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Why Offer A SaaS Free Trial: 10 Benefits For
SaaS Companies

Why Offer A SaaS Free Trial

 

Most SaaS products nowadays offer a free trial or a similar setup, like a freemium plan or product demo.

But does offering a SaaS free trial really work?

The short answer is yes. 

Having a free trial for your SaaS product has its pros and cons. But more often than not, the pros outweigh the cons.

And that’s why you see so many SaaS companies giving away their products for free… at least for a little while.

So what are the benefits that SaaS businesses can get from it? Why offer a SaaS free trial?

Let’s take a look at some of the top reasons why offering a free trial can be beneficial for your SaaS business:

 

1) The Word “Free” Is Attractive To People

 

This one is pretty self-explanatory. Free is always better than paid, right?

When people see that they can try out your product without spending any money, they are more likely to take you up on the offer.

This makes it easier to promote your SaaS product. You can simply say, “Hey, try our product for free!” and people will be more likely to convert.

 

2) It’s A “Foot In The Door”

 

The “foot in the door” technique is a sales tactic where you get the customer to agree to a small request first, before asking for the main sale.

For example, let’s say you’re selling vacuum cleaners. You might start by offering a free home consultation. Once they agree to that, you can then try to sell them the vacuum cleaner.

The same principle applies to SaaS free trials. It’s a way to “get your foot in the door” and start selling your product.

 

3) It Eliminates Risk & Pressure For Long-Term Commitment

 

One of the main obstacles for a potential customer to sign up for a SaaS solution is the risk and pressure of a long-term commitment.

A free trial eliminates that risk because the customer can simply try out the product with no strings attached. If they don’t like it, they can just stop using it. No harm done.

It also gives them the freedom to try out your product without any commitment. And this can be more appealing to potential customers.

 

4) It’s A Great Way To Generate & Nurture Leads

 

A SaaS free trial can also be an excellent tool for lead generation and nurturing.

When people sign up for your free trial, you can collect their contact information (like their email addresses).

You can use this information to be in constant contact with them. The free trial then becomes a means for lead nurturing.

With the help of email and other communication channels, you may use, you can lead a trial user closer to becoming a paying customer.

 

5) It Helps You Identify High-Quality Leads

 

When you offer a free trial, you can also use it as a way to identify which users are really a good match for your SaaS product and which are not likely to become paying customers.

The people who sign up for your free trial and actually use your SaaS solution are usually the ones who are genuinely interested in what you have to offer.

At the same time, you would know not to focus on those who just sign up but do not engage with the free trial (yes, it happens).

This can save you a lot of time and energy in the long run because you can focus on converting the free trial users who are most likely to convert into paying customers.

 

6) It Gives Users A Firsthand Experience Of Your SaaS Product

 

One of the most effective ways to turn a prospective customer or free trial user into a paying customer is delivering value.

For them to become willing to pay for your SaaS product, they need to realize how much value they can get from it.

This realization is also called an “activation” or the “a-ha!” moment.

The best way for users to realize this value is by actually using your product. And one of the few ways for them to do that is if you offer a free trial.

This way, they can experience your product firsthand and hopefully come to that “a-ha!” moment.

In other words, a free trial is an opportunity for your SaaS product to sell itself.

This is why a lot of SaaS companies with a product-led growth model tend to offer a free trial or a freemium account.

 

7) It Allows You To Gather User Engagement Data

 

One of the most important data you can get from your existing users and customers is their usage data. This data can be extremely valuable when it comes to product development and marketing.

For example, if you see that a lot of your users utilize a particular feature, you know that it’s something you should focus on and perhaps even promote more.

On the other hand, if there’s a feature that’s not being used much, you can either ditch it or find ways to make it more appealing.

The only way to get this valuable usage data is by having people actually use your SaaS product, which is easier if you let prospects try it for free.

 

8) It Can Help You Build Social Proof & Credibility

 

When you offer a free trial, it can also help you build social proof and credibility for your SaaS product.

Social proof is a psychological phenomenon where people tend to follow the actions of others in order to feel correct or justified in their own actions.

In other words, if other people are using your SaaS product, they believe that it must be good and worth using.

This is why user reviews and testimonials can be so powerful when it comes to conversion—they act as social proof.

Now, if you offer a free trial for your SaaS solution, people can easily try it. That includes tech bloggers and SaaS product reviewers.

If they like it, they can write about it and give your SaaS brand some great publicity.

This could lead to an influx of new users, which in turn could lead to even more social proof.

