Increasing Your SaaS Free Trial Conversion Rate

For the typical SaaS provider, a large amount of sales is online, meaning the SaaS Free Trial conversion rate directly correlates with revenue. Therefore, a poorly performing free trial directly translates to lower revenue. For many Cloud and SaaS providers, 100 percent of their clients undergo the Free Trial period as part of the sales process, yet for a majority of providers, their Free Trial is barely an afterthought. When creating a sales funnel, a SaaS provider will often analyze the following key steps: Visited Site >> Trial Sign-UP >> Activation >> Logged-In >> Billed.

Conversion is not just when the user shifts from free trial to paying user, it continues and perhaps never ends:

$10/mo. user>>$50/mo. user >>$100/mo. user, etc.

It is about adding more value to users and get them to pay for it.

Increasing Your SaaS Free Trial Conversion Rate

1. Provide a Usage-Based Plan

Software pricing models date back to when the sale of software was done in a onetime payment and perpetual license. Today, subscription-based pricing is the way to go. While subscription-based pricing is a great pricing model, many larger enterprises such as Amazon discovered that usage-based plans can help increase conversion rates. Several users don’t like the idea of subscribing and providing a single usage-based plan, on top of 2 to 3 subscription plans, is more likely to increase the number of times users reach for their credit cards to pay.

Sometimes the Customer Lifetime Value (CLV) can be lower for users who purchased a usage-based plan, even though you noticed that usage-based plans reduce churn. Apparently, usage-based plans is a good way to convert your free trial user into a paying user. And once the user has made the dreaded buying decision, it becomes much easier for you to up-sell and enclose her in a subscription based plan, which could end up in a long term commitment that you’re looking for.

2. Be Creative and Up-Sell Like a Real Professional

Most software businesses are constantly trying to get users to pay more. In up-selling, timing is very important. To get great results, send a promotion after segmenting and understanding your user’s usage; otherwise, no one will be interested. Sending a one-size-fits-all email to all users will generate poor outcome. For instance, after a user has grown and reached his monthly email cap, you can send them a promotion to upgrade because it will make more sense to him and chances are that he’ll upgrade.

To further optimize your up-sell initiatives, you can offer a different pricing package than what’s on your pricing page. For instance, a package of extra 2000 emails for an additional $5 dollars can get a user interested. Be creative and your up-sell offers will produce great results. Tailor packages to target users based on usage; don’t just offer discounts and coupons.

3. Conventional 3 Tiers of Subscription-based Plans are not enough

3 tiers of subscription-based plans cannot make you realize a substantial expansion and revenue. You have to cross-sell and up-sell. In addition, build your pricing page like several analytics tools, such as Keen.IO, are doing. Find out what your core feature is and cap its usage. Customers are always willing to pay more for extra value. Always think of ways to improve on your pricing by delivering more value for extra money.

4. Make Use of Coupons

While the above-mentioned methods for improving SaaS Free Trial conversion are much more superior, coupons don’t lag far behind. People love discounts just as much as they love free things. Therefore, make use of coupons and then up-sell where necessary.

5. Know How Much a User is Willing to Pay

Your pricing plays a key role in conversion; when the price is too high, users won’t buy, and when the price is too low, users question product quality. If you are entering a market that already has a few players, you can check your competitor’s pricing to understand how much users are willing to pay. But this is not enough, you have to understand how users value your software.

6. Get to Know How Much Users are Willing to Pay

Understand how much value your product is offering and learn to differentiate plans. Most customers don’t mind paying more for extra value.

7. Use Lifecycle Emails

A relevant, well-timed email can do wonders for your SaaS business. Getting an email from a founder approximately 30 minutes after a sign-up can make the difference between a disgruntled and a happy user. Additionally, an email to a SaaS user who have taken a while without signing in, offering discount/ help, can substantially lower churn. You can also use emails to up-sell.

8. Extend the Free Trial Period for the Heavy User Who Hasn’t Made a Buying Decision

If you have heavy users who are still using your SaaS free trial but have not made the buying decision, then you can extend their free trial period. Sometimes they just need more time, which you should be willing to provide. You are more likely to convert these users in the long run.

9. Speak to Your Users

To improve conversion, you have to speak to your users. Ask them why they didn’t buy and ask paying users why they haven’t upgraded yet. By understanding why your users are stuck in the sales funnel, you can be able to open bottlenecks up.

10. Build a Great Product

This is very important. You can follow all the other nine tips, but if your product sucks or doesn’t solve a real problem, then no matter what you do your conversion rate will be close to zero. Test your own product by using it and knowing that it can indeed solve the problem it is intended to solve.

Conclusion

For a SaaS business (or every other business), conversion rate is a key metric to track. You can track so many conversion rates along the marketing funnel, from the moment a user clicks on the link to get to your site, up to that moment s/he becomes a paying user. Most importantly, having a great product that solves real problems is where you should start before anything else. These tips can help you increase your SaaS Free Trial conversion rates, increase your revenue, and expand your SaaS business.

saas

Omri Erel
Omri is the Head of Demand Generation, as well as the Lead Author & Editor of the SaaSAddict Blog. Omri established the SaaSAddict blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to SaaS and cloud migration.
Omri Erel on sabtwitterOmri Erel on sablinkedinOmri Erel on sabgoogleOmri Erel on sabfacebook