7 MAY 2019

Find the right balance and payment method for your free trials

POSTED UNDER Digital Goods Direct Carrier Billing Mobile Marketing Payments
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Krõõt Padrik

Content Marketing Specialist

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Free trials are a controversial topic – either you love them or you hate them, but you can’t live without them. Free trial abuse and churn due to asking credit card information are two sides of the same coin.

If you make them too easy to gain, people just abuse them. Asking for credit card information is no guarantee either. There are endless internet forums and blog posts that teach you to get unlimited free trials without or with a fake credit card.

If you make them too hard, you might end up losing potential clients who just want to get a taste of the service. There are endless solutions to every problem available online – why should the client commit to anything without testing it out first.

Why should you trust any of your sensitive information to a platform or service you haven’t even tried yet? That’s the whole point of free trial anyways, isn’t it – getting to know the service and building trust before opting into a commitment.

Free trial as a red flag

At the same time, free trials have gained a bad rep altogether. Free trials or “subscription traps” as they call it, have ended up on the radar of the US Better Business Bureau and the Federal Trade Commission. They went as far as calling free trials a hook to get consumer credit card information.

EU has also raised the question of the free trials legal grey zone. They’ve specifically brought out the consumer inertia reliant free trials in the cloud-based backup services, as well as video and music streaming services.

Consumer inertia reliant free trials is a business model that focuses on taking advantage of consumers’ inertia and overconfidence. The trader provides clear information on the terms of the free trial, but one of them is that by signing up for the trial, they are also signing up for transitioning to a paid subscription afterwards, unless they take the initiative to cancel before the end of the free trial period. Also the paid subscription is often automatically renewed unless the client takes the initiative to cancel it, taking advantage of the fact that many consumers will forget to cancel.

Even if the free trial flow isn’t set up maliciously, it can be a serious threat to reputation and customer satisfaction. Discovering that their card has been charged is obviously a bad experience for the customer. As that is not bad enough, it creates additional workload for the customer support.

Recently several tech giants have paid millions to settle class-action lawsuits for automatically renewing subscriptions without consumer consent. Payment companies are launching notification services themselves to warn people signing up for "free" trials when they are coming to an end.

Finding the right balance

It seems that both the users and the service providers can be quite cunning. Problematic marketing practices taint the entire business model, even though most free trials are in genuine interest of both the potential client and the merchant.

So how to bring back the trust and balance into those relationships?

Let’s take a look at the main purpose of free trials – it should showcase the content, offerings, functionality, and USPs to users and convert them into paying customers. Asking for payment information on the one hand helps identify the user and avoid trial abuse, on the other hand it allows a seamless billing experience after the trial runs out.

So the three main points to consider are 1) conversion, 2) identification and 3) comfort of the payment experience. In this light every service provider should ask themselves the following questions.

Does the trial actually help in conversion?

Compare your free trial offers to other offers and see if it actually makes a difference in conversion. If free trial brings you a bunch of subscribers but they don’t convert into paying customers, there’s really not much point into making the offers and providing the service for free.

Should you go all out in the free trial?

You don’t have to offer everything for free in the free trial. If your service can be divided into smaller chunks or layers, don’t give it out all at once but just enough to give a taste. The user should get benefit from using the free version but it’s okay to start billing them for your advanced features.

How long should the free trial be?

Not all trials have to be created equal. Offer different trials depending on the information the client is willing to give in return. For example a month long free trial for credit card users can mean a week long trial for carrier billing. But take into account how long it takes for the client to understand the value of the service and get used to the comfort. If the learning curve is longer, you can’t just give a brief taste as the user might not understand the product.

Should you ditch free trials altogether?

Instead of a free trial you can just make an offer the client can’t refuse. Asking for a payment method is justified if you actually bill the client – even if it’s just 99 cents for a month. Of course there’s a saying it’s better to be free than cheap. The super low price offer might become an anchor point for the customer and they keep looking for that next super-cheap offer. This makes abusing the trial unproportionally rewarding for the client and it doesn’t even feel like abusing since they’re paying for it, right?

And finally, have you considered alternative payment methods?

The free trial flow doesn’t have to be a choice between a credit card or nothing. The talk about credit card fraud has made people especially wary about protecting their card information. Alternative payment methods can seem a lot less threatening but get the job done just as well or even better.

For example carrier billing identifies the user by its mobile number. This means the personal data is protected and the client doesn’t have to insert any more information. At the same time people rarely change their mobile number, whereas they might change their name and definitely will change their credit card number. As credit cards expire regularly, that might cause involuntary churn when the client forgets to update their payment information. Carrier billing is also flexible enough to test different price points quickly and find the one that works.

To sum it all up, there’s no point on copying other business models’ since every business and client base is different. Test your heart out and find the right solution for you.

Modern direct carrier billing solutions support all the features that credit cards do (including discounts, free trials and their duration) with the added benefit of simplicity and bigger consumer reach. So if you want to upgrade your free trials with carrier billing, get in touch.

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