We are in the middle of a massive shift in the way people try and buy software.
No longer are executives or purchasing teams in charge of what software to buy; the end-users are now the ones evaluating and choosing what software they think is best for their job, and they are not talking to any salespeople along the way.
Sales and marketing-led growth are on the decline, product-led growth (PLG) is booming and it's exploded the top-of-funnel for many product-led growth companies. Canva has more users than AirBnB and Robinhood combined.
One of the fundamental pillars used by PLG companies is free usage of the product, allowing anyone to try your product for free and convert them once they're hooked on your product.
Get it right and your business goes into hyper-growth. Get it wrong and you have lackluster revenue and you're left scratching your head why no one is willing to pay for your product.
The success of your company depends on how well you acquire and convert these customers inside of your product.
So what does getting it right look like and why are the common 7, 14, or 30-day trials probably the least efficient option, despite their popularity?
To explain why we need to take a look at how a new user converts into a paying customer that happily uses and pays for your product.
There are three steps any user you acquire needs to go through before they are happy to pay for your product.
When a user comes to your website, they first need to get set up to start using your product. They need to install your app, desktop software, or just register an account to start using your web-based software. This is called the Setup Moment.
After that comes the "aha" moment. This is the moment when your user experiences the value of the product for the first time. Not just from reading your marketing material but experiencing it themselves and seeing how it can improve their lives.
Getting your users through these two moments is already difficult enough, but if you want to retain users long-term and keep them as paying customers, they also need to use your product on a regular basis. This is what we call the habit moment; when the user has established a habit around using your product.
Engaged users are usually happy to pay for your product as they understand the value and use it regularly, but users that are only just getting set up or have used your product once or twice are more hesitant to pay.
A successful trial thus needs to guide users to the habit moment, but having an arbitrary time limit on your trial doesn't guarantee this happens as it might end before the user reaches this stage.
A Case Study in Ineffective Trials
Let's look at an example for a (great) piece of software that I recently became a paying customer of. Rewardful.
Rewardful promises "instant affiliate programs" for your software and they offer a 14-day free trial, sounds pretty good right?
Let's walk through a purchasing scenario together and see why the trial is pretty much useless. Let's say I'm a growth marketeer at a medium-sized SaaS company who wants to launch an affiliate program using Rewardful. I need to install it on a custom domain so I'll start on the Growth tier with a 14-day trial.
I set up the account and enter my credit card details, the trial starts now.
Unfortunately, I don't have the technical skills to implement it myself so I write up a ticket, it's discussed in our weekly team meeting and scheduled for our next sprint.
We're now already 50% of the way through our trial before we have reached the setup moment!
The work is completed quickly, it's tested by Q&A and prepared for the next weekly release.
After a week of waiting for an engineer to start on it, a week of working on it and testing it, and a week of getting it into production. The 14-day trial has expired and I have yet to get any value from the product.
See why a 14-day trial doesn't provide any benefit to the user here?
The trial expired even before the setup moment and so I was never even able to get to the AHA moment or to build a habit around using the product. I haven't been able to use it at all before the trial expired.
A sole venture or tiny startup might fit it all in in the first 2 weeks but no bigger company can. Bigger enterprises sometimes take months as multiple people need to sign off on things so by going with a limited-time trial, they also completely shut out any larger organization from their free tier.
A proper trial is based on product usage, not time.
Although a time trial sounds like a great idea on paper - you can sign up and start using the full product for free - we have just shown why it doesn't work in many scenarios.
The time limit is completely disconnected from the actual customer journey.
Having a timed trial shows a lack of understanding of how and when your customers are ready to pay. A trial should be tied to the actual usage of the product after a user has at the very least experienced the "aha" moment.
Imagine if Rewardful removed the time limit and instead allowed you to try any plan for free, but limited it to 5 affiliates.
In that hypothetical scenario, I can completely set it up in my product, invite affiliates, and these affiliates can sign up and generate revenue for me. At that point, I'll be hitting the limit and I'm asked to pay.
How likely it is I'm happy to pay $99 per month when the first 5 affiliates have generated more than $99 for my company? It's a no-brainer.
Knowing this, how do we set up a great trial experience for our users and make it more likely they'll convert to paying customers?
Better Trial Options
The goal of your freemium tier or trial is to remove all friction for new users to start using the product and understand the value your product offers them. This is not in any way tied to a 1 or 2-week limit but it's more sophisticated than that.
Give away a portion of your product for free and push users towards upgrading once they hit usage limits.
A few examples of this are:
- 2GB of storage on Dropbox's free tier
- 3 editable boards in Miro
- 25 videos on Loom's free plan
- 3 Figma and 3 FigJam files on Figma's free tier
You can take as long as needed to reach these limits and they are only hit by users who are using the product regularly and are therefore likely to both understand the value of the product and have a higher willingness to pay for it.
If your product is very heavily feature-based, you can layer on a reverse trial on top to make the freemium plan even more effective.
Reverse trials put every new user on a trial with unlimited usage but instead of ending it completely after a certain amount of time, they simply revert you to the limits of the free tier.
This works well for products that are heavily feature-based as it's difficult for users to experience the value of features if they are paid and because you remove all the friction of using them. Users can build habits right away on a paid offering and you don't have to push anyone to use a trial, every user participates in it.
Reverse trials have some similar limitations to time-based trials in that users need to experience the value in a limited amount of time. Therefore reverse trials work best if your product has a daily or weekly usage frequency, any longer than that and they might have gotten all the value they needed before they were asked to pay.
Reverse trials also are not recommended for companies with a high cost to serve as you might rack up costs on users who don't end up paying you, leading to a negative return on investment.
Another way to make your trials even more effective is to offer them multiple times.
Many companies believe that users will just abuse this but, if your trial is properly set up, that shouldn't be a big issue.
Why should you offer the same users multiple trials? There are many reasons.
Your product might have changed a lot in the past 6 or 12 months so it can make users reconsider it even if they didn't end up converting to customers during their last trial.
Your customer might be in a completely different position. They might have more budget, maybe they got promoted or moved companies and now are better positioned to make buying decisions.
The competitive landscape might have changed enough that a large group of potential users is now looking for alternatives.
You don't have to limit the trial to just a once-in-a-lifetime thing. Make sure it isn't abused but allow potential customers to try out your offering multiple times.
Which trial works best for your company depends entirely on your product but it's rarely a time-based trial. Find out how you can activate users and only introduce the friction of having to pay AFTER they understand the value of your product.
Of course, tying your business goals directly to customers' success is a more risky proposition. Gyms infamously make most of their revenue from people who don't go. But it could also be a really powerful growth loop to grow your company if executed the right way.