Turn Your Free Trial into a Growth Machine

Let’s start simple. What percentage of your revenue comes through a Free Trial?

For many SaaS companies, it’s above 75%.

But, here’s the real question – what percent of your Free Trials become paying customers?

If you swallowed hard, cringed or had to guess your conversion rate, listen up!

Most Free Trials are under-optimized and seen as nothing more than “a box on a flow chart.” Since they’re not optimized, conversion rates are horrible and companies move on to improving other customer acquisition levers.

It’s time for this to change. Give your Free Trials a little TLC and unlock the biggest growth lever sitting right under your nose. Think about it… increase your conversion to paid customers from 5% to 10% and you’ve doubled revenue. The best part – with a little work most SaaS companies can easily improve their free-to-paid (F2P) conversion rate by at least 50%. Not to mention the positive impact on retention and CAC.

I want to touch on three major pillars of your Free Trial you should start with when looking for areas to optimize. But I don’t want to be one of those people who tells you where to look and leaves out the juicy actionable nuggets. So I also tell you what to look for and give you templates to hit the ground running. Use these as your framework to find areas of improvement.

Tease: I’ll be going into A LOT more depth on each of these areas. Wanna be along for the ride? Get every tip in your inbox

Acquisition Channels

Every journey starts with a first step and acquisition channels is where our journey begins. For the purposes of this post, we’re not going to take a deep dive into customer acquisition. Instead, we are going to answer two questions:

Who is our ideal customer?
What are our F2P conversion rates per channel?

Once you’re armed with this information, we can define what channels to double down on and new channels to test.

Developing Your Ideal Customer Profile

Your Ideal Customer Profile is the guiding light for your acquisition programs. Even if you already built your ideal profile, dust off those old PowerPoint decks or Google Docs and walk through this exercise. I promise, it will be worth it. I suggest companies go through this process every year to make sure you’re profile is up-to-date and accurate. As your product adapts and changes, so does your audience. Make sure your ICP is aligned throughout this lifecycle.

[Innovation Adoption Lifecycle]

Ideal Customer Profiles are unique to each company. It should answer what the problem is and who you’re solution for. Here’s a set of questions your ICP will be developed around:

What problem are you solving for?
Who is your customer? Be specific.
How does this problem impact your customer?
Will your product solve their problem? Be honest.
Is your customer a decision-maker?
Do they have authority to purchase?

Now we’re rolling and you have the backbone of your ICP. Notice that this is a “customer” profile, not “customers.” This is vitally important. Do not try to broaden you profile and fit a variety of customers. You’ll miss you’re true target.

I’m not reinventing the wheel here. There are a ton of resources out there to help you build out your profile. By far, my favorite is Lincoln Murphy’s Ideal Customer Profile Framework. He goes into a ton of depth and even gives you a sweet spreadsheet to build your profile.

What to look for – once you’re finished, you should be able to clearly state (in one sentence) – who your customer is, what’s their problem and how your product solves this problem.

Free-to-paid conversion rates per channel

I have to admit, this is one of my favorite metrics to track. A lot of companies track they’re F2P conversion rate, but not enough track this by channel. If you want to get more detailed, track your F2P conversions by channel and campaign. This will give you a TON insights. For today, we’re going to stick with channel.

QQ – Do you track your F2P conversion rates by channel?

It’s ok if you don’t, here’s a spreadsheet to start dashboard today.

Software like Kissmetrics or Mixpanel can do this reporting for you. Considering, you may not have these tools, lets get up close and personal with the data in Excel.

Link text

This spread sheet highlights a few key areas you should look at on a regular basis:

Website Visitors to Free Trial Signup – How well is your website converting visitors into Free Trials

Free Trial Signups by Channel – Shows you what channel is filling your Free Trial funnel.

Month-over-Month F2P Conversion Rate by Channel – Historical overview of how each channel is converting over time. This gives you a sense of how efficient these channels are (more on efficiency in a second).

Month Recurring Revenue Generated by Channel – Conversions and revenue are not the same thing. So don’t treat them the same. Isolate MRR by channel to see what is contributing to the bottom line.

F2P Customers by Channel – As an acquisition engine, segmenting F2P customers by channel pays huge dividends later one in the lifecycle. Not to jump too far ahead, but we’ll get into Lifetime Value and Retention in another post and this information is crucial.

