Pros and Cons of Offering Free Trials in 2023
In today's competitive business landscape, companies are always on the lookout for effective marketing strategies to attract new customers and retain existing ones. One strategy that has gained popularity in recent years is offering free trials. Free trials provide potential customers with an opportunity to try a product or service before committing to a purchase.
However, like any marketing strategy, free trials have their pros and cons. In today’s article, we will take a closer look at the pros and cons of free trials in 2023, so that businesses can make informed decisions about whether to use this marketing strategy or not.
What Is a Free Trial?
A free trial is a marketing strategy that allows potential customers to try a product or service before making a financial commitment. In the context of SaaS, a free trial typically allows potential customers to use a software product for a limited period without paying any money.
During the free trial period, users have access to all the features of the software and can evaluate its performance and suitability for their needs.
The duration of a free trial can vary depending on the product or service being offered, but typically it lasts for 7-14 days. During this period, the user can test the software and evaluate its features and functionality.
After the trial period ends, the user has the option to purchase the software or service if they want to continue using it.
Free trials are popular in the software industry because they provide a low-risk way for potential customers to evaluate a product before making a purchase decision and there are many benefits of free trials. This can help to build trust and credibility with potential customers, as they can see for themselves how the software works and whether it meets their needs.
However, it's important to note that free trials can be costly for businesses to provide. They require investment in infrastructure, customer support, and marketing, and there is always a risk that potential customers will not convert to paying customers after the trial period ends.
As such, it's important to carefully consider the potential pros and cons of free trials before implementing them as part of your marketing strategy.
Pros of Providing a Free Trial
The benefits of free trials vary from businesses that use them as a marketing strategy. Here are some of the most common advantages:
1- Competitive Advantage
Providing a free trial can give your business a competitive edge by allowing potential customers to try out your product before they commit to purchasing it. If your competitors don't offer a free trial, you may be able to capture more customers who are hesitant to buy without trying.
A free trial can be a powerful marketing tool to attract new customers and differentiate your product from the competition.
2- Reduced Sales Friction
A free trial eliminates the need for a hard sell. When potential customers can try the product without making a financial commitment, they are more likely to convert to paying customers. This reduced sales friction can increase the number of sign-ups and ultimately drive revenue growth.
The free trial can also give the sales team an opportunity to demonstrate the value of the product to potential customers.
3- Reduced Signup/Lead Friction
A free trial can also reduce lead friction. When potential customers don't have to provide their credit card details upfront, they are more likely to sign up for the free trial. This can increase the number of leads in your sales funnel and ultimately lead to more sales.
By eliminating the friction associated with the signup process, more potential customers are likely to try the product.
4- Building Trust and Credibility
By offering a free trial, you are demonstrating confidence in your product. This can build trust and credibility with potential customers, which can lead to increased sales and customer loyalty. By allowing potential customers to try the product, they can assess the quality of the product, its features, and capabilities, and determine whether it meets their needs.
If the customer has a positive experience during the free trial, it can increase their trust in the product and lead to a greater likelihood of conversion.
5- Customer Feedback
A free trial can also provide valuable feedback from potential customers. You can use this feedback to improve your product and marketing messaging, ultimately leading to higher conversion rates and customer satisfaction. The feedback can help identify areas for improvement and also help to understand the user's perspective.
It can provide insight into how the product is being used and how it can be optimized for a better user experience.
Cons of Providing a Free Trial
While providing there are many benefits of free trials, there are also some potential drawbacks to consider. Below are some of the key cons of providing a free trial:
Offering a free trial can be expensive. You need to provide customer support during the trial period, and you may need to invest in additional infrastructure to handle the increased demand. Additionally, providing a free trial can require marketing spend to acquire new users, which can add to the overall cost.
2- Lower Conversion Rates
Despite the benefits of free trials, some users may not convert to paying customers. This can result in lower conversion rates and revenue than if you had charged upfront. Even if users enjoy the product during the trial, they may not be ready to commit to paying for it, especially if there are alternative free or cheaper solutions available.
3- Free Rider Problem
A free trial can attract users who are not your target market or who are not willing to pay for your product. These free riders can consume valuable resources without generating revenue for your business. The free trial can attract users who are not qualified to use the product, which can add to the support burden and reduce the ROI of the marketing spend.
4- Support Burden
A free trial can also increase the burden on your customer support team. Potential customers may have questions or require assistance during the trial period, which can be time-consuming for your team. This can be particularly true if there is a large influx of users during the trial period, which can be challenging to manage.
5- Short-Term Gains
A free trial may lead to short-term gains, but it may not be sustainable in the long term. You may need to invest in other marketing strategies to continue to drive revenue growth. The free trial may be effective in generating new leads and conversions initially, but it may not be sufficient to maintain long-term business growth.
To sum up; providing benefits of free trials can bring many improvements to your SaaS product, but it's essential to weigh the pros and cons carefully. A free trial can give you a competitive advantage, reduce sales friction and signup friction, build trust and credibility, and provide valuable customer feedback.
However, there are also potential costs and drawbacks to consider, such as the cost of providing support during the trial period, lower conversion rates, the free rider problem, and the potential short-term gains.
Before deciding whether to offer a free trial, it's essential to carefully consider your business goals and the needs of your target market. You should also ensure that the free trial is properly structured to attract the right users and minimize the risk of free riders.
You should also consider the cost and support burden of providing the free trial and the long-term sustainability of the strategy.
Overall, a free trial can be a powerful marketing tool when used correctly. By understanding the potential benefits of free trials, you can make an informed decision about whether it's the right strategy for your SaaS business.
If you decide to offer a free trial, be sure to track key metrics such as conversion rates, customer satisfaction, and revenue growth to evaluate the effectiveness of the strategy and make adjustments as needed.