Trial Conversion Rate is the percentage of users who converted to a paid account after completing a trial period. This indicator, also known as the Free Trial to Paid Conversion Rate, reflects product value by counting the number of users who find the product valuable enough to pay for it. Trial Conversion Rates differ depending on the type of trial used.
But why do you need to track free trial conversion rates? It assists you in determining the viability of your product. A higher free trial conversion rate suggests a better fit for the product market and faster business growth. The statistic assists you in determining the type of free trial consumer most likely to convert to a paid membership. This allows you to target this prospective customer directly with your marketing campaigns for higher free trial conversion rates. Additionally, maintain track of your free trial conversion rate benchmarks to see where you stand compared to world-class SaaS competitors. However, it is crucial to note that the benchmarks frequently differ depending on the user acquisition model used.
Tracking your free trial conversion rate is vital since it provides a concrete approach to optimising your customer acquisition strategy.
Most software companies rely significantly on free trials to acquire customers. This is especially true for SaaS organisations, as consumers frequently come in or go through a free trial following an initial contact approach (think ads, news articles, or referrals). Tracking your free trial conversion rate might help determine which audiences to target. You may segment your trial conversion data to see which types of people convert to paid accounts at the highest rate and target them directly with your marketing efforts by segmenting your trial conversion data.
Types of user acquisition strategies and the benchmarks you should strive for:
Freemium is a two-tiered customer acquisition approach in which the SaaS company provides consumers with basic capabilities for free. When new users want to access additional features, they can subscribe to a paid subscription. Freemium often provides less functionality than a free trial, but there is no time limit. It’s a simple method that will entice any new user to try out your SaaS solution.
If done correctly, freemium users would likely subscribe to a paid subscription (with advanced capabilities) once they’ve had enough time to see if the product meets their demands. The opt-in free trial approach provides the prospective consumer full product access for a set period. The customer does not need to input their credit card information for this SaaS free trial approach, allowing them to enjoy the product right away. After the free trial, customers must provide their credit card information and upgrade to the paying plan.
The opt-out free trial approach necessitates consumers providing credit card information upfront to gain full access to the product during the trial time. A free trial subscription is typically charged if they do not cancel before the free trial time expires. This SaaS free trial might be successful or unsuccessful. As the credit card billing cycle is automated, businesses may see an unusually high conversion rate.
Even if the percentages are high, conversions may be the same or even lower than in an opt-in free trial. This is because the starting point for computing the percentage is much lower. You’ll get fewer signups in the beginning because many individuals are hesitant to submit their credit card information for a product they have yet to test or trust.
The hybrid strategy combines freemium and opt-in/opt-out free trial techniques. The free trial subscriber has complete access to the fully-featured product for a limited time. When the SaaS free trial period expires, they get unrestricted access to the freemium version. Users will have to become paid clients if they want full product access again.
Users are given a taste of the premium product experience to understand what they miss out on when the free trial expires.
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%.