SaaS Conversion Rates from Free Trial

https://capitalandgrowth.org/questions/691/what-is-the-general-conversion-rate-from-free-tria.html?src=HN

by jkuria • 8 years ago

47 11 8 years ago

neutrinoq• 8 years ago

Stripe's recent article on SaaS has some great breakdowns on numbers as well: https://stripe.com/atlas/guides/business-of-saas

gcatalfamo• 8 years ago

The free to paid with CC is obviously skewed. If you have the commitment to signup trial with CC you are, statistically, much more committed to stay. What they don’t say is that the higher CVR of CC is balanced by less people signing up for trial in absolute numbers.

thisisit• 8 years ago

Additionally, the figures might also be missing people who forgot to cancel the subscription after the free trial is over.

flexie2• 8 years ago

When you take people's credit card details, and 60-70 percent of them regret the purchase / don't continue after the trial period ends, what do the credit card companies say about that?

patio11• 8 years ago

Two separate issues here:

Don't continue after the trial period ends. This is a successful transaction by the standards of everyone involved, right? The SaaS company successfully induced a user to try it. The user got free use of a product and decided against adopting it. The various parties that come under the heading "credit card companies" were all instrumental in facilitating commerce. The fact that no funds were actually captured is not maximally relevant to anyone here; no harm happened. This is like a user walking into Best Buy and walking out without buying anything; Best Buy is eagerly supportive of that, within reason.

Buyer's remorse is a real thing, but it is not the case that SaaS companies operating aboveboard have 60~70% of users regret their (actually charged) purchases.

Suppose that a particular customer is dissatisfied with a particular SaaS company. The first line of defense is very clear messaging around trial timelines, payment terms, etc; the company should avoid surprising anyone.

The second is likely the SaaS company fielding a CS inquiry from the customer. The overwhelming policy of SaaS companies in response to "I started a free trial and gave you my credit card to do so, and whoops seemed to have gone over by 2 weeks, but didn't actually use the software." would be some variant of a refund and (if they're smart) an offer to extend the trial.

The reason that SaaS companies have their finger on the refund button is that, in the event of them saying "Well, you agreed to these trial terms, and under our terms you do owe us the $29", the customer can open a dispute with the bank which issued their credit card. The bank has wide discretion on whether it wants to side with the person who is their customer (and generates revenue for them) or the SaaS company which is not their customer and doesn't generate revenue for them.

Most people who have run SaaS companies will tell you that disputes are unfun and that, even if one is in the right, one will not successfully win a huge percentage of them, and so one should comport one's affairs to generate as few of them as possible.

Note that any company which sustains a dispute rate of above 1% or so will get a very unfun series of decisions made about their business, by either the credit card brands or their credit card processor. You urgently do not want this to happen to your business.

SaaS businesses are not at a very high risk of this happening, particularly when well-operated. They generally sell a product which mostly works to customers who are relatively savvy, and as they have ongoing relationships with customers, their customers only need to go to the financial system for resolution in extremis.

There exist other businesses which are at substantially higher risk of running afoul of high dispute rates even if they do everything right.

Disclaimer: I work at Stripe and so the above is theoretically professionally relevant to me, but I'm speaking here mostly in my personal capacity, as someone who spent 10 years selling software over the Internet on no-card-required and card-required free trials.

hackathonguy• 8 years ago

The more interesting figure would be conversion rate from visitor to paying user, with cc required vs without cc required for the trial period.

Finbarr• 8 years ago

Also whether no cc/cc required has any bearing on churn patterns.

Harrisonbans• 8 years ago

The free to paid conversion rate with CC is really good and impressive.

jlebrech• 8 years ago

What about a 3rd technique, free to try, then offer a few more days free if they add cc.

SaaS Conversion Rates from Free Trial

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