It’s a snowball effect.

What’s more, a free trial can also be a powerful show of credibility because it conveys that you’re confident enough in your product to let people use it for free.

 

9) It Can Help You Get User Feedback

 

When you offer a free trial, you also open up the opportunity to get feedback from users who have actually used your SaaS solution.

This is important because their feedback can help you improve it.

For example, if a lot of free trial users are asking for a particular feature, it might be something you want to consider adding.

Or if a significant number of free trial users encounter bugs on specific pages or when using certain features, then you could address it as soon as you can.

 

10) It Lowers Your Customer Acquisition Cost (CAC)

 

Your CAC is the amount of money you need to spend in order to acquire a new paying customer.

Ideally, you want your CAC to be as low, in relation to your revenue, because it directly impacts your bottom line.

The good news is that free trials can actually help lower your CAC.

How? Well, if you’re able to convert a significant number of free trial users into paying customers, it means that you’ve acquired those customers at little to no cost.

By letting your SaaS product sell itself, you can be less reliant on sales or high-budget marketing gimmicks.

This is why a lot of SaaS companies with a freemium model or a free trial tend to have a lower CAC.

 

Potential Drawbacks In Offering A SaaS Free Trial

 

Of course, free trials aren’t perfect and there are some potential drawbacks you should be aware of.

Let’s take a look at some of the potential cons of offering a free trial for your SaaS product.

 

You Still Have To Cover Overhead Costs

 

It may be free for your free trial user, but not for you.

Remember, you still have to cover the expenses of hosting, maintaining, and developing your SaaS product. Not to mention the cost of providing customer support to your free users.

So even though you’re not directly losing money by offering a free trial, you are forgoing potential revenue that you could use to cover these costs.

 

Some Free Trial Users May Never Convert Into Paying Customers

 

The goal of offering a free trial is to eventually convert those users into paying customers.

However, the sad reality is that not all free trial users will convert no matter how good your SaaS product is.

Some people are just tire kickers who like to try out new products but have no intention of ever paying for them.

Others may sign up for a free trial with the intention of converting but then never get around to actually using your product.

The key is to make sure that you’re doing everything you can to increase conversion rates and deliver value to each free trial user.

 

Almost Everyone Else Is Already Doing It

 

When it comes to SaaS, offering a free trial has become the norm.

In fact, most of your competitors are likely already doing it.

So while offering a free trial can be a great way to differentiate your SaaS product, it’s no longer a unique selling proposition (USP).

This is why it’s important to have a well-thought-out free trial strategy. Otherwise, you risk getting lost in the sea of other SaaS companies who are all offering the same thing.

That brings us to our next point of conversation.

 

Best Practices For Offering A SaaS Free Trial

 

If you want to reap the full benefits of offering a free trial, it’s important to do it the right way.

Here are some best practices you can follow to make sure your free trial is as effective as possible.

 

Set Reasonable Limitations

 

A free trial should give your users a taste of what your SaaS product has to offer, but it shouldn’t be a completely unlimited experience.

Remember that your goal here is to bring each free trial user to their “a-ha!” moment.

If you give them too much too soon, they may never reach that moment. Or, worst case scenario, they might reach it but then never convert into a paying customer because they don’t see the value in upgrading.

A good way to set reasonable limitations is to identify what the “a-ha!” moment is for most of your users. Then provide enough features and time for them to reach it.

This way, they’ll get a feel for what your product can do but they’ll also be incentivized to convert to a paid plan in order to unlock its full potential.

 

Make It Easy To Sign Up And Get Started

 

The sign-up process for your free trial should be as simple and straightforward as possible.

Ideally, it should only take a few minutes to complete. Otherwise, you run the risk of losing potential free trial users who get frustrated and give up before they even get started.

You should also make it easy for trial users to get started with your product. Ideally, they should be able to start using it right away without having to go through a lengthy onboarding process.

The goal is to get them to use and experience your product as quickly as possible so they can start seeing the value it provides.

 

Decide Whether Or Not To Ask For Credit Card Information

 

One of the most common questions SaaS companies have about free trials is whether or not they should require credit card information upfront.

There are pros and cons to both approaches.

Not asking for credit card information can help you attract as many people as possible.

After all, most people are more likely to sign up for a free trial if they don’t have to provide any payment information.

So this may be a good idea if you’re selling a B2C SaaS solution or a B2B product intended for individual end-users.

On the other hand, asking for credit card information is a great idea if you only want high-quality leads signing up for your free trial.

