8 reasons to offer a FREE trial as a SaaS company

saas free trial

In a bid to acquire customers, many subscription-based companies offer a free trial as a part of their pricing strategy. However, despite the growing popularity of free trials as a customer acquisition tool in the SaaS industry, many experts believe that they could actually be dangerous for tech businesses. While I agree that every company is different and that this strategy might not suit every scenario equally, I truly believe in the power of offering a free trial as a SaaS company: and today, I will give you my 8 reasons why.

Image source: Rune Lillevang, Sketch

1. Reach more potential buyers

SaaS companies are known for offering high-tech, innovative products designed to impress; but in all honesty, customers don’t care how innovative your product is if they don’t see its value in action. In fact, they will probably not even bother to try it out if you are asking for a long-term commitment based on subscription without showing how it solves their problem or makes their life easier first.

Two weeks ago, my team and I went to pitch our newest tech product to one of our biggest clients (we are a B2B company). In the beginning of the pitch, they reacted with intense scepticism; the moment we showed it in action, we could see how their initial scepticism fell off their face to get substituted by excitement and questions on when we could start testing it out with them.

saas free trial - reach more buyers

Although my example does not involve a person purchasing a subscription-based service online, it only goes to show that no matter how amazing your product is, your potential buyers might never know if you don’t allow them to see it in action. And, considering that decision makers in the B2B industry don’t subscribe to a service before studying different alternatives, having to pay for a SaaS product before analyzing if its the best option for their particular needs will directly lead them to try other free-trial providers instead.

In the B2C industry, customers are even less prone to pay before trying out a product; and in all matters, they don’t have the time to try out every alternative that exists on the market. So naturally, they will start with the options that don’t cost them a cent to try. As a SaaS company, offering a customer-friendly free trial can definitely attract the attention to your services, helping you reach more potential buyers.

2. Reduce the fear of long-term commitment

saas free trial

 

As I previously mentioned, subscription-based solutions require a long-term commitment by nature, which is not always the case with regular products and services. Considering that many companies will only make a significant discount if you pay annually instead of monthly, customers are provided with two options: they either pay a higher fee just because they are not sure if they will like the product, or pay a lower monthly fee with the obligation to continue consuming the service for the next few months or years.

And, even when we talk about low monthly fees, users will have to pay the whole sum for an entire year at once: which is a lot of money for someone who hasn’t even tried your product yet.

long term committment buyer saas free trial

Thus said, offering a free trial as a SaaS company is a great way to reduce the fear for long-term commitment that might stop users from buying your subscription-based service.

3. Get valuable feedback

Many SaaS companies are sceptical about offering a free trial because they are afraid that users will not continue using their service once the trial is over. And that’s okay. In fact, silent customer behavior provides valuable feedback on whether your service actually met their needs for the right price. In fact, if your free trial strategy experiences extremely low conversion rates for a long period of time despite being well-designed for conversion, maybe the free trial is not the problem. Maybe it’s your service that is overpromising, or its real value is not perceived by users correctly.

free trial saas customers

As a conclusion, free trials can help you gather valuable data on customer behavior, and use it to identify and work on the weaknesses that are leading to high abandonment. To get even more feedback, enquire customers on their reason for not renovating subscription once the free trial is over. You might be surprised!

4. Keep it honest and transparent

A lot of companies claim that they are customer-centric while inviting customers to enter their payment details so they can be forced into an automatically-renovating subscription service once the free trial is over. Feel absolutely free to argue with me on this, but I don’t see how this practice is customer-centric – however, offering a free trial with a credit card is entirely new topic which I will cover in some of my next posts.

AppleHealth

From my experience as a Marketing specialist and a customer, no matter how many tricks you try to implement for getting users to subscribe to your services, nothing works better in the long term than keeping it honest and transparent throughout your whole strategy. For this reason, I believe that offering a free trial as a SaaS company without hidden tricks not only gives your users the chance to try out your products without being forced to a commitment, but also increases their trust in your company.

This will help you bild a powerful community of people who value your brand and products and want to spread the word because they actually believe that your services are making a difference. After all, being aggressive will probably have the exact opposite effect that you are looking for in your Marketing strategy – and they might cancel their subscription after a few months.

customer free trial

5. Provide first-hand experience for customers

Decision makers, especially in the B2B industry, put a lot of effort to discover different sources of information that will help them make an educated decision. Reviews, tutorials, comments, and experiences of other people are only some of the sources that give them a glimpse into what they are about to buy.

But offering a free trial for your SaaS product, you make it possible for customers to get a first-hand experience without having to rely exclusively on third-party opinions. After all, opinions from other people can often be misleading because every user perceives something differently, and not every customer or company has the same needs. Maybe your subscription-based service did not cover the needs of one user, but will be just perfect for another user – and it’s better to give them the option to try by themselves.

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6. Get qualified leads

When you are selling products in a physical establishment, let’s say headphones for example, your customer can easily visit the shop, try them on, feel the quality of the materials, and even put on some music to test the sound – BEFORE deciding on a purchase.

However, this process is not as easy when you are selling intangible software products. For this reason, free trials are a great way to provide some tangibility to help users make an educated decision – and the best part is that the people who signed up for a trial are already interested in your product. This means that you will not have to spend additional time to educate them on the characteristics and benefits of your solution.

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7. Easy to implement

SaaS free trials are extremely easy to set up and implement into your current Marketing strategy. So, even if you conclude that a free trial doesn’t work for your business for whatever reason this might be, you haven’t wasted too much time nor efforts to test out the strategy, and you can easily eliminate it as well.

8. Get a higher conversion rate

Conversion rate is probably one of the most important metrics for every Marketing strategy – after all, it makes little sense to dedicate a lot of efforts to attract potential buyers to your web, if nobody ends up buying your service.

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Depending on the estimates, the conversion rate for SaaS free trials is between 15 and 25%, which may vary depending on the quality of your trial optimization, your niche, your ideal customer, and your company’s business model. According to SixteenVentures, some companies can even reach a conversion rate of 60%!

In what cases is NOT recommended to implement a free trial for your SaaS product?

As I already mentioned in the beginning, despite the amazing benefits of this strategy, it doesn’t mean that there won’t be companies or cases where it won´t work that well.

Free trials are great when your product is standarized. However, if your service is exclusively based on the needs of the customer and is customly tailored to fit them, offering a free trial will not be possible as the company (you) will have to invest a lot of time and efforts for technical integration for a user that might not convert at all. In these cases, you can consider offering a demo instead.

To sum it up, if your service:

  • Is custom-made for each client;
  • Requires a complex technical integration;
  • Involves upfront implementation work;
  • Is generally complex, or the user would need to much time to figure how it works,

You might consider going for a sandbox demo, a video, or a money-back guarantee strategy.

While we are on the topic of pricing and free trials, don´t forget to check my article Should B2B Companies Publish Their Prices? for additional information! If you liked this article, let me know in the comments below!

Note: All image sources are from sketchappsources.com.

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