Your end goal for every trial is to convert a free user into a new customer, but that outcome isn’t always guaranteed. The industry standard for trial-to-customer conversion is less than 25%. However, that’s the standard. In practice, your SaaS may not achieve anywhere close to that conversion rate, especially if you’re new to the market and still tinkering around with your onboarding strategy.
Never fear. In this guide, we’re going to explain exactly what you can do to convert your trial users into paying customers.
Let’s get started.
What’s the Point of Offering a Free Trial for SaaS Users?
Almost every type of SaaS business offers users a free trial, whether it’s the standard 14 days, 30 days, or longer. But have you ever wondered whether there’s an actual value behind offering a free trial?
The value to the user is obvious. They get the opportunity to test drive your product to see if it’s the right fit for them. But, with less than 1 in 4 of those users actually turning into paying customers, is it really worth your effort to offer a free trial at all?
While conventional wisdom suggests that every SaaS should offer a free trial, it’s simply not the right marketing solution for all. In fact, many SaaS companies have decided against offering free trials, and here are some of the reasons why:
The product is complicated – Some products have a ton of moving parts. These types of products require in-person demos, workshops, training, hand-holding, etc.
If your product isn’t easy to use without extensive training, it’s probably not suited for a free trial.
In this instance, a free trial will only frustrate your free user. Because they’re not paying (yet), you can’t financially justify investing a lot of your time and human resources into helping them find success with your product.
However, if you don’t do that, you’ll end up with a user who has no idea what they’re doing. This will backfire when the overwhelmed and confused user ultimately develops a negative impression of your brand simply because of their poor onboarding experience.
In this case, free trials aren’t the answer, but demos are. You can avoid this worst-case scenario by giving your clients a hands-on guided tour of your product (demo) instead of allowing them to self-drive (trial). When you’re in control, you can ensure that your client doesn’t run into a ditch.
The target customer is an enterprise – If you’re working with an enterprise customer, it’s often not a good idea to offer a free trial. Enterprise customers are notoriously complicated to onboard, usually because they have a lot of users (employees or clients) and each enterprise has its own unique set of needs. Instead of a free trial, an enterprise customer can be won over through relationship building and with a simple but earnest satisfaction guarantee, such as a money-back guarantee.
The product requires a time investment – If your user can’t see the benefits of your product within the trial period, they may give up on your product before they actually become paying customers. Users want reassurance that your product will actually benefit them before they buy, and this is one of the reasons why you’ll offer a trial. Your trial gives your users the chance to see how your product aligns with their goals.
However, if your trial is too short for your customers to confidently evaluate your solution, the answer may be to avoid offering a free trial altogether.
You may be thinking, Why not extend a trial period for longer to give the user more time to consider a product? Good question. Depending on your product and how long it takes for a customer to derive value from it, a short test drive can be impractical and not give them the full picture of what your product can do for them. It may take months, if not longer, to see the value of your product. But, by that time, you may have exhausted your resources and will, at best, break-even, which is no way to do business.
It’s best to keep trials short and sweet so that you hook the user but don’t give away too much of your product for free. If your trial lasts for too long, you’ll be in danger of doing just that.
Why Should You Offer a Free Trial?
So, we’ve broken down why offering a free trial is not universally beneficial for all SaaS products. However, let’s say you have a simple, easy-to-use product for an uncomplicated target customer, and your SaaS will benefit from giving your users access to your product for free. Why should you do that?
Give Your Customer a Hand’s On Experience – One of the biggest reasons to offer a free trial is so that your target customer can try your product and see for themselves how it will solve their problem. While a demo can help prospective customers see the potential use of your product, giving them access to explore your product on their own makes it easier for prospective customers to see themselves using it. And one of the goals of offering a free trial is to show how your product can seamlessly fit into a customer’s processes to solve their problem.
Reduce Fear of the Unknown – One major problem with not offering a free trial is that your prospective customer may not understand what they’re getting into. And, for many, the fear of the unknown is too big to overcome. A lot of consumers don’t want to commit to a long-term agreement (even if there’s a money-back satisfaction guarantee involved) unless they have the opportunity to first see how your product performs, and if it feels intuitive to them. By offering a free trial, they’ll get the opportunity to see how your product works, which will make the decision to convert a lot easier.
