Top Challenges and Benefits of SaaS Free Trials

Many software as a service (SaaS) providers are offering free trials of some kind to potential customers.

Why?

Because it’s a proven SaaS marketing strategy that works. It's also the only way for a user to test your product before purchasing it. Demo videos, on the other hand, can often be inconclusive.

Using a free trial model poses a number of questions. Is there an ideal length for the trial? How successful are free trials in converting to paid users/accounts? Finally, how many features should you include in the free version of your product?

As you might have realized, there are a lot of challenges to offering free trials of SaaS solutions. However, there are also some benefits that should be acknowledged. This article will dive into both so you can weigh the challenges and benefits of free trials for your own product.

So, let’s dive right in.

Benefits of Free Trials

There are lots of great reasons to offer a free trial for your SaaS solution. Let’s take a look at them.

1. Allows Customers to Test the Product

As mentioned above, there really isn’t a way for customers to try your software solution before buying it, if you don’t offer a free trial.

Committing to a tool without getting a feel of it can be scary, and enough to drive away prospective customers.

But how do free trials help?

Offering a free trial is similar to giving a test drive of a new vehicle, enabling customers to get a feel and become comfortable with the idea of buying it.

The question now is how much should you include in your free trial. Dealerships will only let you test drive a vehicle for so long, after all.

Your free trial should include all the basic functions so that users can at least get familiar with the platform and its layout.

You can use the advanced functions as an incentive for customers to pay for full access.

Take Calendar as an example. They offer a “freemium” package which gives unlimited access to the users and allows them to try the product before purchasing a more inclusive package.

Image via Calendar

2. Generates Sales Leads

One of the biggest benefits of free trials is that of aiding your lead generation efforts. Even if a customer doesn’t convert into a sale immediately, you have a lead from every free trial signup you get.

Why is this important?

These individuals have shown an interest in your product, making them an easier target for sales teams to try and convert.

You should make it a requirement for customers to include some contact information in order to sign up for a free trial. A basic email address will do.

But why?

You can use this contact info to send them updates, sales notifications, and even discounts to try to convert them into paying customers.

Also, a free trial is much easier to sell than the product in full. Customers will be more drawn to this idea and will be glad to avoid the aggressive selling techniques they’re used to elsewhere.

I’ve been around some of the best sales speakers out there and many of them consistently speak about building trust with customers. One of the best ways to do that is to earn their trust before you sell them on a bigger dollar amount.

3. Can be Easy to Market

Leveraging a free trial model is a relatively low-risk, high-reward marketing strategy. For starters, once your free trial is set up, it doesn't cost much to run it. Secondly, free trials work best as marketing fodder.

Why is that?

Few people will decline a free trial unless they really have no use for your product, in which case they weren’t likely potential buyers anyway.

For the rest of your consumer base, leverage social media and other advertising platforms to promote your trial and you’ll gather interest quickly.

Let’s take a look at ETL Robot. ETL tools aren’t something everyone is familiar with. Many people have never heard of these data analytics tools before. By marketing a free trial, ETL Robot can easily gather customers to teach about data analytics.

Image via ETL

4. Spurs Growth

One of the top benefits of free trials is that they help you grow your brand. Entering the crowded SaaS market isn’t easy with a new product. A free trial helps get you on the map.

How does it do that?

The biggest challenge any startup will have is to start getting paying customers, and free trials are quick ways to reel some in.

Even if you’re an established force in the SaaS industry, you can spur additional growth through free trials. New software programs won’t win over even the most faithful of customers automatically, so having a free trial option will allow for steadier growth.

5. Plays Into the Consumer’s Mind

Let’s take a moment to look at the psychology of the average consumer. How does a free trial play into that? This strategy guides their hands right into their wallets due to these factors:

The Endowment Effect

People tend to value their things because they belong to them. That’s why it’s so hard to toss out an old sweater, even though you haven’t worn it in years.

A free trial gives customers that sense of ownership, causing them to hold onto it tighter when it’s time to purchase or drop it.

Loss Aversion

If you can help it, you won’t lose anything you don’t want to get rid of. Free trials leverage loss aversion, swinging customers over the fence simply because they won’t want to lose the subscription they’ve just started getting used to.

