Have you ever wondered why people who sign-up for your Free Trial don’t turn into customers?

Well, I got an email from the CEO of a SaaS document management company the other day and she was at her wits’ end wondering the same thing!

She wrote me to vent her frustrations about her Free Trial process and to get some guidance on how to fix it.

Below is part of my response to her – I put my answers after excerpts from her initial email – because I want you to see my answers in context.
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For those companies who’ve offered a SaaS Free Trial and had it fail, it is hard to see how it could ever work.

For those who’ve never offered a Free Trial, the idea of adding an extra 30 or 60 days to the sales cycle seems like a bad idea; they’re doing just fine, thank you very much.

Of course, if the Free Trial didn’t “work” (help them acquire more customers), maybe they just didn’t do it right.

And for those who don’t currently offer a Free Trial, how many prospects do they not even engage with simply because they don’t offer a Free Trial?

What if they realized that a 30 or 60 day Free Trial doesn’t actually have to add that much time to the sales cycle?

Or what if having a Free Trial actually reduces the cost of acquiring customers sufficient to offset the hit Customer Lifetime Value might take with the delayed start…

…or what if having a Free Trial could even reduce the sales cycle AND help convert customers at a higher Average Selling Price so CLV actually expands?

High-Converting SaaS Free Trials are No Accident

SaaS and Web App companies who have figured out how to effectively use a Free Trial to get more customers know those things and understand that not having a Free Trial would literally kill their business.

So clearly, Free Trials work sometimes and don’t work other times… unfortunately the majority of SaaS and Web App vendors fall into the latter category…

… but it doesn’t have to be that way!

I’ve said it many times - I’ll say it a million more times I’m sure – if your Free Trial is failing to convert prospects to customers, it is probably doing what it was designed to do.

High-converting Free Trials are not an accident… they are designed and engineered with one goal in mind; convert customers!

How to know if a SaaS Free Trial actually increases conversions

To really know if a Free Trial increases conversions, we have to know what it is “increasing” from… and for the purposes of this post I suppose that would be not offering a Free Trial at all.

If you currently offer a Free Trial, you can actually test that – replace your Free Trial sign-up with a “buy now” button and see what happens and you’ll have your answer… (we do know putting both a Buy Now and a Try Now button has yielded very interesting results).

It is very likely only offering only a “buy now” button will result in fewer sign-ups overall because you’re asking people to buy based on the perception of value.

Big brands or well-known companies even in smaller niches can get away with this easily since they are already known and trusted in the market place.

You can have affiliates send traffic to a page with a buy now button rather than a Free Trial sign-up since affiliates are likely to be trusted advisors by the customer and the link they provide to your marketing site comes with implied trust.

But… if someone doesn’t already know, like, and trust you, getting them to buy from you on perceived value, especially in a B2B SaaS setting where trust is super-duper important, is going to be a hard sell.

For some vendors, this means having a strong Indoctrination process that gets the market to know, like, and trust them so buying becomes easier… many times this is required even to get prospects to sign-up for the Free Trial!

For other vendors, offering a Free Trial allows prospective customers to try the product and that enables the prospect to get to know, like, and trust’em in the context of evaluating the product, which then makes it easier to buy from that vendor.

And if your target market expects a Free Trial from the vendors in your space, then you probably should offer a Free Trial because not having a Free Trial would be a non-starter.

In this case, even with a low conversion rate, a Free Trial probably would “increase” conversions over not having one!

Of course, if you understand how to take people that think they’re just “evaluating” your product and get them using it and hooked on it, they’ll buy your product and not even evaluate the others!

SaaS Free Trial as a Competitive Advantage

Now, if your competition doesn’t offer a Free Trial to your Target Market, then offering a Free Trial could be a competitive differentiator, especially against large, legacy, slow, or entrenched competitors.

Imagine what you would have to do to get someone in that market to pay you before using your product if you’re new to them… it would be almost impossible because “no one ever got fired for buying [the big vendor's product in your market].”

But if they can try it first (and you do it right and get’em hooked on and actually using your product during the trial) then displacing the legacy player might be a realistic possibility even for a small, bootstrapped vendor… your Free Trial goes from being just a competitive differentiator to a Competitive Advantage!

There are many other factors that go into whether you should offer a Free Trial in the first place…

…and the factors start with your market/customers, their expectations/requirements, how they buy the type of product you’re selling, how they evaluate products, who you can reach (buyers vs. influencers) with your marketing, etc.

And of course some factors include vendor-side issues such as what you can support technically, the resources available to build the Free Trial, budget or expertise to acquire or build a marketing automation/lifecycle messaging engine, building or procuring your subscription management, metering, and billing solution, etc.

But by far the most important factor on the vendor’s side is the company or team’s willingness to put in the effort to learn what a real Free Trial strategy is, to plan it, and to execute it.

I can’t emphasize how important it is to know how to plan, build, and execute on a real Free Trial strategy.

Strategy before Tools

Look… you can instrument your app with the latest and greatest Customer Success technologies , you can have CRM integration, you can use the fanciest lifecycle messaging or in-app messaging platform, you can integrate with the most sophisticated metering and billing solution…

…and you can STILL have a Free Trial with low conversion rates!

Tools on their own are of little value… knowing how to use them is key.

Put a different way, you can use the fanciest marketing automation tool and still automate a crappy marketing strategy.

So just going through the motions, having a marketing page that leads to a sign-up form that sends an email that has a link that you click to validate the address that lands you in the app and 30 days later bills your Credit Card or asks for payment info and being able to monitor each of those activities isn’t a Free Trial strategy.

Don’t get me wrong, you’ll probably do most or all of those, but if that was all that was required in a Free Trial strategy, every SaaS company that offers a Free Trial with that workflow would have high conversion rates.

And most don’t…

…something like 66% of SaaS vendors have a conversion rate from free to paid of less than 25%.

So if for the majority of SaaS vendors, their Free Trial causes greater than 75% of the people that sign-up for the trial to NOT sign-up, then we could safely say that overall, Free Trials don’t work, right?

Well, I also think it is safe to say – presumably with a few exceptions that all should be market-driven – that even though we’re talking about an an average conversion rate of less than 25% on their Free Trials, that probably results in more sales than if they didn’t offer a Free Trial.

But you don’t want to settle for low conversion rates when – with a clear understanding of Free Trial Strategy, a little work, and some perseverance – you could have HIGH conversion rates!

The Reason for Low-Converting SaaS Free Trials

So I’ll let you in on the secret behind most Free Trials with low conversion rates… they fail to engage the prospect.

Most Free Trials are built to further the “perceived value” concept… an extension of the brochure marketing site they created… maybe an “active” demo at best.

When I ask what a successful trial looks like for the prospect, most vendors answer with something like “the customer is able to see the difference our app will make to their business.”

Hmm… doesn’t that sound exactly the same as the goal of the marketing site? Or the feature list? Or the demo?

The Secret to High-Converting SaaS Free Trials

A really effective Free Trial strategy is one that moves the prospect from where they perceive value to where they REALIZE VALUE… and when they realize value, conversion from free-to-paid is a no-brainer.

So for SaaS vendors that understand the difference between perceived value and realized value – like the SaaS vendors I help – Free Trials increase conversions in a big way.

But just having a Free Trial doesn’t guarantee anything.

Let’s Optimize your Free Trial Conversion Rate

There is only one of me, so I can only help a limited number of SaaS providers at any one time. But if you’re serious about finally turning your SaaS Free Trial into a customer-acquisition machine, email me with the details of your situation and I’ll get back to you to setup a meeting.

- Lincoln