Saas Trial Periods

[Jord]

Hi All,

Been lurking in this forum for a number of months. Love the gems of information that are dropped here, so many times reading someones comment on here has motivated me to take action on different things!

I've seen there is a number who own SAAS applications. I have one that we plan to launch shortly.

I have a few questions about offering trials on a saas. Do you have better results when offer a trial, take payment details and auto bill after the trial period? Or offering a trial without the need for the user to enter card details?

 

[infotech]

I think it would depend on the service you are offering.
If its something people know about(there are exisiting competitors) then you can get them to signup with card details.
If its something new and they are not sure how it would benefit them, then you can offer your service without card details.
But I read somewhere that churn rate is lower if you go the 1st option, also signup rate will also be slightly lower.

 

[Jord]

I think it would depend on the service you are offering.
If its something people know about(there are exisiting competitors) then you can get them to signup with card details.
If its something new and they are not sure how it would benefit them, then you can offer your service without card details.
But I read somewhere that churn rate is lower if you go the 1st option, also signup rate will also be slightly lower.

Thanks infotech, yeah even though the niche is relevantly new to the idea of using a saas there is some competition that have similar service.

That is my thought, with option 1 i think the churn rate will be lower. With option 2 I think this may create a lot more work to have to do after the trial to get people to upgrade the account. I know the product is solid but people get busy therefore churn rate will be higher.

 

[CCarter]

#1. Forcing CC information up front will result in higher refund rates and cancellations. You are going to get a flood of people complaining they forgot to cancel and you'll have to refund them otherwise take the risk of them complaining about your deceptive practices to online websites like RipOffReport. There are ways to prevent people from abusing the system but it requires outside the box thinking. For example if your SAAS connects to Facebook you can limit the amount of trials on a '1 Facebook account' basis.

Think about it from a consumer standpoint. Whenever I see "free trial" and click on it and it asks for a CC - 100% of the time I just immediately leave the website. Maybe it was a great product, but I figure anyone playing the "14 days free trial" then immediately billing game knows people are going to forget about the 14 days trial and get billed. Those are weak products in my mind if they need to play the "CC upfront 14 day gotcha" game.

There are legitimate concerns about spam/fraudsters however they can be figured out by thinking outside the box. Maybe if your SAAS is monitoring a domain for a user, you only limit the free trial to that domain, and if another user on a free trial tries to enter that domain it's denied stating "this domain has already been used in a free trial". Start thinking in ways to get around it without forcing CC information.

2. Free trial then afterwards asking for billing information once the trial is up will result in the least amount of churn. That way you know the people that are truly interested in your software will sign up and it won't be a "gotcha, 14 days past and I'm billing you" scenario. If people aren't using your product or forget, then they'll cancel or draw a chargeback against you and claim fraud, maybe you get them for 1 or 2 months, but they'll leave cause they never came back to your product and will be surprised when they see charges from you - like a nutrition supplement product that does a 30 day rebill without letting anyone know. Think about the reaction anyone gets when they see an unknown charge or a charge for something they don't use surprisingly appearing on their credit card statement - It's always negative. Do you want that negative feeling to be associated with your brand?

I don't understand how you guys came to the conclusion the other scenario would be less churn.

Totango did an excellent short PDF about the benchmarks for what the Best in Class SAAS do in terms of Free Trials, Paying Users, and Active paying users versus monthly churn. Here is a link to the PDF: 2012 SAAS Conversions Benchmark - Based on the engagement with about 100 SAAS companies

Here are screenshots of the meat of the conclusion:

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When I started out my SAAS I had the exact same question, but when you follow the customer pattern down the "take CC information upfront" and "Don't take CC information" - you realize in the first scenario you WILL end up with more refunds and pissed off customers versus the second scenario where only people truly interested in your product will give you their info (no pissed off customers almost 0% refund rates). Add "awesome content for inbound marketing" and a pro-active approach to customer retention - specifically responding to Customer FAST (talk a bit about this in the customer service/support Day of the crash course), and letting users constantly be informed on what's you are working on to continue innovating for them, you've got a winning formula.

Unless you are trying to do some Clickbank or JVZoo product launch where you know your product is slimy at some level and are trying to get paid off of the dubiousness of the consumer
I'd avoid Credit card upfront AT ALL COSTS.

If you've got a solid product then there isn't a need to play the "credit card free trial gotcha game". Free trial is great, CC information upfront - not so much.

 

[ari]

@CCarter
I think a lot depends on the saas and market you're targeting. If we take off our rebill hats for a second, one of the reasons people ask for cc on trial is to increase the free to paid sign up.

 

[CCarter]

@CCarter
I think a lot depends on the saas and market you're targeting. If we take off our rebill hats for a second, one of the reasons people ask for cc on trial is to increase the free to paid sign up.

Wouldn't the customer enter their payment information once the free trial is over if there was a prompt when the trial is over?

 

[enslam]

@CCarter
I think a lot depends on the saas and market you're targeting. If we take off our rebill hats for a second, one of the reasons people ask for cc on trial is to increase the free to paid sign up.

What you want to do is show your customers how your SAAS adds value to their business and limit the trial in such a way that they're inclined to upgrade during the trial, instead of waiting for the 14 days to be up.

 

[Jord]

Thanks for the feedback.

That report from Totango was very helpful and insightful @CCarter . This is a long term project so considering the brand long term is definitely something we need to take into consideration. Need to work on some more quality content around the niche and how the application helps those working in the niche before launch I think.

 

[darkzerothree]

@CCarter those stats and info are very valuable.
Had not seen those before.

Nice to see a gut feeling validated.

The pointers after the pure stats are good too, who to look at for and what to observe will help me in my next project.

 

[Jord]

Sorry I have been absent in this thread for a little while. Been doubling down on this saas but here is a small update.

We decided to follow the route of offering a trial with no credit card details needed upfront.

The number of signups increased which is great but what is most valuable is the level of customer feedback.

The customer feedback from ones who signed up has noticeably increased, allowing us to implement new features and gain some great insight into how we could improve it for day to day users.

Those active customers on trial who although at the moment are small in number all turned into paying customers that are actively tweeting and talking about us in social media.

For us it was definitely the right choice to choose this route, we are now more prepared than ever for launch. As now not only have we had some great feedback that has allowed us to make changes but we have a core group of active users that are talking about the software.