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.
Depending on your infrastructure and hosting platform, it will cost you money to host and deliver your solution to free trialers. The cost of computing and storage may be low, but it's not free.
If your solution requires support to get the free trialers up and running, in the form of telephone or chat help, or online tutorials, factor those costs into your calculation.
Why buy the cow?
For some applications, there's very little value delivered beyond the free trial period. If it's a solution that helps manage a task done once per year - for example, arranging the annual user group conference - why would the prospect actually pay for the solution once that task is done?
In this case, the SaaS company is essentially giving away the full value of its solution. A free trial can attract users, but not many paying customers.
Does it really show the value?
Consider whether the trialer will truly see the full benefit of your solution during the course of the trial. If you're helping them manage a process that takes 6 months to execute, for example, the trialer might not see much value in a 30-day period.
And don't assume the prospect will put in the time to learn how to use your solution. In fact, if it's not immediately obvious, a free trial might actually deter prospects from buying. "Free" does not compensate for a poor product that's difficult to learn. (See "If it's hard to use, it's hard to sell")
Alternatives to a free trial
Before you automatically opt for a free trial, think about alternatives. There's more than one way to let prospects experience your solution.
- A "sandbox" demo would allow the prospective customer to work with the software in a controlled environment. It might provide access to all functionality or it might limit the user to certain features. For example, it might not allow printing or emailing reports.
- Videos could be used to show off the key features of the solution, explain how it would be valuable to the prospect, and demonstrate how easy it is to use.
- A money back guarantee would allow someone to purchase the solution and, if they are not satisfied, cancel their subscription after some period of time to get their money back.
- A no-obligation contract would allow a paying customer to cancel their subscription at any time without penalty. They are under no long term commitment.
With these alternatives, prospects can get some experience with your solution. And you might avoid some of the downside risk.
What's been your experience in offering free trials? Please share your thoughts in the comments.
(Photo credit: billmcintyre)