If they’re willing to take the time to input their credit card details, you know they’re serious about trying out your SaaS product.

A credit card information form can help you weed out tire kickers and those who are just looking for a free ride.

What’s more, it also gives you the ability to start billing as soon as the free trial period is over, which can help reduce accidental churn.

 

Provide An Excellent User Onboarding Process

 

Just because they’re using your SaaS product for free doesn’t mean you should skimp out on onboarding them.

In fact, it’s even more important to provide an excellent onboarding experience for free trial users because you want to convert them into paying customers.

The goal is to get them up and running with your product as quickly and easily as possible so they can start seeing results.

You can do this by providing a quick start guide, video tutorials, or even just a few email tips.

Whatever you do, make sure it’s easy for free trial users to find and use your onboarding materials.

 

Find The Sweet Spot For The Trial Period Length

 

The length of your free trial period is an important decision to make.

On one hand, you want to give users enough time to experience the full value of your product so they’re more likely to convert into paying customers.

On the other hand, you don’t want to give them too much time as they may not feel the urgency to explore your SaaS platform.

Finding the sweet spot can be tricky. But it all depends on the learning curve for your product and how long it takes for a free trial user to get to the “a-ha!” moment.

Generally, a shorter trial period leads to a shorter sales cycle length. But if your SaaS product needs a lengthy onboarding process, you may also need a longer trial period.

The best way to know for sure is to test it out. See how your trial users react and adjust based on your conversion data.

If you’re seeing a high conversion rate, you may want to shorten the trial period. And if you’re not seeing as many conversions as you’d like, you may need to give users more time.

 

Focus On Activations, Not Signups

 

A common mistake SaaS companies make is to focus on free trial signups instead of activations.

In other words, they’re more concerned with getting people to start the free trial than actually using the product.

But if you want people to convert into paying customers, you need to focus on activations.

After all, it doesn’t matter how many people sign up for your free trial if they never actually use it.

Aside from providing a seamless onboarding process, you can increase your activation rate by delivering a personalized user experience.

For example, you can send new users a welcome email with customized content based on their specific needs. You might also want to automate it with a drip campaign.

What’s more, you can also segment your user base and target them with different types of content or special offers.

The key is to make sure each free trial user feels like they’re getting a personalized experience that’s tailored just for them.

 

Use Customer Usage Data To Personalize Your Paid Plan Offer

 

Your free trial users can provide valuable insights into which features of your product they find most valuable.

This information can help you close more deals and get people to upgrade to your paid plans.

For example, let’s say you have a free trial user that mostly uses two or three particular features. When you offer your paid plans, you may want to focus on those particular features as a selling point to them.

What’s more, tracking usage data can help you offer a paid plan with the best timing.

You see, the best time to offer them a paid plan is right at the moment when they experience the value of your SaaS product. AKA the “a-ha!” moment.

If you wait too long, they may forget why they loved your product in the first place. But if you offer it too soon, they may not be ready to commit.

It’s all about striking while the iron is hot. And customer usage data can help you do just that.

 

Make The Upgrade Process Seamless

 

When a free trial user is ready to convert into a paying customer, you want the upgrade process to be as seamless as possible.

Ideally, they should be able to upgrade with just a few clicks.

And if you’re collecting credit card information upfront, you can even automate the process so they don’t have to input their payment details again.

The goal is to make it as easy and frictionless as possible for them to upgrade.

If you make it too difficult, they may get frustrated and decide not to convert after all.

 

Retarget Trial Users That Didn’t Convert

 

Just because a free trial user didn’t convert into a paying customer doesn’t mean they’re never going to.

In fact, many times all it takes is a little reminder.

That’s why you should consider retargeting trial users that didn’t convert with ads or emails.

For example, you could create a Facebook ad campaign specifically for people that started but didn’t finish your free trial.

Or you could send them an email with a special offer or discount to entice them to come back and give your product another try.

There’s no guarantee that they’ll convert the second time around. But it’s definitely worth a shot.

 

Final Thoughts On Offering A SaaS Free Trial

 

Offering a free trial can be a great way to increase conversion rates and get people to try your product.

But it doesn’t come without its risks and potential pitfalls.

The key is to make sure that free trial customers have a wonderful user experience from start to finish.

That includes a hassle-free signup process, sufficient user onboarding, an intuitive upgrade process, and a lot more.

If you do it right, offering a free trial will work wonders in bringing more customers and lowering your customer acquisition costs.

Want more guides to help you grow your SaaS business exponentially? Visit our blog here.

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Ken Moo