If you have a SaaS product, offering free trials is a great way to invite and impress customers with a cutting-edge product experience.
After all, who doesn’t love access to top-notch features for free?
And the end goal (and hope 🤞) is that your free trial user becomes a paid customer once the trial ends.
But how many of those free users actually end up paying?
Are you losing sleep over your conversion rates?
Well, you don’t have to!
In this article, we’ll discover what free trial conversion rates are, including the conversion benchmarks for the four customer acquisition models.
We’ll also highlight four vital reasons why free trial users churn and introduce you to a tool that can help skyrocket free trial conversion rates.
What Are Free Trial Conversion Rates?
Your free trial conversion rate is the percentage of users who become paid subscribers during or after your product’s free trial period.
To boost conversion rates, you need to give the free user a mindblowing customer experience – like guests at a seven-star resort. 💅💆
Yep, we’re talking about access to state-of-the-art features, support staff attending to all their needs, helpful directions wherever they go - the list goes on! 🤩
So how do you calculate this metric?
How Do You Calculate Free Trial Conversion Rates?
Free Trial Conversion Rate = No. of free trial users who converted / All free trial users x 100
If 150 free trial users signed up for your SaaS product and only 15 converted into paid customers at the end of the trial, your free trial conversion rate is 10%.
But why do you need to track free trial conversion rates?
- It helps you determine your product’s success potential. A higher free trial conversion rate indicates better product market fit and faster business growth.
- The metric helps you assess the type of free trial customer opting for the paid subscription at the highest rate.
This way, you can target this type of prospective customer directly with your marketing campaigns for better free trial conversion rates. And with tools like Toplyne, you can identify high-intent users and dedicate all your sales effort to only the most qualified leads.
Additionally, always keep tabs on your free trial conversion rate benchmarks to assess where you rank against world-class SaaS competitors.
However, it’s important to note that the benchmarks usually vary based on the user acquisition model used.
Let’s go over the four main types of customer acquisition models that your SaaS company can opt for (along with the conversion rate benchmarks for each).
Four Types of Customer Acquisition Models and Their Conversion Benchmarks
Here are four types of user acquisition strategies and the benchmarks you should strive for:
Freemium is a two-tiered customer acquisition model where the SaaS company offers basic features to users for free – wait for it – forever!
Any new user can upgrade to a paid plan when they wish to unlock advanced features.
Freemium typically gives users lesser functionality than a free trial, but it doesn’t have a time limit.
It's an easy strategy that attracts any new user to take your SaaS product out for a test drive.
If executed properly, freemium users will likely upgrade to a paid subscription (with advanced features) as they’ve tested the product long enough to know if it fits their needs.
Benchmarks for the freemium to paid conversion rate:
- Slack’s conversion rate was about 30% (2014).
- Dropbox's conversion rate was about 4% (2012).
- Evernote’s freemium to paid conversion rate was nearly 6%.
2. Opt-In Free Trial
The opt-in free trial model gives the prospective customer complete access to the product for a limited time.
The customer doesn’t have to enter their credit card details for this SaaS free trial model, letting them use the product immediately.
Customers are asked to submit their credit card information and upgrade to the paid plan AFTER the free trial period.
Time for some *ka-ching ka-ching*
Benchmarks for the opt-in free trial to paid conversion rate:
- Customer.io’s average conversion rate was about 8% (2014).
- Recapture.io’s opt-in free trial to paid conversion rate was about 25% (2016).
- The free trial conversion rate of Groove HQ was about 4.15%.
3. Opt-Out Free Trial
The opt-out free trial model requires users to share credit card information upfront for complete access to the product during the trial period.
Typically, a free trial subscriber is automatically charged if they don’t cancel before the free trial period ends.
Unsurprisingly, this SaaS free trial can either be a hit or miss.
Companies may witness an extremely high conversion rate as the credit card billing cycle is automated.
Alternatively, they may leave the paying customer with buyer’s remorse, leading to a barrage of angry tweets from the paid subscriber asking:
Benchmarks for the opt-out free trial to paid conversion rate:
- Moz converted about 56% of free users (2012).
- Totango (customer success software) surveyed nearly 100 SaaS companies to find an average conversion rate of 50%.
There’s a catch!
Even though percentages might be high, in absolute terms, the number of conversions might be the same or even less than in an opt-in free trial.
That’s because the base figure for calculating the percentage is far lower.
You will have fewer signups in the first place as many people are unwilling to share their credit card details for a product they haven’t tested or trusted yet.
So should you opt for an opt-in or opt-out free trial?
It’s like someone asking you to choose between chocolate fudge cake and hazelnut brownies. There's no wrong answer here. 😋
Both desserts can give you a sugar rush. But what are you in the mood for?
What type of free trial aligns with the needs of your product and company?
Hybrid is - you guessed it - a combination of the freemium and opt-in/opt-out free trial approaches.
Here, the free trial subscriber gets total access to the fully-featured product for a specific time. Once the SaaS free trial period ends, they are given access to the freemium version for an unlimited period.
If users want complete product access again, they’ll have to become paid customers.
