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SaaS startups: Why your free trials are way too long

Posted by Steli Efti on Mon, Dec 02, 2013

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No matter the industry, few things tempt prospective customers more than giving away something for free.

The key is turning those freebies into long-term business.

We help a lot of SaaS companies convert more free sign­-ups into paying customers. Along the way, we’ve seen plenty of SaaS companies initally go wrong by offering too long a free trial. Fortunately, this can be fixed easily, resulting in a streamlined marketing funnel and more paying users.

So how long should your free trial be?

Short.

Probably shorter than you feel comfortable with. Many founders worry, and with good reason, people won’t convert after a short trial. There’s an overwhelming likelihood of rejection and who doesn’t want to postpone rejection?

In our experience, 99% of B2B SaaS products should limit the trial to 14 days, max. (In a minute, we’ll get to the remaining 1% for which a longer trial period or a forever­-free plan might make sense.)

Here’s why short trials are better for your bottom line

1. People don’t really try something for a full month

If you look at the usage statistics of free trial users, you’ll find the vast majority don’t take full advantage of your trial. Only a tiny minority will use your product for more than three days in a row during a trial.

This is typical conversion behavior: Just like you’ll never get 100 percent of people to buy your product, you’ll never get 100 percent of people who showed a bit of interest to spend massive amounts of time trialing your product. Ask yourself, “How many times have I signed up for something I never really gave a shot or used at all?” Probably a lot.

Don’t just take our word for it—check your analytics and find out how many of your users actually log in for their free trial on days two, three, and beyond.

2. More engagement

By keeping your trial short, you actually increase the likelihood that your customers will take the time to get to know your product.

It’s probably a psychological effect—they know they’ve got just a few days to check it out, so they’re more motivated to actually do it. Whereas, if you offer them a one or two­-month trial, it’ll be easier for them to put it off (and then forget about it).

3. Lower customer acquisition costs!

If you have salespeople, it’ll shorten your sales cycle. Shortening your sales cycle from, let's say, six weeks to three weeks will reduce your CAC (customer acquisition cost) significantly. This is one of the most important metrics of every SaaS startup, and its impact will become greater the more you grow. It'll improve the overall economics of your business.

You might be saying to yourself: “But my clients need more time to evaluate our product!”

That’s fine, but don’t just give it away like that. Instead, make them ask for it. Have one member of your sales team contact them and ask them, “Do you want me to extend the free trial for you?” Sending automated emails asking trial users if they need more time is a great way to go.

You’ll probably get a high percentage of responses (somewhere around 30 percent) asking for more time. That’s a great way to engage with these prospective customers, find out more about their needs, and help them convert.

“But my signups will go down if I offer a shorter trial!”

Yes, you’re probably right, fewer people will sign up for your free trial. But let’s take a step back and look at the bigger picture: What do you want to focus on? Vanity metrics or paying customers? For whom do you want to optimize your conversion funnel?

  • The large group of people who are mildly interested in your product, sign up for a free trial, and never look at it again?

  • The small but crucial group of people who will see value in your offer, actually use your product, and pay for it?

Help the right people to commit to your product quickly and easily. The mildly interested people don’t waste time signing up for a free trial for something they’ll never really use. Your clients will start benefiting from your product sooner, and you get more money coming in quicker. Everybody wins.

When longer trials are better

As mentioned above, for about 1 percent of B2B SaaS products, longer trials really are better. However, sometimes it seems that 99 percent of SaaS founders think they belong to this 1 percent. There’s really just one scenario where having a longer trial (or a freemium plan) is better: if your product is designed so that using it really locks people in.

This would mean you have a product that makes it dramatically more difficult to switch to another product the longer they use it. Two examples:

  • Dropbox. Once you upload your pictures and files, you really don’t feel like downloading all those files again and uploading them to another service.
  • Evernote. If you organize enough of your thoughts and ideas in Evernote and find a way to make it work for you, you’ll need to have a really good reason to switch since there’s such a high cost to move to another product.

SaaS startups, don’t assume your product will sell itself given a long trial period.

It’s time to shorten your trials and start selling!

SaaS Startups: Why Your Free Trials Are Way Too Long

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Topics: SaaS, saas sales

    
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