marketing, customer-developmentI’m working on a project that will help users manage servers from remote. This service will use my servers, and for that, I will have to buy those servers up front.
For information, the service is Uncovr, you can find it at http://uncovr.it
I first thought about offering a 15 days free trial, but I’m wondering if this is a great idea : I’m affraid that I will have too many curious users that will only try the app, and not go further the 15 days trial. This will led me to buy too many “unpaid” servers and may fail the whole project in term of cash.
Don’t get me wrong, I really would like to let people try before paying and I’m pretty sure this is a feature I will enable if/when the project is working and I can pay the servers without having money difficulties.
But for starting, I’m wondering if not offering a free trial is a bad idea.
In my opinion, forcing the user to pay to use at first day will bring only really interested users, but I may loose others that would first see, and then be interested to pay.
I don’t have much experience on that side, that’s why I’m asking it to you.
There are a LOT of businesses offering free trials. They’ve clearly determined it makes sense for their business. But there’s plenty of successful businesses that do not offer free trials and are doing just fine.
I’m affraid that I will have too many curious users that will only try the app, and not go further the 15 days trial.
…
In my opinion, forcing the user to pay to use at first day will bring only really interested users, but I may loose others that would first see, and then be interested to pay.
Right there, is the summary of your issue. There is a cost to offering free trials, and there is a cost to NOT offering a free trial option.
So the real question is: “Which potential cost is greater?”
The answer to that is going to depend on your business model.
If you’re going for growth as quickly as possible at whatever cost necessary (as many well funded startups do), then you would absolutely want to offer a free trial.
If you’re bootstrapped and looking for a slower growth model that guarantees you can still pay your bills, the better option might be to skip the free trial for now and go only with paying customers as they’re the ones that keep electricity flowing to the servers. Growth will almost certainly be slower if you go this route, but sometimes slow growth is safer growth depending on the business model.
There is another option that’s somewhere between the two - but first here are some things to consider:
I consider the cost of a free trial offer to be a marketing expense. It is an attempt to attract a new customer just like any other marketing tactic. With many marketing strategies you’re paying for exposure to people that may or may not be interested in your service (though hopefully it’s at least targeted to people that are likely to be interested). With a free trial, you KNOW they are interested in your service - otherwise they wouldn’t be using it.
Depending on exactly what your service is, people that sign up use the service for a day before deciding it’s not for them and never touch it again, may not cost you as much as someone that uses the service heavily for the full extent of the free trial. Yet those that use it the most heavily are likely the ones most willing to pay for it. So the ones potentially costing you the most may be the ones most likely to turn into paying customers when it’s over and those that abandon it may not cost as much comparatively.
Many companies that offer free trials do it not simply out of generosity, but because they’ve figured out that a certain percent of people will sign up, put in their cc info, and forget to cancel. Thus the company gets their payment at least for the first month even if the customer doesn’t stay with them. Some companies offer refunds if the customer calls in to complain about it, still knowing that many customers won’t bother. Other companies make it hard to get a refund or don’t offer them at all. Some even make it difficult to cancel at all.
I’m not specifically recommending or discouraging any of those practices (except probably the last one - I don’t really think that’s ever good for the long-term goals of the business). But does show that free trials aren’t necessarily a total loss even when the customer doesn’t continue the service long term.
If you think of this as a marketing expense, then you have to consider if your marketing budget (assuming you have one) is best spent on free trials or on whatever else you were planning to spend it on. That will probably depend on your specific service and what it is you were planning to spend the rest of your marketing budget on. Keep in mind though that a free trial won’t work as well by itself, you have to have some way of letting people know you exist so they can come and try your free trial.
If you want to offer a free trial but you don’t have enough of a marketing budget to go around, you could do a limited free trial offer where it is not open to everyone.
You could make the offer available to a specific subset of those you’re marketing to (i.e. offer members of a specific site a link to the free trial).
You could make people apply to the free trial. This isn’t as convenient for the customer, but it can be a way for you to make sure people are serious about trying it out before you give them free access. When I logged into my Amazon Web Services account the other day, I had an offer from a company to let me use their automated backup services free for 6 months. It was a pretty sizable offer actually if I was in a position to use it to the full extent of its capabilities. But when I went to check it you, there was an application process to get the offer. I didn’t apply because I’m not in a position to fully utilize it. But to them that really doesn’t mean they lost a customer, it means they lost a free trial member that probably would have cost them more than I would’ve been worth. They probably lose at least some people that would’ve been longterm paying customers too, but it allowed them to make a very generous offer and still limit it to those that are most likely to become long-term customers.
You could limit it to X number of free trials per day/week/month/lunar cycle/whatever. Something along the lines of: “Our first 150 users this month are eligible for a free trial! Only 48 left, sign up now to claim your spot!”
Which of these options (or something different) works best for your business is something only you can answer based on your specific business model and financial standing.
I think not offering free trials is a bad move. If you get a bunch of free trials, and very few conversions, then the problem is not the free trial itself, but your product. It may be that the value proposition is not worth the price tag the product has, or you’re targeting the wrong customers. That’s not a problem you’re going to resolve by eliminating the free trial, but by improving the product.
If people pay upfront, and then decide your product is not good enough, they’ll ask for a refund. A refund is always worse than a customer not renewing/signing up for the subscription. Also, depending on the payment processor a refund can actually cost you money on top of your regular operation cost.
If you decide to go for the Free Trial route, keep in mind the free trial length. There’s no right or wrong answer when it comes to length, just keep in mind that the free trial has to be long enough for your prospects to actually use and get any value out of product.
Keep in mind too that a short trial, people won’t feel like they’ll be able to adequately try the product and can scare them away. If you are going after a segmented market, mystery shop your competition and see how long their trials are.
However, despite of what the trial length actually is, you have to be diligent about converting your prospects as soon as possible. Try for example solutions that have 30 or 60 day free trial periods, and you’ll see that they will try to convert you to paying customer since day 1.
One approach I’ve seen many companies take is to make a barebones version and offer that as a free trial. I’ve worked with a company that did this and they had really good conversions. The key to free trials is to make it effective enough to keep the users wanting for more. When it comes to paying, you include to full set of features which they will believe makes it worth buying.
There is no specific time frame for free trials but keep it too short and users will be put off from buying the product. If you really wish to maximise, you could always send a small survey for them to review the product after the trial is over with a possible extension if they complete their review. This way, they will give you back insights on your app and it is a form of user testing.
Limited Free trials can be taken into account as well, if your product is really good this can be a good tool for promotion. People like to feel elite and this can be used to get more converting users.
All content is licensed under CC BY-SA 3.0.