But a free trial doesn’t just benefit your potential customer. Offering free trials also provides other benefits to your business outside of direct conversion. Here are the secondary benefits to offering a free trial of your SaaS product:
Increase Exposure for Your SaaS – If offer a free trial, you’ll get attention from people who would otherwise never even notice your SaaS product. Free trials increase your exposure and give prospective customers a no-risk chance to explore what your product can do.
Also important if you want to get noticed, market your product by using the word “free.” People love free stuff. When they get something for free, the consumer feels like they’re making a wise evaluation decision, and they are.
Gather feedback – You can think of a free trial as a feedback channel. It allows you to learn how users behave with your product. You can also identify any problem areas or bugs in your product so that you can make necessary corrections. Throughout the trial, ask for feedback from your trial users. Find out if they have any questions or if they are looking for a feature that isn’t available at the moment.
Their feedback and your analysis of their behavior during their trial period can help you improve your product offerings for the future. But their insight can also help you improve your trial onboarding experience for future users. Once you understand where users most often encounter problems with your product, you can take the steps to correct the error.
Why Do Free Trial Users Churn?
So, after you’ve given away your product for free to a user, some convert and some churn, but why? Why do they decide to nibble off of the cake and then leave instead of buying?
Here are the most common reasons for free trial churn:
Your product didn’t meet their expectations – Sometimes, marketing presents an inaccurate picture of what your product is, who your product is for, and what your product can do. Your user may be convinced by the marketing that your product will solve their problem, only to be sorely disappointed during the trial use.
Your onboarding experience is lackluster – When a new user signs up, they’re excited about the possibilities of using your product. But that excitement can quickly turn to frustration if they get access to your product but don’t know how to use it.
It doesn’t matter if you’re onboarding a free user or paying customer. Everyone who gets access to your product needs a thorough introduction to how to use your product. And don’t skimp on onboarding simply because you’re giving away the product for free. If you want that user to convert into a customer, onboarding is the most important part of the process. This is where you start building trust with your user and showing them how to find success (i.e. reach their goals) with your product.
Onboarding includes sending out welcome emails, sharing tutorials and best practices, following up with surveys or feedback requests throughout the trial, and being responsive whenever a user needs help.
If you’re not investing in onboarding, you’ll definitely not convert as many users into customers.
How Do You Get Free Trial Users to Convert to SaaS Customers?
Now, let’s get into the meat and potatoes of this post. How do you get your trial users to convert into actual customers so that you can start making money?
Fortunately, there are multiple proven ways to convert a trial user into customer. Let’s explore what you can do to increase the odds in your favor.
Keep Your Users Engaged Throughout the Onboarding Process
A trial period isn’t just for users to kick the proverbial tires of your SaaS. For the users who will eventually convert into paying customers, your trial period also serves as their onboarding to your product. And this is especially true if your product comes with a built-in free trial period. Invest into providing quality onboarding for all of your users.
How do you keep trial users engaged?
Beyond the welcome email, continue to send emails throughout their trial period where you offer different tips and tricks. These emails will encourage them to explore your product more and simply stay active. User activity is the greatest indicator of churn. If you manage to keep your users actually using the product every day of the trial, then you’ll increase the chance that they’ll buy it.
Your free trial isn’t just for customers to use your product. They’re also trying your brand, too. This includes getting introduced to how you do business. You probably have competitors who offer the same product that you do. But one way to differentiate yourself is through customer service. This starts with your trial period. As we mentioned above, onboarding plays a crucial role in creating satisfied and engaged users. So, throughout your trial, be sure to support your users by communicating the following:
- How to use your product (testimonials, tips, tricks, and best practices)
- Where to go for help (knowledge base, help desk, customer community, etc.)
- How other customers have found success using your product (case and use studies)
Shorten the Length of Your Trial Period
An extended trial isn’t really that great — for your customers or you. When given a lengthy trial, a new user doesn’t feel immediate urgency to start using the product. They may initially play around in the product but tell themselves that they have plenty of time to actually explore it before the trial expiration date. However, if a user doesn’t stay engaged throughout the trial, their initial excitement will wane and they’ll likely forget about your product altogether.
Your goal is to hook them right away. You don’t want your new user to think they have an extended time to try your product. Instead, you want them to start the trial with a ticking clock in their mind so that they won’t delay.
