It is well-known that I help B2B SaaS and Cloud companies achieve Profitable Growth, often by accelerating Customer Acquisition, improving SaaS conversion rates, and optimizing Free Trials.
Because of that, I am often asked for my opinion or advice in public forums, like recently when I was asked about $1 Trials on Quora.
At first I didn’t think I had much to say on the topic… but it turns out that I do.
Don’t Forget to Keep it Sleazy
First, you don’t see $1 trials in B2B that much… there’s probably a reason for that, right?
Second, when you do – other than being offered by a very misguided company (I’ll tackle this in much more detail shortly) – $1 trials are offered when a vendor uses a payment processor/gateway that doesn’t allow $0 trials (like PayPal in the very recent past), where vendors try to avoid the “negative option” that many payment processors frown upon (zero $ trials, followed by forced continuity after 30 days) or when they already got slapped for “negative option” violations.
Let’s get real for a second… many vendors intentionally make it difficult to cancel service during the trial, resulting in at least one charge before the ‘customer’ is able to cancel.
Sure, this makes their SaaS conversion rates high… but lot’s of negative metrics high as well!
Ultimately, this is one of the main – often less-than-public and super-sleazy – arguments for asking for payment information up-front… charging $1 instead of zero makes them think this avoids the sleaziness because, hey, at least they “paid something, right?”
I’ll just say this so we’re on the same page; if you need to get customers through forced continuity or by offering a “low barrier to entry*” and hoping they forget to cancel their trial, please don’t contact me to help you improve your conversion rate… you’re not my type.
* as you’ll read below, what you think is a “low barrier to entry” isn’t…
SaaS Conversion Rates: Trust is Key in B2B
Let’s get back to the reason you offer a Free Trial in the first place: so prospective customers can get to know your offering before paying for it…
… remember, they don’t already know, like, or trust your company or product.
In B2B especially, trust is huge… trust that your product does what you say it does, trust that you’ll support your customers, trust that you won’t rip them off, etc.
So… if that’s the case, how does asking them to provide a credit card simply to try your product help build trust? Right, it doesn’t.
Attention Prospective Customers… Keep Out!
The reality is, if you put up a credit card wall, many prospective customers that don’t already know, like, and TRUST you enough to give you their payment information will leave before you even know who they are.
And if asking for a credit card up-front meant that everyone who signed-up for your trial became a customer, then I wouldn’t see super-low (sub-20% conversion rates; my experience, your mileage may vary) all the time for companies that put up CC-walls…
…in fact, those people from whom you got payment information but who don’t convert have to actively opt-out of becoming your customer… that should sting A LOT!
So clearly, the CC-wall just keeps out people who aren’t ready to give you their payment details and does little to convert a real, long-term customer.
What you need to know is that it’s the stuff that happens AFTER someone signs-up for your trial – with a CC or not – that matters.
The stuff you do to engage them, to get them to use your product, to get to know it, to realize value… to become so invested in time, resources, and energy in your product during their trial that conversion becomes a no-brainer.
If you do that, you’ll convert more customers.
Mr. SaaS CEO… tear down that wall!
Once you’ve done that, then you can tear down that CC-wall, get more prospective customers into the trial, and convert more to customers.
More people into a trial that’s designed to convert customers means more paying customers coming out the other end. Simple.
In my experience, SaaS, Web App, Cloud… or any subscription business for that matter, puts up a CC-wall to keep the riff raff out and to prevent abuse.
My thoughts on that:
- If you have “riff raff” entering your trial, you’re attracting the wrong crowd (that’s your fault*) or you’re thinking of the people that your system failed to convert as “riff raff” instead of “lost customers and revenue” and are blaming the wrong people
- If your system is abusable, fix your system; a CC-wall doesn’t prevent abuse, it just lets fewer people in so you have less abuse (and less customers; again, your fault)… oh, abuse points = value points… you’re just doing it all wrong!
- For B2B, most people that sign-up for your trial aren’t doing so just to mess with you or for fun… they’re signing-up because they thought your product would solve a problem for them or let them take advantage of an opportunity. If they didn’t convert, don’t blame them… you failed to convert them and asking for their CC up-front wouldn’t have helped.
- Many of the SaaS and Web App pros and Executives I talk to say “We have a 10% conversion rate, but that’s okay because those 90% that don’t convert wouldn’t have been customers anyway” or “we get 3% of the visitors to the sign-up page where we ask for the credit card to join the trial, the other 97% who didn’t sign-up weren’t potential customers anyway” … whatever makes you sleep better at night, but it sounds like you’re trying to justify your poor performance by blaming everyone but you.
*It’s good to know when something is your fault… because that means you can fix it!
So in summary; putting up a CC-wall doesn’t make a lot of sense most of the time; it is often used to cover up things that should be fixed or because you don’t believe that your Free Trial is setup to convert customers (which it probably isn’t).
A Bad Idea Made Worse
So, back to the $1 trial idea… why are you looking for ways to keep MORE people out of your trial?
