Extract Value From Your SaaS Free trials

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The HBR Sales and Marketing blog posted an article on Don’t Count on Free Trials to Win You Customers. But there are two caveats to this advice. First, it doesn’t apply well to SaaS software. Second, the focus on short-term sales causes it to miss the value to the product manager. Software is Different Than Chocolates I’ll start with why free trials of software behave differently than other “experiential” products. The most obvious difference is that the cost of goods for a SaaS trial is minimal compared to the box of chocolates shown above the article. This is especially true if the provider deletes the storage after the trial’s grace period ends. Moreover, among other options to generate leads, free trials have shown their worth.  Our own research, led by Jeff Chamberlain, showed that free trials are actually the best ways to generate marketing qualified leads (MQLs). This was particularly true for larger (revenue >$250m) software companies where 22% said it was the best call to action (just ahead of content assets and webinars). I recommend reading Jeff’s post on “Is Freemium the Right Path for You?” to learn how the freemium concept is not fundamentally unsound - it just needs tuning in many cases. Free Trials Provide Free Telemetry My second point is that free trial, freemium and pilot customers offer a good opportunity to hoover up usage information that can provide years’ worth of guidance on what features are valued or confusing in a few months. This telemetry extracts value from their free usage even if they do not convert to long-term customers. In the short term the value is for product managers.  The value to sales comes in the future as this free intel leads to products that better meet market needs. One caveat is that the type of customers that take advantage of a free trial may not be target customers, so the needs and behaviors they reveal may be not relevant. But many will be similar enough to the target audience to make the telemetry useful. Perhaps they are smaller than the target company size. So they are unlikely to buy, but they may still share other characteristics such as how well they can figure out how to use the software. If users keep entering two digit years instead of four, they’re letting you know of a UI deficiency that will affect your target market too.   Mining for telemetry gold is more art than science.  It requires the good judgement of the product manager to extract improvement ideas combined with the product marketer’s ability to test for their assumed target market characteristics. But if the product manager and marketer work together the usage information from free usage can be molded into a better product - and higher market share.
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