A Founder’s Guide to Free Trials

Paula Alcalá
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My co-founder and I talk about Palabra’s revenue model about once a month. As our early SaaS product evolves and our core features shift, we take a few minutes to think if our revenue model still makes sense.

So far we’ve considered every pricing structure there is and tried a few of them before choosing a self-served opt-in free trial. Now, three months after we launched our self-served onboarding, we’re working to optimize our trial conversion.

The good news is since our tool helps other companies optimize their free trial journeys, we’ve learned a lot about what works.

So I thought I’d take this opportunity to share our lessons learned and thoughts for our strategy in a short guide.

Let’s get into it.

What there is to know about B2B free trials

As SaaS shifts into focusing on end-users, B2B companies like ours quickly adopt product-led strategies to grow. So I’ve talked to hundreds of founders using Free Tiers of Free Trials to put the product in front of customers and provide value as soon as possible.

Since Palabra is made to optimize core customer journeys (like trial conversion), I’d say Free Trials have been one of my biggest concerns for the last year. And even though every business is different, we are all following similar structures to get more paying and active users.

If you have free trials for your B2B business or are thinking about it, here are some things that we learned and I think you should know:

  • B2B Free Trials are a good idea for middle to low price products that require little setup. If made correctly, they allow employees to be confident about your product and suggest it to their bosses.
  • Free trials don’t make sense for every product. Most enterprise companies don’t even think about offering a free trial, since their growth is heavily sales-led. The same goes for complex and industry-specific products that require training and setup.
  • Free trials are not new users, they are prospective customers. Your free trial is the “consideration” part of the funnel. You should think about it as a funnel itself, and optimize it for conversion through testing and iteration.
  • For early-stage companies, free trials (and pricing structure as a whole) should be measured and improved often. Your goal is to make sure prospects can get value from your product before the trial ends.
  • Timing of free trials is important, but it’s ok to make an educated guess and iterate as you learn. The key is to find the quickest path to value in your product. If you reduce the steps it takes people to get to that useful feature, you’ll get more customers.

In Palabra, we chose to offer a Free Trial because we think our product should speak for itself. Since we’re aiming for an easy-to-use product, it shouldn’t require explanations or long setup costs.

But we quickly found that some prospects need lots of setup time (especially those that are not tracking user events) and don’t understand the product enough for the trial to be compelling.

So now we’re looking into best practices to improve it and here I’ll share what we’ve learned 👇

How to design a free trial for conversion

So we know Free Trials are part of the sales funnel and should be optimized for conversion. We also know we should get prospects to value before the trial ends. How do we do that?

🚀 Some questions to ask yourself

Free trials are the perfect opportunity to understand what’s most important for your business. What value means for your prospects and how they get there will be different depending on your product.

Lincoln Murphy from Sixteen Ventures has written about this a lot, and I’ve used suggestions like these to help Palabra customers build their customer journeys.

So here are some questions to ask yourself before designing your free trial journey:

  • Who are your most important customers or Ideal Customer Profile (ICP)?
  • Are your ICPs getting to your free trial? What do they usually do when they start?
  • What’s the problem your ICPs have that your product solves? What does value mean for you?
  • What steps do people have to take before using your product? Any setup or configuration?
  • What do they need to do to become engaged in your app? (this will usually be using your most important feature)
  • What do they need to do to become invested? (invite colleagues, connect integrations, etc.)

🚀 Activation

If you’ve read or talked about product-led growth, you’ve probably heard this word before. If not, I suggest checking out Growth 101 from Growth University, where Craig explains it simply and clearly.

Now that you know what value means for you and what people should do to become engaged and invested, this is what will help you get people there.

Activation is driving users to the action you wish them to take.

When it comes to Free Trials, activation means driving users to convert into paying customers.

Activation components can be triggered emails, onboarding calls, actions users should take within your product. Anything you’re doing to move people towards paying customers is part of your activation.