Asking for the CC up-front will reduce the number of people that sign-up for your trial vs. not asking for a CC… moving from Free to $1 would – in my most humble of opinons – reduce the number of people that sign-up even more.
I suggest you look for ways to get MORE people into your trial… and work hard to convert more of that increased flow of prospects into paying customers.
I know the logic here… it’s easier to get money from a customer that already has given you money so asking for just $1 (or 1 GBP or 1 Euro… whatever) will make it easier for them to give you money later. I also think Cialdini’s rule of Consistency and Commitment could come into play here…
… but I believe that TRUST trumps all and if they don’t trust you enough to give you their CC in the first place, asking for even $1 is going to be a problem.
So the $1 trial just seems like an added barrier for your prospects to overcome.
$1 Trials: the gift that keeps on giving (or taking)
No wait… it gets even better.
By asking for $1 to try the product, you could actually seriously de-value your offering, doing a lot of damage to your value proposition by equating your product with a low price.
I know, I know… it’s just the trial that’s $1… but if there’s a chance your potential customer allows that to skew their perception of your product overall then it isn’t worth the risk. Right?
A couple of things… first, if you have price transparency – a pricing page – then hopefully your customer is aware of the price of your offering. In that case, those prices or the price of the bundle they chose to try, becomes the anchor price… the reference for their buying decisions and value perception. But what if they see the $1 trial first? This is psychology… brain stuff that we don’t control. Put $1 in there and that could set the tone.
Second, unlike Freemium where the use of ‘free’ could actually hurt your value prop, a Free Trial can help improve your value prop by allowing the realization of value to boost your value proposition and make the transition from prospect to customer – even at a really high price – the no-brainer I spoke about earlier.
I’m also sure that you will be able to cite at least one exception to everything I’ve just said… but don’t do it to convince me… and if you’re just trying to convince yourself that I’m wrong… well, I’ll let you figure that one out.
Most people will tell you to “just test $1 trials and see if they work for you”… like somehow A/B testing is going to magically transform a bad idea into something that just might work. Look, you can test tactics like this all you want, but before you do, understand the reality – the potential upside and downside – behind the tactics and save yourself a lot of time, energy, lost profit, and heartache.
But I personally won’t be recommending that my clients even test $1 trials.
Rather, we’re going to focus on converting prospects to customers and not preventing them from signing-up in the first place.
Let’s Improve your SaaS Conversion Rates
If you’ve been in-market at least 6 months and are curious how we could Accelerate your Profitable Growth – perhaps by optimizing your Free Trial – contact me and we’ll setup a time to discuss your options for improving and accelerating customer acquisition.
- Lincoln
(972) 200-9317
About Lincoln Murphy
Great article Lincoln! I think if you rely on your own personal response to the credit card detail or paid trial model, most of us should easily come to the same conclusion.
Thankfully, we did decide to go with the free trial model for our SAAS Link Removal tool, but your post leads me to ask whether you think there are “degrees of trust” that can be achieved within that model…and whether they work more or less in your favor for conversions?
When originally developing our service we opted to offer a very limited free trial – just 1 Trial Campaign with the same parameters as our least expensive paid account. Once the campaign was finished, the trial was no longer active, but data could still be accessed. Trial signups were coming in small numbers and a few early adopters jumped into paid accounts, but the tool was new, in beta and things were going along about as expected.
While attending Mozcon, we were feeling a little TAGFEE rubbing off, and decided to convert our free trial to what we call our Basic account – still just one campaign with the same limits as before, except that we now allow the Basic user to create new campaigns , 1 at a time. Effectively, this means small site owners can do the job 25 domains at a time for free if they want to. Not very efficient, but if they need or want to use it this way they can.
After the change, Basic signups increased dramatically and paid subscriptions also lifted. The question in my mind though is: did giving people more really get us more, or was it just the exposure bringing more prospects? Also, does there come a point where our conversions suffer because people just decide to use up the free opportunity & skip paying? (Our paid versions do provide automated features which make the process way easier, as well as expanded capacity)
Sha… thanks for your comment. You asked a couple of questions that without more info I can only generically answer.
1. Are there “degrees of trust” that can be achieved within that model…and whether they work more or less in your favor for conversions? I think the answer is yes if I understand the question right. First, you need to provide a way for them to sign-up for your product that is congruent with the level of trust they have in you. Huge, well-known and loved brand… you might get them to pay you up front without a trial… unknown, early product or a poor reputation … they might hesitate to even give you their email address. So get them in by keeping the barrier to entry in line with what the market requires to be low enough and then work to build trust throughout the trial process… the more you can help them reach their goals within the trial, the more trust you build and the more likely they are to become a customer (you have to ask for the sale, though… kind of important).
2. TAGFEE is great… but process trumps any mantras when it comes to actually acquiring customers… do good things, be good people, do no harm… but design a process that helps them become a paying customer… it doesn’t matter that your former business – the one that failed because you couldn’t get customers – adhered to TAGFEE, right?
