Software as a service platforms (SaaS) are useful tools that are typically subscription based and simplify daily activities for their customers’ business or personal needs. In this technology-centric day and age, more and more SaaS companies are coming out of the woodwork with innovative solutions.
66% of SaaS companies report conversion rates of 25%.
How can you, as a new SaaS company, prove to new customers that the solutions you offer will benefit them? One of the most effective ways is to offer a free trial.
For example, imagine that you’re a baker selling delicious, homemade cherry pies, but you’ve only just started your business and need to spread the word that you make the best pies on the market. You decide to offer new customers a free sample of your cherry pie.
Some people enjoy the sample and get hooked! They go on to become regular customers. However, others are not convinced your pies are worth buying. You’ve wasted resources and time offering your pie for free. Same logic applies to SaaS.
Conversion rate (for opt-in free trials) at 15% for SaaS businesses; the rate jumped to 50% for opt-out trials. (Totango)
Now what? You need to take the time to convince more people to buy your pies after trying the free sample. You need to help them become invested because they know your pies are simply the best. Give them that extra push to follow through with their purchase.
This analogy is frequently experienced by high-growth rate SaaS platforms offering a free trial option. By offering a free trial of your software, you can prove to potential paying customers that your services are simply the best.
SaaS Free Trial Marketing Strategy
It’s important to know what you’re getting into by offering a free trial. You need to have a solid SaaS marketing strategy to improve free trial conversions. While SaaS trials lack an event based trigger, offering SaaS free trial are very effective at prompting bottom of funnel leads to initiate testing to see if your SaaS platform meets you companies needs.
The small win in this segment of your lead generation efforts, gets leads committed enough to your software to go through the process of signing up, giving you their contact information, and in some instances, providing their credit card information. They’ve also committed to allocating their own time testing the various features and functions of your SaaS platform. You already have their interest - which makes them qualified leads to target your marketing efforts towards.
Just like selling cherry pies, the ultimate goal is for these customers that are using your software on a trial basis to see the benefit and convert into actual paying customers.
How can you ensure that you're taking the right steps to increase your SaaS trial conversion rates? In this blog post, we’ll explain the different options of free trials and the best tips to maximize your conversion rates.
1. Opt-In VS Opt-Out Free Trials
Free trials vary. They aren’t all created equal, and won’t result in the same conversion rate results. For this reason, it is important to have a game plan in place and choose what works best for your company.
It’s also imperative to note that combining Free Trial and what is known as “Freemium” will be difficult to track and evaluate your free trial conversion rate metrics. What most know as “Freemium” refers to when a software offers a version of their services for free, or an upgraded version of their services for extra costs.
Generally speaking, SaaS strategy towards free trials fall into two different categories: opt-in free trials and opt-out free trials. Understanding the difference of these two types of trials will help you be more effective in converting prospects into customers. And similar to what we mentioned above about Freemium, these two kinds of trials should be measured independently from one another to understand your true conversion rate results.
2. Opt-In Free Trial
An opt-in trial is when a potential customer can start a subscription without a credit card by providing payment details during or once the trial is over. While there is less of a barrier standing in the way of prospects starting this kind of trial, you’ll still need to put in a lot of effort to attract them to it in the first place and even more effort into ensuring that they realize quickly how becoming a paying subscriber will benefit them.
3. Opt-Out Free Trial
On the other hand, an opt-out free trial is one that a prospect can only start if they provide their credit card information upfront. They then have to log in and opt-out of the subscription, or it will begin charging them once the trial is finished.
Prospects today aren’t as willing to dish out their payment details as they might have been in the past, so it can be tricky to get them to sign up for an opt-out free trial in the first place. Well-known brands may be able to pull this off more often, but newer companies will need to put in a lot of effort to attract the attention, spark interest, and earn the trust of prospects.
While this does have the chance of converting a prospect into a paying customer, often a prospect uses the free trial and actively chooses to cancel their subscription without ever paying a dime. Even though you have their credit card information, you still need to put in the hard work to get them to the point of deciding that becoming a paying customer makes the most sense.
The difference between opt-in and opt-out free trials can determine what is missing in your SaaS free trial marketing strategy and low conversion rates - which brings us to our next segment of this blog post…
Tips for Boosting SaaS Conversion Rates
Now that we know the different types of free trials that you could implement, the real question is - how do I convert free users into paid users?
We’ll now discuss our top 6 of the most useful tips for converting free users into paying customers. Let’s dive right into SaaS conversion rates best practices along with actionable SaaS conversion strategies you can quickly implement.
1. Switch from Opt-Out to Opt-In
If you’re a newer SaaS business, we recommend starting with the Opt-In free trial. This will allow you time to prove your worth to your free users and build trust.
However, if you’re already implementing an opt-out free trial, we recommend rethinking your SaaS free trial marketing strategy. Keep in mind, switching from opt-out to opt-in and tearing down the credit card wall that might be deterring potential customers may cause your conversion rates to decrease at first.
