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How to convert free digital trials into sales

Broaden your ecommerce or SaaS customer base.

"Try us FREE for 14 days," … "Start your 2 free months, cancel anytime," … "You may be eligible for a 30-day free trial. No credit card needed." Lines like these grab attention, but do they actually work? 

They say great products make great marketing tools. If you really believe in the value of your offering, a free trial is a great way to expose others to its greatness.

When executed properly, free trials can broaden a product’s potential customer base, establish a standard of expectation for trial users and help generate qualified leads. Furthermore, companies with digital products commonly offer free trials because of the ease of getting that product into the customer’s hands. After all, there are no shipping fees, inventory issues or distribution logistics to worry about.

As a result, free trials have become somewhat of a competitive necessity amongst software as a service (SaaS) providers, with roughly 75 per cent providing some form of free trial.   

But providing a free trial for the sake of following industry norms is never a wise decision. Though significantly cheaper than distributing physical products, free digital trials still require an investment of time and money. After all, even SaaS companies need to dedicate a certain amount of resources to designing, building and troubleshooting free trial applications, not to mention the cost of acquiring each trial user.

Furthermore, not all free trials are built the same, and what works for one company won’t necessarily work for another. With such a wide variety of free trial types and with varying levels of success across companies and industries, it’s important to ensure value to the company before giving your product away for free.  

Types of free trials

Free trials come in many different varieties, with each format requiring different levels of commitment from prospective customers. Organizations need to conduct significant research into their target market in order to consider which model will resonate best for their specific product. Here are a few models to consider:

  1. Credit Card Required: Users are asked to input their credit card information for a free service and will be charged if the service is not manually cancelled before the expiration of the free trial period.
  2. No Credit Card Required: Users are more likely to utilize a free trial if it doesn’t require inputting their credit card information, but are less likely to subscribe to that service following the conclusion of the trial period.
  3. Credit Card Extension: In this format, a no credit card required free trial can be extended further if the user inputs their credit card.
  4. The Freemium Model: Popularized by mobile gaming and applications, this format offers basic services for free with an option to purchase premium services at an additional cost.
  5. Finite Free Content: Popularized by major news organizations, this model provides a finite amount of free product over a certain period, requiring the user to pay for more. For example, The New York Times gives mobile readers access to eight free articles per month, at which point they face a pay wall until they either subscribe or the month ends.

Which metrics to consider

While it’s important to calculate the conversion rate of free trial users, it’s also essential to consider their lifetime value as a customer. That’s because organizations typically offer free trials of their premium products and services, and even if the conversion rate is lower than their standard marketing efforts at approximately the same cost per acquisition, the value of those free trial customers can be higher than their average customer.

Therefore, it’s important to keep a wide scope when measuring the return on investment, specifically with regards to individual customer value, rather than limiting it to the standard metrics of a typical marketing effort.

Expected conversion rates

Conversion rates for free trials will vary widely amongst industries and companies, and across free trial types. For example, highly targeted campaigns offering free trials to qualified leads might see a conversion rate of 80 per cent or more, while premium products might see single digit percentages of customers paying for additional services. 

Generally speaking, free trial conversion rates improve along with the product, meaning that established companies have a lot more to offer their free trial members than early-stage startups, and are thus more likely to convert users.

Some experts suggest that companies should strive for a 25-50 per cent conversion rate, understanding that it will likely depend on the product and the free trial offering, and is likely to increase over time. Whatever your conversion rate, it’s important to set realistic expectations and maintain ROI standards that need to be reached in order to keep the free trial program alive.

Why communication is key to free trial success

In a 2015 study of a European digital television service, researchers found “the average customer lifetime value of free-trial customers to be 59 per cent lower than that of regular customers”. That means that this company would have to attract almost two and a half times more customers to make the free trial a sound marketing decision.

Researchers explain that in order to improve the value of a free trial offering of a premium product, the value must be clearly communicated before, during and after the trial period.

Furthermore, they recommend communicating specific insights into individual usage patterns whenever possible. For example, users are more likely to buy a subscription for premium digital channels after being told how much they used those channels during the free trial period. 

 

Up Next: Could social media be another tool you can use to generate sales?

Can you drive revenue from social media?

Jared Lindzon

Jared Lindzon is a freelance journalist based in Toronto, covering a variety of topics, including technology, careers, entrepreneurship, politics and music. His work regularly appears in major publications in Canada, the United States and around the world, including the Globe and Mail, Fast Company, Fortune Magazine, Rolling Stone, Politico, the Guardian and more.

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