
Conversely, longer trials tend to increase costs since they demand more resources.
According to a recent study by Statista, a three-day trial period is considered the most ideal length, as reported by 32% of mobile apps. This shorter duration doesn’t require extensive support and resources, thereby reducing customer acquisition costs effectively.
Cons Of A Free Trial
Here are a few drawbacks before planning for a free trial of your SAAS product:
- Money and Time Costs:
Preparing, marketing, and supporting free trials require significant resources. It’s essential to evaluate this investment against potential gains to ensure it aligns with business objectives and profitability goals.
- Limited Evaluation Time:
Some users may not fully evaluate the product within the trial period, which may impact conversion rates. Strategies to mitigate this include extending the trial duration or providing targeted guidance to help users maximize their evaluation.
- Risk of Attracting Non-Serious Users:
Offering free trials can attract users who are not genuinely interested in purchasing the product, which can skew conversion metrics. Implementing filters or qualifying criteria can help focus efforts on serious prospects likely to convert into paying customers.
- A lot of competition:
The SaaS industry is highly competitive, with many companies offering free trials. To stand out, highlight unique features and benefits that differentiate your product from competitors. This helps capture potential customers’ attention and convert them into loyal users.
Considerations Before Implementing A Free Trial For Your SAAS Product
Implementing a free trial for your SAAS product can boost user acquisition and provide valuable feedback.
Still, ensuring your product’s onboarding process is seamless and that your support team is prepared to handle an influx of new users is crucial.
1. Does Your Product Need Personalized, High-quality Assistance?
You should know this because if they don’t know how to make the most of your free trial, then they won’t be interested in using it. If the user is struggling to use your free trial, you should help them in the form of video tutorials, step-by-step guides through blogs, and guidance wherever needed.
2. Can Your Business Handle A Large Number Of Users?
Free trials have many more signups, and you need to be available if someone is facing some queries. So, are you ready, or do you have a team to support your customer’s objections? If not, then you should reconsider having a free trial of your product.
3. Lastly, Are Your Users Actively Engaged During The Trial Period?
Converting free trial users into paying customers is crucial. From onboarding to ongoing engagement and support, maintaining user interest through a smooth user experience, a comprehensive product overview during onboarding, and timely follow-up emails are essential.
It’s not like you’ve created a free trial and are done. You’ve got to strategize which type of free trial, for how many days? Do you have the ability to support customers? So, you’ve got to check all these things to keep your users engaged.
Conclusion: Free Trials Are Good For Conversions!
To sum up, free trials are powerful tools in the SaaS industry for customer acquisition. Offering potential customers a risk-free way to experience a product before purchasing.
While they can attract a wider audience and provide valuable user feedback, they also come with significant costs and challenges, such as resource investment and the risk of attracting non-serious users.
To maximize the benefits, make sure you’ve got a clear goal, a plan to execute it, and a team to support you.
FAQs
The ideal trial length depends on your product’s complexity. Generally, 14 to 30 days work well.
Implement user qualification criteria or limit trial sign-ups to prevent non-serious users from abusing the trial.
To minimize revenue loss, you can set clear trial limits, require credit card information upfront, offer premium features only to paying customers, and implement effective follow-up strategies to convert trial users to paying customers.
Promoting a free trial can attract a larger audience, generate buzz, and create opportunities for word-of-mouth referrals, as users are more likely to share their positive experiences with others.
A free trial can lead to a sudden influx of users requiring assistance, which may strain your customer support team if they are not adequately prepared to handle the increased volume of inquiries.