Essentially, users are given a taste of the premium product experience, so they realize what they’re losing out on when the free trial period ends.
Companies like HubSpot and Adobe are known for implementing this model successfully.
Now that we know about the different types of trials and their average conversion rates, let’s explore why free trial users churn and ways to keep every potential customer around for the long haul.
Four Reasons Why Free Trial Users Churn and How to Stop it
Here are four reasons why free trial users churn and tips for conversion rate optimization:
1. Failure to Deliver Promised Value
When your product doesn’t deliver the value it promises in the marketing campaigns, it negatively impacts your free trial conversion rates.
Say your marketing resources claim that the product is suitable for non-coders.
If such a user persona discovers that your product’s UI is too complex or technical during the free trial, they might end up like this:
And they’ll most likely discontinue using your product.
Here, product usage analytics can help you out by letting you understand how users interact with your product.
For instance, if most users abandon the free trial midway, it indicates that something is hampering their progress. It may be a lack of guidance on how to use the product effectively or a lack of user-friendliness.
Based on this product usage data, your product team can implement developments or updates to make the user journey simpler and hassle-free.
SaaS companies can track and assess all this user data with Toplyne.
But more on that later!
To avoid disappointing customers, develop an intimate understanding of their needs.
And ensure that your product marketing emphasizes how you’ll solve users’ problems.
Once you have a clear idea of your customer's pain points, you can create a product that provides value to users and help them find long-term success with it.
2. Limited Self-Service Support Options
Customers often churn when they don’t get adequate support through blog posts, automated chatbots, and comprehensive knowledge bases.
Remember – it takes just one click to cancel a trial! 😐
Even after someone becomes a paid user, giving them everything they need to get the most out of your tool is important. That’s the best way to ensure the user remains engaged even after the free trial conversion.
Consider creating a detailed knowledge base that can provide quick solutions to users’ queries and act as the ultimate guide.
Provide chatbot support to resolve common user queries and engage with customers at more touch points along their journey. If you have the budget for a 24/7 dedicated customer support team, even better!
This way, the paid customer or the free trial user can find answers to all their queries and have a better user experience.
3. Poor Customer Onboarding Processes
Free trial users can’t properly commit to your product if the onboarding process lacks structure.
For example, with an unorganized onboarding process, you may overwhelm users by introducing them to too many product features simultaneously.
When too many things are screaming for your user's attention, they may end up screaming!
Bombarding them with features may frustrate your active user to the point where they don’t want to explore your product further.
You may fail to introduce them to your product’s unique selling points (USP).
To avoid this disaster, preempt any early points of frustration by having a well-tested and structured customer onboarding process. Make sure customers understand which key features will satisfy their needs and how to access them.
Slack, for example, uses tooltips to point users to key features like direct messages.
Check out some tips to impress your customers with a kick-ass product led onboarding experience.
4. Overpriced Features
If users feel your product’s pricing is exorbitant, they won’t stick around for the long haul (and that’s bad news in every universe).
Instead of chasing away every active user with expensive pricing plans, check how your competitors set their price points and what their packages offer.
But don’t base your pricing just on what they’re doing.
Instead, focus on your product’s USP and how your customers can benefit from it, and emphasize that.
Use product data to identify the most popular features amongst your free trial users and include advanced versions of those features in the paid plans.
People are highly motivated to pay for something they already find value in.
Looking for more ways to reduce customer churn?
Crush Churn and Boost Customer Retention with Toplyne
You can rely on Toplyne to help launch unique go-to-market (GTM) strategies to keep product-qualified leads engaged and happy!
The tool combines product usage data from your product analytics tools (Amplitude, Mixpanel, etc.) with your existing GTM apps to create different customer segments.
You can then target different user personas with different GTM strategies such as re-marketing, automated messaging, sales assist motion, and in-product nudges.
Here are the user personas you can choose from in Toplyne:
- New users: Users who have shown low engagement off late.
- Needs attention: Users with low engagement levels and showing early signs of churn.
- Hibernating users: Churned users who didn't derive value from the product.
- About to sleep: Old-time tourists who drop by your website once in a while and don't find any consistent value.
These user personas give you an idea about your product’s customer health score.
But wait, that’s not all!
Toplyne can also help you:
- Integrate with popular CRM tools (Salesforce, Hubspot) and product analytics infrastructures (Segment).
- Send every product qualified lead to your sales channel (email, Salesforce, Webhook, etc.)
- Craft an in-product tailored user experience that encourages any active user or paid user to invite more team members.
Companies like Canva, InVideo, and OpenPhone are already using Toplyne to improve their average conversion rate.
Win Brownie Points with Your Free Trial Users
Offering time-limited, no-cost, no-obligation test drives of your product reduces the need for aggressive sales tactics.
Typically, good news for your SaaS conversion rate!
But your free trial conversion rate won’t soar without a seamless onboarding experience, self-service options, and - most importantly - knowing which free trial user is most likely to convert.
Toplyne will pick out high-intent customers for you, while you keep doing what you’re best at - delivering a world-class user experience!
So what’s holding you back?
Sign up for Toplyne for free today to sky-rocket your SaaS conversion rate!