Customer-centric Growth by Lincoln Murphy

Why $1 Trials are a REALLY Bad Idea

Why one dollar Trials are a REALLY Bad IdeaIt 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 increases the negative metrics 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 upfront 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 optimized for conversion within the trial, 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, far too many companies – SaaS, Web App, Cloud… or any subscription business for that matter – put up a CC-wall to keep the riff raff out and to prevent abuse.

My thoughts on that:

  1. 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
  2. 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 fewer customers; again, your fault)… oh, abuse points = value points… you’re just doing it all wrong!
  3. 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.
  4. 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 that 90% that doesn’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 opinions – 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. Better.

By asking for $1 to try the product, you could actually seriously devalue 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.

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