The most important thing to learn about activation is that those components should be connected, following a simple and logical path.

For your customers, taking the next step towards becoming a paying customer should be obvious.

To do that, you need to design your free trial to be that obvious. Think about every activation component you have and try to reduce it into a single obvious customer journey.

How to optimize a free trial for an early product

Best practices and benchmarks always seem to be too far off for early-stage founders like me. This is why I always try to translate best practices into MVP versions of them.

If you’re an early-stage company, I really recommend thinking about your trial conversion journey as a linear path.

Maybe there are many steps required for users to become active, or to predict engagement. I usually suggest choosing your most important one.

It’s much easier to optimize one linear funnel than multiple and combined flows. You can map the entire flow and then choose what your main Free Trial Journey will look like. Start small, focus, and then scale as it makes sense.

Here are some things to do to optimize your trial when you’re early.

It will probably look something like this:

  • Step 1: Signup. Pretty self-explanatory, it always starts here.
  • Step 2: Setup and onboarding. Any mandatory steps users should take before actually using your features. For Palabra this means connecting an integration and bringing their data to our platform. These should be cut down to the bare minimum, try to remove any unnecessary blockers.
  • Step 3: Use of key feature. People in this step will be those that got to see what you have to offer. This means prospects got to your feature at least once and will allow you to understand what happened afterward. For us, this means creating at least one customer journey with 2 steps.
  • [Optional] Step 4: Indicator of engagement. If you have a nice stream of users coming in, it’s a good idea to understand which of them are most active. This can be a repeated action through a period. Be careful though, because this can be tricky to track.
  • End goal: Pay for a subscription. Also obvious, this is your end goal with your free trial.

2. Track events

If possible, track each step with a single user action (click or page view).

Taking signup as an example, I would recommend tracking signup after users complete their information and get started. It might make sense to track when people click on “Get Started” on the landing page for marketing, but not for trial optimization.

We also usually recommend using Segment to track events, but starting as small as possible. Choose those 5-10 events that are key to conversion, and try to track them consistently.

There are also some considerations to have when tracking to make sure it’s reliable information, like trying to track from the back end.

3. Reach out to prospects manually at first

Automated email drip campaigns seem like a must-have for any self-served flow, but it’s not.

Don’t get me wrong, I think you should always reach out to customers (and automation is a good idea). But if you have about a dozen new users each week and are still figuring out what your logical activation path looks like, creating that automation can take you more time than it saves.

I’ve seen great companies start by reaching out manually. This gives them the flexibility to understand if each prospect is an ICP and make personalized suggestions that feel better from a customer perspective.

  • Use these manual processes to understand what your customer journey looks like, and implement automation after it’s obvious for you.

4. Optimize each step separately

Remember to design clear steps for customers to follow. It would be easier for us to improve conversion as a whole by improving each of them separately.

After you’ve tracked those key steps and have a couple of weeks of data in some sort of dashboard (Palabra for example 🙃), you’ll probably see where the biggest drop-off is. Then you can focus on that step and try to reduce it by making small changes to your product or communication. We managed huge improvements by changing the words we use on onboarding emails.

If there are no obvious drop-offs, just make an educated guess and start from there. As long as you’re taking it one step at a time, you’ll be able to predict what’s most important for your customers.

🚀 Final thoughts

If you’ve read previous posts I wrote, you’ll find I usually suggest taking small consistent steps towards improving your metrics and achieving your goals.

I think this is the only way of getting actual results. No hacks or case studies will allow you drastically improve your conversion rate. It takes time (and that’s ok).

We’re considering this while we build a product made for early-stage startups: less is usually more. This is why Palabra helps you build linear journeys to understand where each user is and what they need to move forward.

If you’re trying to improve your trial conversion rate, I recommend starting by tracking each step of your customer journey and seeing where your customers are usually getting stuck.

We have helped dozens of companies do this, and I’d love to help you as well. Want to book some time to chat with me?