The following is a guest post by Peter Cohen, Managing Partner of SaaS Marketing Strategy Advisors.
Lots of companies offer a free trial of their SaaS offerings. For some, it works well - cost-effectively bringing in new, paying customers. Emphasis here is on "paying."
For others, it's an unproductive drain on company resources that doesn't bring in nearly enough customers to justify the expense.
Why do free trials work for some SaaS companies and not for others?
Free trials can't work without follow-up
For a free trial to work, it needs to be part of a overall customer acquisition plan. A free trial without a well-constructed follow-up effort to convert the trialers into paying buyers isn't worth much.
You should also have a plan for people who tried but didn't buy. They should be part of your target audience for on-going marketing programs.
Free does cost
With a free trial, you are essentially extending the sales cycle by the length of the free trial. Most buyers won't pay you until they need to. That will require more working capital.