F2P Sales Efficiency by Channel – Move beyond conversion rate and MRR. Get into the REAL performance of the campaign and measure your ROI by channel.

This dashboard will get you started off on the right foot. You’ve just scratch the surface on measuring acquisition channels. Next steps – have clear insight all of the way through your Free Trial funnel by measuring retention and lifetime value by channel.

Pro Tip – break your cohorts down and look at monthly conversion rates by week to see trends on when people convert during their Free Trial. (This is assuming you’re not taking a credit card upfront)

What to look for – identify channel trends. What is your best converting channel? Is it generating the most MRR? Which channels are the most efficient?

Sales Strategy

Caution: Hot topic!

There are many different philosophies on Free Trial sales strategy. I’m not going to reveal my opinion (yet!). I’m going to explain some variations and allow you to decide which one is best for you. Defining a strategy is not easy and you won’t get it right the first time.

Broadly, SaaS companies choose a Self-Service or High-Touch sales model. I like to throw a third strategy in the mix. Let me layout each strategy for you to access what’s right for you:

Self-Service: This may sound obvious, but self-service is a model largely absent of Sales or Success resources. The goal is to use in-app onboarding and marketing automation to convert Free Trials to paid customers. You may want to think about this strategy i your:
- Product is not overly complex and users can get up and running without the assistance
- ICP is capable of purchasing your product
- Pricing tiers are clear
- Competitive environment is weak
- Sales force is small
High-Touch: Think Sales supported. Most companies that employ this strategy because there’s often a consultative sale or customers need support implementing the product. This is for you if:
- Support is need to get users to see real value
- ICP needs to gain buy-in from multiple stakeholders before purchasing
- Pricing is complex
- Competitive environment is strong
- Sales for is large
Hybrid: This is tough to be prescriptive with. Often times, this is used when a product can convert trials to paid customers with Self-Service, but you’re leaving money on the table without introducing Sales people into the process. To accomplish a hybrid sales strategy, run the program as Self-Service, but selectively pass customers who fit a particular profile onto the Sales team. Use both demographic and Free Trial usage data to determine who should be routed to the sales team.

Note: I made some generalizations here. There are ALWAYS exceptions and I would encourage you to think long and hard about how you can provide the best experience.

What to look for: use the criteria above as a starting point, but use trial usage data and conversion rates to determine if the sales strategy is right for your business.

Engagement

Engagement will depend on your sales strategy, but no matter what you choose make sure your engagement is relevant and provides value. It’s 2015 and you know what actions users have taken in their trial, what pages they’ve visited, emails opened, links click, etc. Use this information!!

The biggest opportunities you have to improve engagement are:

Inside your product
Email

In-app Onboarding

Email Nurturing

Sales Strategy

Caution: Hot topic!

Broadly, SaaS companies choose a Self-Service or High-Touch sales model. I like to throw a third strategy in the mix. Let me layout each strategy for you to access what’s right for you:

Self-Service: This may sound obvious, but self-service is a model largely absent of Sales or Success resources. The goal is to use in-app onboarding and marketing automation to convert Free Trials to paid customers. You may want to think about this strategy i your:
- Product is not overly complex and users can get up and running without the assistance
- ICP is capable of purchasing your product
- Pricing tiers are clear
- Competitive environment is weak
- Sales force is small
High-Touch: Think Sales supported. Most companies that employ this strategy because there’s often a consultative sale or customers need support implementing the product. This is for you if:
- Support is need to get users to see real value
- ICP needs to gain buy-in from multiple stakeholders before purchasing
- Pricing is complex
- Competitive environment is strong
- Sales for is large
Hybrid: This is tough to be prescriptive with. Often times, this is used when a product can convert trials to paid customers with Self-Service, but you’re leaving money on the table without introducing Sales people into the process. To accomplish a hybrid sales strategy, run the program as Self-Service, but selectively pass customers who fit a particular profile onto the Sales team. Use both demographic and Free Trial usage data to determine who should be routed to the sales team.

Note: I made some generalizations here. There are ALWAYS exceptions and I would encourage you to think long and hard about how you can provide the best experience.

What to look for: use the criteria above as a starting point, but use trial usage data and conversion rates to determine if the sales strategy is right for your business.

Reporting (tee up future posts)