Effort vs. Impact

The bigger the impact a product has on a customer, the more likely they are to make an effort to purchase it.

A free trial gives your software solution more of an impact than it would otherwise. The greater the impact, the more will your customers line up to make a purchase.

Challenges of Free Trials

Don’t rush into anything just yet. Even if a free trial is right for you and your product, you should take these challenges into account before launching one:

1. Selecting Length of Trial

Let’s circle back to one of the questions asked in the introduction: Is there an ideal free trial period? That might depend on several factors regarding your software solution.

One philosophy is that 14 days is all you need for a SaaS free trial. This promotes a sense of urgency in customers who will rush to make a full purchase in order to continue using the software.

It can also be argued that a short two week period is all one needs to determine if they would use a product or not.

On the other hand, there are some benefits to a longer free trial. For some customers, this takes away the stress of having to decide within a short period, giving them all the time they need to make a full commitment.

You can also stagger free trials to match up with different sizes of software packages you offer; longer free trials for more sizable software purchases.

2. Limiting Free Accounts

Where free trials exist, there will be freeloaders who try to take advantage of the system.

Just ask any video streaming site with a free trial. As soon as their accounts expire, diligent binge-watchers will be making another one.

However, there are ways to discourage freeloaders from accessing endless free trials. A simple requirement of a new email for every signup will ward off all but the most persistent ones.

Other forms of verification can also be used, such as unique IP addresses and credit card information.

3. Increasing Perceived Value

If a SaaS company is offering a free trial of their product, how good can it be, really? While it’s not necessarily true that a free trial indicates a lesser product, some consumers might feel that way.

They can see everything at face value and make quick assumptions in the short time they have to try things out.

How do you overcome this? Offer your free trial strategically. Hold some features back so there’s value beyond the free trial, promising that the full version is even better than what you see upfront. This ensures that they see the product benefits as well.

Also, provide an exceptional free trial, without cutting any corners, so that the value right out of the gate is at a high level.

Another issue with free trials is that in order to see the real impact, customers need to implement it for some time.

Consider this when deciding on the trial period and brainstorm some ways your software solution can provide value in even a short time.

4. Explaining the Software Solution

Perhaps one of the biggest challenges of free trials is getting customers to understand the software solution in a limited time and in a reduced capacity.

If they’re unable to figure the platform out, there’s little to no chance that they’ll buy the full version.

How can you avoid this?

Incorporate guides and tutorials that walk users through the software solution so they’re able to use it well.

Simple walkthrough videos explaining your tools and steps will greatly impact the user experience. A “sandbox” mode for your free trial can also guide users through set parameters.

In this mode, they can control what they can or can’t do and walk through things one at a time, almost like a video game tutorial.

For example, note how Shopify has a video explaining what their product is all about.

Image via Shopify

5. Retaining Customers is More Difficult

Imagine what your average customer going through your free trial looks like. They’re most likely calculated and patient, weighing their options before making a final decision.

Because of their unique approach when compared to other consumers, retaining them after a free trial can be tricky.

There’s little stopping these customers from signing up for additional free trials to test new platforms and ponder a switch. That’s why it’s also one of the biggest challenges of free trials.

To sway them from this behavior, be sure to offer plenty of other perks to customers who purchase the full product.

Dedicated customer service lines, company resources, and customer benefits will bolster your retention strategy with a more difficult target audience. The better you take care of them after the sale, the more likely they’ll stick around after the free trial.

Final Thoughts

Free trials are great tools for SaaS marketing that are being used by companies all around the world, but they too have both challenges and benefits.

They allow customers to test your products, generate leads, and can also make it easy to market them. Also, free trials can help drive the growth of your company by playing into the consumer’s minds.

Similarly, when it comes to the challenges, it can be difficult to determine their length and you need to have a marketing strategy to avoid freeloaders. Also, you need to increase the perceived value of your solution and make it easy to understand it. Finally, retaining your customers can be difficult as they could migrate to other platforms offering free trials.

Don’t offer a free trial until you’ve weighed these challenges and benefits. Once you’ve made the decision, make a detailed checklist that covers everything that can go right or wrong.

Do you have any questions about the challenges and benefits of free trials mentioned above? Ask them in the comments.