Product-led companies use free trials or freemiums to get more customers, and product managers and marketers work hard to understand the needs of their customers in order to offer the best trial experience. Yet some of those users still won’t convert from free trial to paid. If you’re a SaaS business that offers free trials or freemiums, this is likely one of your central questions: How do I help guarantee that users who started free will ultimately upgrade and later renew with a paid subscription?
In a recent webinar we hosted, InnerTrends Co-Founder and CEO Claudiu Murariu shared his secrets to this challenge. “The customer has to experience the promise of your product,” Claudiu emphasizes. And it’s your job to determine at what stage in the process is most important for them to experience that promise and ensure that they do so. The promise of your product is usually the headline on the home page of your website, the mission of your company, and it’s why your customers create an account in the first place.
After signing up for a free trial, the process of the free trial to paid account journey consists of four main steps:
- Creation of an account/beginning of the trial
- Trial limit/expiration
- Upgrade to a paid subscription
Ideally, the customer experiences the promise of your product early on in these stages, but the most important period to tackle, Claudiu says, is the stage after they create the account and before they meet the trial limit. That may be obvious. What is not so evident is that for most SaaS businesses, the promise needs to be reached by the user in the first hours or days after creating the account, and only rarely more than a week. Statistics show that 60 to 80% of users have already abandoned the trial well before the limit is reached, so it’s clear that this part of the process is key to long-term success.
Launching the onboarding process almost immediately, Claudiu emphasized, is the most effective way to get your customers to convert from a free trial to a paid subscription.“The onboarding process finishes when users experience the promise of your product for the first time,” he pointed out. Therefore, he continued, tackling the biggest blocker in the trial-to- paid funnel should be the highest priority of everyone in the company, from marketing to sales.
Sometimes the promise isn’t fulfilled until after the trial limit hits but before the upgrade, especially with SaaS businesses with long setup cycles, where the product does not offer instant gratification. In these scenarios, there are two options that can help keep them in the game:
- Encourage the user to upgrade to reach the promise
- Extend the trial period
Some customers will experience the promise of the product, yet they will not go for the paid version proactively. One option here would be to offer automatic trial-to-paid conversion, making it clear at the outset that users would be charged once the trial is over unless they cancel the subscription. This is a common practice but should be applied when you are confident this benefits the customer through a frictionless experience (no service interruption), and be prepared to get refund requests from those that are not willing to continue. Note that this option will qualify your prospects further, so expect fewer people (but those who are keener to try your product) to start the trial in the first place.
Another scenario Claudiu pointed out is when the promise isn’t reached until after the upgrade but before renewal. With this group, your key focus needs to be helping them experience the promise of the product, and this can be easily achieved with your customer success teams. “If they paid but didn’t experience the promise, go the old way, have your customer success team contact them, otherwise they will churn in 2 to 3 months, impacting your LTV.”
Claudiu introduced us to the InnerTrends tool, the Actionable Metrics Canvas, a wizard which can help businesses define their onboarding process and the key metrics around it. He walked us through a real-life example – video conferencing SaaS tool BlueJeans, showing the importance of reaching the promise in order to achieve upgrading and ultimately converting to a paid subscription.
The Actionable Metrics Canvas, he explained and demonstrated, helps product, marketing and executive teams to know what to focus on for tracking, measuring, and ultimately optimizing to convert more users to paid subscriptions.
And how to tackle low onboarding rates?
- Define the onboarding funnel.
What are the steps and technical requirements a user has to fulfill to experience the promise?
- Identify at which step you are losing users.
You will lose at least 10% at each step but there are usually one or more steps where your key blocker lies. Use a cohort funnel to determine which step that is and turn to data insights for answers: What are the differences between successful (completed onboarding process) and unsuccessful (did not complete onboarding) users? This will help you know what to highlight and what to downplay.
You will need to use an analytics tool – such as InnerTrends – to assist you with this area. The tool should help predict the point in the onboarding process that is most likely to result in the customer seeing the promise in the product.
- Experiment and tinker with your onboarding process to find what works.
This is where reaching the promise prompts the most users to complete the onboarding and will vary depending on the type of business.
For B2C, onboarding rates of 30 to 50% are considered very good; for B2B, that rate is 40 to 60%.
- The biggest blocker to getting users to convert from free to paid is not having them experience the promise of your product within the trial period.
- To measure that promise and see how many people never get to it, you have to, well, first define it.
- The promise is not defined by data but by the job your product is designed to do.
- Use data insights to understand where most users drop-off and what you need to do about it.
- Getting more than 50% of your trials to experience the promise of your product will give you a very healthy growth rate.
To see the entire webinar with Claudiu Murariu and learn more about how to tackle the biggest blocker to converting more trials into paid users, watch the full session here.