But the overall number of paying customers may go up significantly! Not requiring a credit card to sign up for your free SaaS trial will bring in a greater volume of leads - some of which might not be the right fit in your prospect matrix. However, an opt-in free trial paired with the right inbound marketing strategy puts you in a great position to attract more qualified leads and convert more leads into sales through effective conversion rate optimization.
2. Offer a Shorter Free Trial
Another popular question that we receive is - how long should a free trial last?
While many SaaS businesses offer a 30-day free trial (assuming that this gives a prospect more time to become familiar and fall in love with your app), we suggest a shorter length. Why? Because giving a customer too much time to think might result in them waiting until they forget about it.
When focusing on your freemium conversion rates, you should stay under 14-day trial for improved conversion rates, as trial user engagement tends to happen in the first 1-2 weeks, before fizzing out and moving on to testing out a few of your competitors.
A 14-day trial is a good place to start! Most customers that opt-in to a free trial know whether they love the software or hate it within the first few days. Additionally, by giving them less time to decide, you’re unnecessarily applying pressure on which makes prospects feel as though they need to make a decision.
3. Lifecycle Marketing - Personalized
As we mentioned above, once you’ve sparked the interest of a potential customer to the point of them signing up for a free trial, they have become a qualified lead. Now is your chance to engage with them in strategic and personalized ways to help them see the benefit in not only your product, but your company’s messaging and service.
Lifecycle marketing is a useful and effective strategy to properly deliver the right messages at the right time to prospects, depending on where they are in their sales cycle. This is accomplished trough conversion rate optimization, so content on your web pages and landing pages actually changes to reflect the industry, lead status, lifecycle stage, referral source or device type prospects. HubSpot CMS or Marketing Pro allows for this deep level of content personalization using HubSpot SMART content shown in the screenshot below.
You can address the following stages with lifecycle marketing:
- Free trial signup
- Account maintenance
With the right content, such as case studies or informative blogs to develop your thought leadership, you can create personalized outreach strategies to appeal to prospects that have just started their free trial or decided not to opt-in.
4. Use Triggers to Boost User Success
Another useful strategy to boost conversion rates and ensure that free trial users will become paying customers is to help them be successful with your software. Implementing the use of triggers that increase the likelihood of a prospect adopting a specific behavior in your product will help you do just that.
When your users are enjoying your product and feel motivated to use your software, these triggers have the ability of making your product “sticky”. In other words, users become attached to using your product. However, triggers can also come off as annoying and backfire.
For this reason, it is important to understand the difference between internal and external triggers. Both can be helpful for users to gain and maintain a new target behavior.
External conversion triggers include sending an email to remind someone to use your software or targeting a conversational marketing tool at a prospect when they visit your site. These triggers are much easier to control.
Internal triggers, on the other hand, take time to manifest in a prospect’s mind and have much more of an impact. An internal trigger develops out of habit - such as a weekly report sent on a specific day of the week. A prospect using your free trial to send the report will open your software without even thinking about it.
We recommended relying on external triggers in the early stages of a prospect using your product. As a prospect becomes more familiar with your product, they’ll start developing their own internal triggers. You can then use behavior and activity reporting to help you understand and evaluate their usage to provide a better experience for them.
5. Make Your Pricing Simple
The less steps a prospect needs to take in order to become a paying customer, the better. For this reason, we recommend simplifying your pricing as much as possible.
Evaluate the step by step process that a customer takes from starting their free trial to entering their payment information and becoming a loyal customer. Remove any steps that stand in the way of them completing their purchase.
6. Establish Common Conversion Activities (CCA)
According to Lincoln Murphy’s Common Conversation Activities (CCA) metrics, it’s important to take the time to identify the activities and behaviors that all or most of your paying customers do during their free trial. Discovering these key patterns through historical data and reporting can help you anticipate the activities of your new trial users.
This strategy helps you understand what a potential customer that signs up for your trial will likely need in order to convert into a paying user.
Chargebee identified the following CCAs by evaluating their own free trial conversion process:
- Completing account setup
- Spending considerable time in the app
- Making API calls
- Inviting other users
- Trying out the test payment gateway configurations
- Logging into the customer portal
- Configuring an invoice
- Configuring a hosted page
While your CCAs will likely be quite different from the ones listed above, this is a great start as far as what to look out for when establishing your own. Remember, CCAs can include super specific behaviors or more general. With a solid list of CCAs, you can tailor your tactics to actively move trial users through these steps yourself and implement this data into your lifecycle marketing strategy.
7. Request Feedback from Non-Converting Free Trial Users
One of the best ways to find out why a prospect didn’t decide to opt-in to a full blown subscription is to, well, ask them! You’d be surprised how willing people are to share their experiences and how informative this feedback can be.
You can request feedback by setting up an automated email and supplying a survey, or take a more personal approach. Just be sure to ask the right questions.
The key is to look for behavior patterns in the responses you receive and address the most common issues by fine-tuning your marketing or SaaS free trial marketing strategy.
Offering a free trial of your SaaS platform can be an excellent way to attract leads and show them how your product can benefit them. Working with experienced SaaS Marketing Agencies can help your SaaS platform choose the right approach to improving your free trial conversion rates to increase revenues.