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Making free trials work for your SaaS business

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Last editedMay 20223 min read

Free trials are a SaaS pricing strategy that can pay dividends for companies that know how to use them. Some of the best-known success stories in the SaaS space – including Xero, Dropbox, and Salesforce – have used free trials to grow their customer base and expand their market reach. Beyond these examples, there are plenty of reasons why letting customers try before they buy could prove beneficial for your business. Explore our guide to SaaS free trial best practices, right here.

What are the benefits of SaaS free trials?

Firstly, it can be much easier to convert users to paying customers with a free trial. Put simply, you can reduce the friction of converting by giving potential customers a chance to see what your product offers before they officially commit. This can help to encourage more customers to sign up, making it an effective strategy for businesses attempting to penetrate the market. Besides, SaaS free trials provide you with extensive user data, which is valuable in and of itself.

Of course, there are several disadvantages associated with free trial products that you should consider. For a start, it requires you to spend much more time on the sales funnel – there are essentially two conversions that need to happen: trying the product and buying the product. In some cases, the additional effort required to bridge that gap isn’t worth it. You should also consider the fact that some SaaS products need too steep a learning curve for a free trial to be genuinely effective.

On the whole, free trials can be an effective pricing strategy, but you need to need to ensure that you’re optimising the process for your business. 

Understanding the conversion rates of free trials in the SaaS sector

Now that you know a little more about the benefits of free trial products, let’s consider whether they’re actually useful. To do that, we need to think about conversion rate. Although reported SaaS free trial conversion rates vary widely, depending on your source, a study from Totango found that opt-in free trials produce a 15% conversion rate, while opt-out free trials lead to a 50% conversion rate. While you should take these figures with a pinch of salt, there’s no question that free trials can be a remarkably effective way to convince users to become paying customers.

SaaS free trial best practices

Making free trials work for your SaaS business requires a reasonable degree of thought and preplanning. There is a broad range of SaaS free trial best practices you can implement to ensure that you’re getting the best out of your business model:

  1. Decide whether payment info should be required – When you’re setting up a SaaS free trial, one of the most important things to consider is whether credit card information is going to be a prerequisite. Payment requirements can be a significant barrier to sign-up, so you should anticipate fewer conversions if you decide to go down this road. However, opt-out free trials tend to produce more qualified users. If you have a healthy flow of traffic and a proven product, asking for credit card information upfront could work. At the same time, start-ups and businesses without brand recognition may see better results from opt-in trials.

  2. Implement suitable limitations – Most free trial products are either time-limited or feature-limited. If there’s no time limit to your free trial, it’s referred to as a freemium model. Many companies have experienced success with freemium business models, but there can be disadvantages. For example, if the customer is satisfied with the experience of the free version of your product, then they don’t have an imperative to upgrade to the paid version. If your company has other streams of revenue and the size of the potential market is appropriate (niche services usually aren’t a good fit for this approach), then freemium could be the right choice. 

  3. Settle on the length of the free trial – 30-day free trials are standard, but a shorter trial period could be more beneficial. If you offer a 14-day trial, you may be able to convey an additional sense of urgency and prestige to potential customers. However, if a lengthy onboarding process is required or your free trial product requires more than 14 days to produce results, then a shorter free trial period probably won’t cut it. Tailor the free trial to the product/service that you’re offering to achieve the best results.

  4. Optimise onboarding – It’s crucial to get this part of the free trial process right. Ensure that new users can get up and running within a short space of time. Otherwise, they’ll lose interest, and you won’t have any chance of converting them to paying customers. Remember, the onboarding process is the point at which your long-term customer retention efforts begin, so it’s essential to provide quick wins and ensure that your users get into the habit of using the product. That way, when the free trial period ends, they’ll be much more inclined to take the plunge and activate the paid option.

  5. Map the right activation nudges – Timing is everything. Encourage your customers to make a purchase at an inopportune moment, and you might lose them forever. But a carefully planned nudge at the right time can turn a wavering prospect into a reliable customer. Both time-based nudges and usage-based nudges can be effective.

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