The Complete Guide to Increasing Free Trial Conversion

Originally published on July 22, 2022

Increasing free trial conversions can lead to sustainable business growth. This guide includes five tips for optimizing conversions and turning free users into paying customers. It also highlights other models like freemium that you should consider as part of a product-led growth (PLG) strategy.

Offering a free trial, freemium version, or reverse trial of your product can prove to be an effective way to acquire, activate, and retain customers. The success of free trials and freemium product models depends on how customers adopt your product and your growth strategy.

Do free trials actually increase sales?

Most companies that use free trials say they account for up to 10% of new sales. But the free-trial-to-paid conversion rate can vary wildly across companies. It also depends on the type of free trial model.

Types of free trial models

For online products like web applications or mobile apps, there are two types of free trials: opt-in and opt-out trials.

• Opt-in free trials are when users gain access to the full product without giving their payment information.
• Opt-out trials are when users gain access to the full product by giving their payment information upfront.

There are also other models, like the freemium model, where users gain access to a free version of the product without time constraints, but it’s usually restricted in terms of feature sets. Free trials, on the other hand, are limited by time but often provide full functionality of the product or a specific feature.

Which of these models is best for increasing conversions and sales? The industry benchmarks for freemium model conversion rates are under 10%, while for opt-in free trials, they are up to 25%, and for opt-out free trials, up to 50%. However, there’s a lot to consider while deciding which model is better for your growth.

Choosing the best model for business growth

Before deciding on free trials and figuring out how to increase free trial conversion, think through which model is right for your product and company.

Gauge the amount of upfront friction to add

Depending on how much friction you add to your free product—whether it’s collecting payment upfront or limiting exposure to premium features—you could be trading off user growth with a higher free-trial-to-paid conversion rate. Basically, if you add more friction upfront, you might not see a high level of top-of-funnel user growth, but you might see higher conversion.

Consider the time frame and metric used

The time frame and metric that you use to evaluate the success of your free product strategy will also impact the model you choose. At Amplitude, we recommend you think about your growth strategy on a longer time horizon, rather than optimizing your free trials for short-term revenue.

Evaluate user response to free trial models

There are several reasons why free trials may not actually drive incremental sales. For example, the users you acquire may not be the target customers for your product. Or perhaps a poor onboarding experience fails to demonstrate value and quickly bring customers to the “aha” moment. Or customers might not see the return on investment (ROI) during the trial and find the price for the paid plan too high for the value (or lack thereof) they received.

Select a model well-suited for your growth strategy

Whether free trials actually increase sales depends on the design and execution of the free trial, as well as the user’s needs. We can’t make a blanket statement about whether it will work for every business, but as a prerequisite, your company should first have a product-led growth strategy. Without that high-level strategy alignment and buy-in, your efforts will be misaligned with the organization’s short-term goals, resulting in suboptimal design and execution.

How customers perceive free trials vs. paid trials

If you optimize for long-term growth and market share gain, free trials are often the preferred model. Free trials offer a low-cost and low-friction experience for potential users to test a product and instill confidence in a purchasing decision, ultimately driving user growth and product adoption.

Paid trials might be better for companies that prioritize direct monetization, where a paid trial is the norm in the industry. They might also be better if the customer acquisition cost (CAC) is too high to offer the trial for free—for example, if the product is not fully self-service and the company offers some human services with the trial.

One caveat is that even if a paid trial is the norm in your industry and your customers have a high willingness to pay, it’s pretty easy for a competitor to be aggressive in offering a free trial and taking away market share. In addition, we recommend teams think about measuring the impact of their product trial initiatives on a long-term time frame, rather than short-term.

It’s important to decide whether to go with a free trial vs. paid trial by considering:

• Who you are trying to attract with a trial strategy. Understand your customers’ willingness to pay in your target segment, and then pick the right strategy for them.
• Your long-term growth strategy. How much growth are you hoping a trial would unlock for your business? If you have aggressive user growth targets, maybe offering a paid-only trial doesn’t make sense.
• They are not mutually exclusive. In some companies, you could have both and target different customer segments that have different needs (e.g., small and medium-sized businesses versus enterprises)—depending on how they want to trial your product.

How to increase free trial conversion rates

When you have a freemium or free trial product, converting free trial users to paying customers takes some work to get right.