3. Did giving people more really get us more, or was it just the exposure bringing more prospects? To me, revenue is the key metric to track; in the SaaS business, we refer to this as Committed Monthly Recurring Revenue (CMRR). Given that, you know where you were before the change with CMRR… where are you now? Did that metric go up? If not, your change was not effective REGARDLESS of how much other activity you generated.
Some will argue that point… but noise is just noise unless it is doing something to grow your business. If you can make money with free users or get them to help spread the word for you (or some other quid pro quo for using your system for free) then you’re heading in the right direction… but that activity – especially the viral expansion loop – should be generating new revenue.
Unless you are heavily funded and looking only to grow a *user* base and not a *customer* base that generates actual and expanding revenue, every person that enters your trial or your free-forever product should be on a path to growing your revenue.
4. Does there come a point where our conversions suffer because people just decide to use up the free opportunity & skip paying? Yes. If you got a bump in conversions its because some subset of users probably didn’t trust you enough to pay to try the product… but you gave them a lower barrier to entry and they jumped on it, liked it, and converted. The question is whether those represent the greater market or just some early adopters… that’s your job to figure out, though I’m happy to help you in the process.
I hope this helps…. give me a call at (972) 200-9317 or email me lincoln.murphy@sixteenventures.com if you need any additional help.
Lincoln, great article been offering free trials since the beginning of our offering but what has been an discussion point is how long to offer the free trial in a B2B service. Our solution is global and different regions have different thoughts toward this .
Glad you liked it Bob… here’s a post I wrote about the ideal length of a Free Trial: http://sixteenventures.com/ideal-free-trial-length
Lincoln,
This is a great article. I am going to play a little devils advocate and say that I feel in certain cases getting a some form of payment method (whether it’s a free trial or a $1 trial) is crucial for several reasons. Mind you this is all relative to the situation. I have had direct experience with this and found that the $1 trial forces people to read further into the products/service being offered. Now if you don’t have a solid sales page or are trying to generate trials right from the front page, that might be different. I have found too many times, people jump into trials without the awareness of key features/benefits that will trigger a purchase at the end of a trial.
The response I have gotten directly from clients has been that the $1 trial has forced them to learn more about what is being offered. It is key to make a direct contact option visible. At least from my experience, if they don’t feel comfortable getting into the trial they will call if the sales page delivers a message that is in line with what they are trying to solve/achieve. I call this being sold on the outside, but not the inside. Generally they might feel comfortable with what you are offering, but just not you. This is where the direct contacts comes into place. On the other side, if they get into the free trial without any barrier to entry, they might oversee 90% of what is important in assuring a conversion and not give a sales team the chance to overcome important objections that the product nor any autoresponder/training might solve for them.
I think both trial strategies have their place based on sale complexity, direct involvement with client and how unique the product is in the market.
Again, excellent insight into this topic. Keep up the excellent work Lincoln.
Jason… thanks for taking the time to comment.
I’m not a fan of Devil’s advocate because too often that role is used to justify past behaviors or future behaviors you’re going to do no matter what.
My challenge to your comment is simple… what if you did all the things you mentioned – getting people to read more about your product before they sign-up, doing the direct contact, getting people to be aware of the features, etc. but did it without the $1 trial? I wonder what would happen then? I don’t think I’ve EVER said to not do any of that stuff.
And your statement “they might oversee 90% of what is important” is 100% your fault and has zero to do with the cost of the trial, the CC-wall, etc. You have your trial setup wrong if that’s the case. Period. Fix that and you’ll get a higher conversion rate, then take down the barrier to entry and you’ll get more conversions overall (at least in my experience, your mileage may vary).
And the $1 trial, asking for a CC to put up some sort of riff-raff barrier, etc…. yes, you will get people to take more action up-front because – in spite of your efforts and even given the fact that THEY DON’T TRUST YOU YET, they think your product will solve their problem… but is that everyone or a subset of hardcore or early adopter users? Don’t make sales in-spite of your efforts… try to get to where you’re making sales BECAUSE of your efforts.
With a $1 trial or CC-wall are you getting, overall, more people to take action and try your product? If not, then you’re focused on the wrong thing.
I want more revenue for my clients at the end of the day, so I focus on how to get more quality people to their marketing site and into the trial, get more of those people engaged and invested, and get more of those people to convert to paying customers. Simple.
One of the ways I’ve helped my clients be super-successful is to stop fighting human nature and psychology and to just roll with it… things like understanding how trust factors in to this is just one of those things.
Good stuff though, Jason.
Lincoln,
You are right by asking “is that everyone or a subset of hardcore or early adopter users?” I took away the $1 barrier and have seen a dramatic jump in free trials. In the service that I have it requires some exploring even with people that get the concept, which the sales page does a good job of accomplishing.
I went right back to several customers and people that have never heard of our service and asked them what they thought and all of them said that they still wanted to see inside of the system regardless of how much they understood what it is.
Excellent points. You truly have a well rounded knowledge of the process. Thanks Lincoln.
My goal on here is to get people thinking… I like that you did that and then took the initiative to do some tests and talk to customers.
The fact that you discovered something that is in-line with what I was saying is just a bonus for me… the main thing is you took action even if your beliefs were challenged. Awesome!