Why You Can’t Count on Free Trials to Win Customers
Free trials are often a tempting method for attracting new customers. In the ideal scenario, a potential customer takes advantage of a free trial offer to test a product or service, and after realizing the value gained becomes a lifetime subscriber or recurring purchaser. Customers as well tend to prefer a free trial because there’s no upfront commitment to gain access to the promoted service or product.
The issue is, free trials don’t actually work as well as many businesses hope. Many customers are happy to use the free trial until expiration, abandoning the product as soon as the trial is over. The customers who do convert are nearly 60 percent less valuable than regular customers over their lifetime, spending less and churning sooner.
Many businesses have experienced great success with free trials, but this approach to acquisition isn’t for everyone. Before you consider a free trial of your products or services, there are a few key things to consider.
Your Product Takes Too Long To Learn
The purpose of a free trial is to remove the risk barrier of trying a new product, but that benefit is meaningless if the trial isn’t long enough or fully-featured enough to show your customers the full value of the product. At the end of the trial, your potential customer still won’t have formed an opinion or connection with the product or service, making them less likely to convert. This leads to a loss in both the potential revenue generated as well as the time spent on the trial itself.
Your Product is Too Complicated
If a customer starts a free trial of your product and can’t figure out how to use it, there’s no guarantee they’ll make a significant effort to try before giving up entirely. If your product has a complicated integration process, requires significant training, or needs third-party integration to fully demonstrate its abilities, customers might never see the benefit.
Normally in this situation, you’d spend the time and effort to produce onboarding guides, training materials, and even live demonstrations to help customers bridge the gap. When your customer is using a free trial, however, all the effort you spend on training is simply adding to your customer acquisition cost and lowering profitability.
When your customer is using a free trial, however, all the effort you spend on training is simply adding to your customer acquisition cost and lowering profitability.
In this case, a demonstration or tour of the product might be a better way for you to bring in customers. You can show them how it works in a fully operational environment, walking them through the features and functionality and running test scenarios, and they can extrapolate how they’d use it in their own workflows.
Users Only Need the Trial
Some needs only come up once a year — the ability to easily file taxes, for example. If you make tax software and offer a two-week free trial, your customers might start the trial, file their taxes, and immediately forget about your product. In this case, you’re essentially giving away the product for free.
In the case of tax software, a limited trial of the services is the best solution. The trial may allow your customers to enter all their data, but not actually file without paying for the software. For other software, you might offer a “sandbox demo.” A sandbox demo runs the software in a controlled environment or with a controlled set of data. You might allow customers to run time tracking reports, but only on virtual employees rather than their own.
Use Trials To Sell Upgrades Instead
In an experimental partnership with a major mobile phone carrier, HBR offered users 60 megabytes of free data to 60,000 random subscribers in the hope that people would see the benefits of extra data allowances and upgrade their plans. Instead, they found a surprising result:
- Users who used low amounts of data before the trial failed to take advantage of the trial, having built a habit of minimal data usage.
- Users who used high amounts of data before the offer continued to do so and did take advantage of the offer, but didn’t use any more data than they had before.
- Users in the middle range of data usage were most likely to both use the extra data and continue to use high amounts of data after the trial was over.
The takeaway from the HBR study was that, in this instance, companies should focus their free trials on offering upgrades to existing customers of medium to high usage, rather than trying to court brand new customers. There are several benefits to this approach:
- Existing customers have already gone through the implementation and onboarding process, removing barriers to trying new features.
- Customers with medium usage levels have already demonstrated a commitment to and reliance on the product — if they don’t like the new trial, you’re not losing ground either.
- Existing customers have historically shown a greater willingness to purchase upsells and cross-sells, making them a more receptive audience.
Usage data on existing customers can be leveraged to customize your trial offer around the features they use most.
Think Sustainable Growth Strategies
Free trials are just one way of generating interest, leads, and customers. Like any marketing channel, a free trial can’t stand alone. What you need is a comprehensive, integrated marketing plan that takes into account the nuances of your company, your goals, and your customers. Then, you need to execute against your plan with intention — meaning your eyes are on tactical performance while your hands are on the optimization wheel. Genuine sustainable growth strategies will require complimentary pieces, smart optimizations, and constant marketing assessments to maintain the momentum that free trials may provide.