1. Make it easy to use the product during the free trial

You can increase the conversion rate from free trials by first making your product experience more intuitive. Make it possible for a user to get to their “aha” moment and form a habit without relying on non-product levers like customer support and customer success resources. Some steps to optimizing the product experience could include:

• Use product analytics tools like Amplitude Analytics to analyze the customer journey. Understand product usage and adoption and see what your most successful customers look like.
• Watch screen recordings and session replays to learn where users are getting stuck. Take steps to smooth out those points of friction.
• Educate your audience with lifecycle marketing, educational videos, or guided product tours to show them the value of using your product while marketing the value of paid features.

For example, at Amplitude, the growth team worked on improving one of the highest friction steps in the onboarding flow: sending data into Amplitude. We fixed this by introducing a redesigned data sources page.

Previously, by the end of our onboarding flow, users landed on a blank settings page and needed to find an external link to the developer docs. The new data source page clearly lays out all the ways customers can send data through Amplitude’s software development kits (SDKs) or third-party integrations.

Our users can now quickly figure out which source applies to them and collaborate with their team members to set up Amplitude on day one. This change significantly reduced user friction and made it easier to use our product.

2. Make your core features low-friction to build a habit around

If you notice your product has certain features that are used more than others at a high frequency, ensure there’s low friction to activate them and help users overcome the cold start problem.

Take Slack as an example. It has an excellent onboarding flow built to get new users familiar with the concept of channels and have them join existing micro-communities in a workspace. When a new user first joins Slack, they are automatically added to several public channels and encouraged to send a message to the Slack bot in a safe environment. This shortcuts the discovery process it would have taken for a new user to discover all the existing channels and figure out which ones are relevant to them. It also gets them to start forming the habit of messaging others on the platform.

3. Figure out the right time frame your users need to form that habit

Figure out the ideal length of time for users to build a habit around the core use case in your product and offer the trial for that amount of time. If the free trial is too long, you unnecessarily delay monetization. If the free trial is too short, users may not get a chance to experience the “aha” moment fully.

The distribution of timing for habit formation can be determined with product usage data from your paying customers. However, it’s crucial to experiment with different trial lengths to find the time frame for your particular situation.

For instance, Dropbox figured out the ideal length of time for a free trial is 30 days for its business products. Its rationale behind offering it for 30 days might be:

• It has a monthly subscription model for its paid plan, so offering a 30-day trial period makes sense for users to have time to use the core features more than once.
• The core use case around file storage takes more than one week to form a habit.
• It makes the trial term consistent across products so that it’s easier to bundle. It can bundle two of its products into a 30-day trial.
• It may have tested many different versions (15, 30, or more days) and found 30 days to perform the best.

Simply offering the product for the right time frame will help optimize free trial conversion and revenue.

4. Personalize outreach during the free trial

Leverage different ways to take a pulse on where customers are in their journey to figure out when and how to reach out. Analyze product usage data to segment customers who haven’t activated, those who have activated but failed to form a habit, or those who are power users and exhibit the types of behaviors you typically see from customers that have upgraded. Then determine whether you should offer users self-service help resources, follow up with a sales call, or send out a survey to understand their needs better.

Often, following up with trial users right after they signed up is not the right strategy because these users haven’t even seen and tried your product or gotten any value. For many PLG companies (including Amplitude), there’s thoughtful design around lifecycle marketing, activation support, and sales touches to the right users at the right time.

5. Build a product-led sales strategy

Who are your best and highest lifetime value (LTV) customers? Even with a fully self-service free trial experience—users can checkout and upgrade with their credit cards—there is still a benefit to adding in sales touches for your highest LTV accounts on the free plan. To do that, you first need to leverage account and product usage data to figure out the right attributes that indicate a customer is more suited for a sales process vs. self-service. You might need to work with your data team to build a PQA (product qualified account) model to predict those customers.

Get this data in the hands of your sales team and maximize potential contract value from your most valuable customers. You will also improve collaboration between product and sales by operationalizing this process and aligning on shared goals. Most product-led companies need a product-led sales strategy to maximize value from their free trial offering.

References

• 8 Proven Strategies for Converting Free Trial Users to Paying Customers. Databox
• 8 Strategies for Converting Free Trials Users into Paying Customers. Fast Spring