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Subscription Economy

The trials of the ‘free trial’

By Ji-Soo Kweon

The trials of the ‘free trial’

To credit card or not to credit card, that is the question. SaaS providers must consider the drawbacks of having a credit card wall for free trials.

 


 

To credit card or not to credit card, that is the question. Free trials are a useful tool to attract new customers and gain a loyal following, and requiring customers to enter their credit card details before accessing a product trial is traditionally seen as a sign that a customer is serious about the product on offer. Requiring credit card details may also discourage ‘tire kickers’; users who will abuse the system by setting up multiple IDs to use the free trial multiple times, and because users need to set up an account, a company can get good feedback from customers should they cancel. However, SaaS providers should also consider the potential drawbacks of having a credit card wall to their free trial programs, particularly from the customers’ point of view. 

According to Lincoln Murphy, a Growth Consultant focused on customer-centricity, customers are now ‘less willing to whip out the credit card to TRY something’ than previous times. This is because consumers now have access to information and customer reviews of anything they might want to purchase or subscribe to, as well as an abundance of 100% free options in any given market. When onboarding new customers, it is important that the sign up process is as simple and smooth as possible, as a clunky sign up process implies a clunky product. Contemporary consumers, Murphy argues, are too busy to be ‘distracted’ by the ‘credit card wall’ when it is easier to simply click away and find something that is free with no strings attached. 

Understanding the differences in the ways in which consumers and businesses perceive the credit card wall is vital in the decision-making process of setting up a free trial. For businesses, the credit card wall is seen as a way to keep the ‘riff-raff’ out; and this perspective is seemingly validated by the higher trial-to-paid conversion of free trials with credit card as opposed to without. However, consumers have now had enough experience with the digitalized subscription economy to be leery of the credit card wall. Free trials should feel like a product test run, not a scam; and consumers are by now overly familiar with companies who go out of their way to make cancelling a subscription before an account is charged overly difficult. Forcing potential customers to jump through hoops or unwittingly encouraging them to doubt your company’s intentions does not make a good start to a business relationship. 

So what can subscription businesses do to improve the conversion rates of their free trials? The key is to improve the UX of the onboarding and free trial process, and let the product sell itself. Murphy prefers the ‘opt-in free trial’, where the trial is started without a credit card and the prospect needs to opt-in to a subscription by providing payment details during or after the trial is over. If an opt-out free trial - a trial with a credit card wall - is considered absolutely necessary, businesses can consider using a platform like PayPal, which will provide customers a degree of security and reduce the distraction and effort of manually entering credit card details. Once the onboarding process has been completed, the free trial should be able to demonstrate to the consumer that the product adequately solves a problem that they have, which would then logically lead to a subscription. 

Providing potential customers with an easy to access, easy to use free trial that successfully demonstrates the strengths of a product and its real-world applicability can give SaaS companies a competitive edge in a saturated market, and allow up-and-coming startups to disrupt legacy brands. However, the free trial is often a trial to companies as they see systems being abused by freeloaders and low conversion rates. However, it is important to consider free trials from the consumer’s point of view, and to eliminate as many barriers to a potential sale as possible. A free trial should be presented in good faith as an offer to ‘try before you buy’, and this can be disrupted by tactics such as implementing a credit card wall, which can be perceived as a cheap cash grab rather than a legitimate means to try and secure loyal customers. 

 One of the many benefits of the digitalized subscription economy is the ability to foster an enduring, mutually beneficial relationship between businesses and consumers, and the ability to provide a flexible, customizable, dynamic user experience. At its best, the relationships created in the subscription economy minimizes risk for both parties and businesses can be resilient to the ups and downs of the global economy by building customer loyalty. This relationship can start at the free trial, as companies can give consumers an opportunity to try out an exciting new product before prospective customers take the plunge to join a company’s clientele. Creating a credit card wall may appear to improve the conversion rate of free trials, but doing so may only lead to cancellations further down the line, revenue from customers forgetting to cancel a subscription rather than the consistent income stream provided by a regular subscription, and play into consumer fears that companies may capitalize on credit card details given prematurely. Understanding consumer needs and fears in a rapidly changing digitalized economy is the key to creating a successful, productive free trial.

 


 

References: chargebee.com, sixteenventures.com, drawbackwards.com, priceintelligently.com, earlystagefounder.com

 


 

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