How do you do that?
Shorten your trial length.
We’ve found that the optimal trial length for most SaaS is approximately two weeks. One week is way too short and one month tends to encourage procrastination. However, two weeks (or 15 days) gives your user a chance to explore your features and get into the groove of using your product. Then, as soon as it becomes part of their daily processes, you hit them with an offer to make it official.
Don’t Ask for a Credit Card
This is also known as an opt-in free trial. This option works well at attracting a large number of free users because the barrier for entry is low. There’s no risk for the user to start using your product.
While this method will get you a lot of attention, it will also get a lot of tire kickers (i.e. people who sign up for your product with no real intention to buy it). However, a sizable portion of opt-in free trial users will decide to sign up for your premium product if you’ve managed to demonstrate value in your product during this time.
Offer a Money-Back Guarantee
Signing up for a product is risky. Even if it’s a month-to-month product and you’re not locking your customers into a lengthy contract, your user will still hesitate over the idea of paying for a product that they’ve only test-driven.
This is why offering a satisfaction guarantee can also guarantee you convert more of your free trial users into customers. Money-back guarantees reduce the risk for the new customer, and reassure them that you stand behind your word.
The longer your satisfaction guarantee, the less risky it will appear to be for your customer. You can offer a 30 day (or less) money-back guarantee for dissatisfied customers, but if you really want to blow your customers away, you’ll stand by your product even longer. But keep in mind that some customers will challenge you to make good on your guarantee, so be sure that what offer won’t compromise your financial sustainability.
Ask for a Credit Card Upfront
When you offer a free trial but ask for the user to share their payment information with you first, you’re employing the opt-out method. This is a risky bet because it can scare off a lot of potential users. If the user doesn’t trust you yet, they’ll feel uncomfortable providing a credit card even if they know it won’t be charged until the end of the trial period. And this is a major hurdle to overcome. However, if you’re able to convince users to share their payment info before access, you’ll get a much higher conversion rate than you would with the above opt-in method listed above.
So, how do you convince a new user to trust you?
Testimonials – On your website, preferably on the trial signup page, share testimonials from your actual paying customers. But don’t share the hopelessly generic testimonials, like “I love this brand.” Instead, use testimonials that describe how your product helped them achieve
Third-party reviews – Approach influencers in your industry to review your SaaS product for their community. Their followers will trust their brand endorsement, and this is an easy way to convince new users to take a chance on your product.
A solid reputation – If you’ve been in business for a while, you can ride off of your own solid reputation as a trusted brand. A new user may not have experience with your product, but if they know that you’re an industry leader, they’re more likely to share their credit card details with you.
Send Them an Offer They Can’t Refuse
When your free trial is winding down, send out an irresistible offer to upgrade. Here’s how to structure your offer so that your user is eager to sign up:
- Explain why they should upgrade by reminding them of their pain point and how ongoing use of your product solves that problem.
- Create a sense of urgency to “lock-in” the price of the product by teasing an upcoming price increase. (Note: This can’t be an empty threat. It’s a good practice to raise your prices annually. Offer to lock in the user at the current price for your standard agreement term.)
Send out notifications throughout your trial period but definitely ramp it up at the end of the trial.
What Should You Do if the Free Trial User Doesn’t Convert to a Paying Customer?
It happens more often than not. But there are a few things you can do about it, such as:
Offer a special discount for signing up – This strategy is controversial, but it may make sense for many SaaS businesses. Instead of taking a big loss on the customer, you can offer a tiny discount (such as one month at half off which will resume to full-price then after). This gives your new customer a win but it doesn’t threaten your customer’s future profitability.
Extend the trial period for longer – This strategy incentivizes people who need a little longer to decide on your product. Only offer to extend to users who have actively used your product but haven’t decided to buy. Be sure to shorten the extension period to half of your trial length. And follow up with these users throughout their trial to determine how you can help them decide to buy.
In this guide, we shared how you can convert your free users into paying customers. The above strategies are battle-tested and guaranteed to improve your conversion rate. And once you’ve converted a free user into a customer, make sure that you keep them by using our dunning software. Click here to learn more about how Stunning can help your subscription business recover failed payments and retain more customers.