Mar 2, 2011 by Jesse Kliza
As the popular adage goes: “There’s no such thing as a free lunch.” In SaaS – there’s no such thing as a free trial – there just isn’t.
As a SaaS provider, you pay for it one way or another, it’s a known, sunk cost of doing business and a part of your Customer Acquisition Cost (CAC). However, how large a part of your CAC it is depends on a variety of architectural and operational factors, as well as your maturity level in both areas.
Operationally
At a high level, a free trial process will typically look something like the following:
Now, let’s briefly break-down typical approaches in each of the three high-level operational phases:
Processing Trial Request
Manual – A prospect places a request with a sales rep or submits a request form via a SaaS provider’s website, which is then emailed to someone to process and pass along for provisioning.
Automated – A prospect submits a request form via a website, which is then automatically validated and the prospect receives some form of confirmation of their access (either the actual access, or a follow up email shortly thereafter).
Provisioning Trial Account
Manual – After the request is processed, someone (or worse yet, multiple people) are responsible for provisioning the trial account access. This can range from as manual as people coordinating with one another to setup a new machine or image, to someone clicking a few buttons to provision the account, and everything in between.
Automated – After the request is processed, the account is provisioned automatically, without any intervention. This could mean automatically spinning up a new VM image, creating their username, password, new DB and account, or simply granting them a subscription with proper entitlements to the application (same single DB as production customers … same everything).
Now, I know there will be people that say, “My application is far too complex to provide automated provisioning.” For a great breakdown of why automated provisioning will work in almost all scenarios, check out this post from Sinclair.
Transitioning Free Trial to Paid Account (with data if necessary)
Manual – The trial period is up and the customer wants to move to a paid account. They somehow communicate that to their SaaS provider, and in the worst-case-scenario they need to provision a brand new account, via one of the manual provisioning approaches listed above. Then, if the customer would like to keep their existing account data, customizations they’ve made, etc., their provider will need to migrate those to the newly provisioned account, as well.
Automated – The trial period is up, and best-case, the customer has been reminded a few times in advance of the trial period coming to a close (either via email, or somewhere in the product itself). They’ve decided they want to move to a paid account, so they simply choose the paid plan of their choice from a screen, input and submit their payment information, and they’re back in and using the product – same account, same data, same everything.
Of course, the entire process is much more costly if the end result is a negative outcome – where the user wants to shut their trial down, and isn’t interested in purchasing!
Architecturally
Depending on what level of resource allocation you have for each free trial account, this will, of course, factor into the cost of providing free trials to your users as well.
Physical Machine and Stack Per-Trial Customer – This extreme option entails setting up a physical box with a full application stack, associated licenses, etc., per trial account. This is the courses grained resource allocation.
Virtual Machine and Stack Per-Trial Customer – This entails spinning up a virtual machine image with a full application stack, associated licenses, etc., per trial account. In this option, there is hardware resource sharing, but each trial account requires its own virtual machine, and licensing costs.
Separate Database Per-Trial Customer – Here, there is hardware resource sharing, sharing of the application instance itself, but each trial account requires its own separate database.
Subscription to Single Instance, Co-mingled Data Application – Here, there is fine grained resource sharing, with each individual trial account having little to no incremental resource cost.
Once again, if the outcome of your free trial is not a customer win, having to manually reclaim physical hardware resources (in the most extreme case), each time a free trial ends is that much more costly.
Free trials are a great way to get the product you so lovingly promote in the hands of your potential customers and, if done right, gives them an experience that they can’t live without when the trial is about to end. Making this process as frictionless for you and your prospective customers, and cost effective as possible is a must. It won’t be “free,” but it CAN be pretty close.
I’d love to hear what others have done, and how they’ve managed to implement free trials successfully.
Jesse is responsible for the creation and execution of
Apprenda’s strategic marketing initiatives, generating demand and awareness, and evolving the company’s brand. Jesse draws from a strong background in Software as a Service, having served as Community Evangelist and Product Manager at SaaS ISV Autotask before joining Apprenda. Prior to Autotask, Jesse served as Director of Marketing at Eden Communications (acquired by Unicom Systems). Jesse holds a Bachelor’s Degree in Information Technology, with a focus in Neuroscience from Rensselaer Polytechnic Institute.
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