The struggle is real.
I have witnessed too many SaaS startups think that their product will out-perform, out-rank and out-sell the competition and before they reach their dreams of achieving critical mass, they wind up closing their doors.
And it was not because their software wasn’t a great market fit or wasn’t priced right.
The primary reason they struggled is because they fell short of conveying real value when the prospect was emotionally engaged in evaluating their software.
What? We tested 7, 14, and 30 day free trials which gave them full access to everything and the conversion rate still fell way below our forecasts. Didn’t they have ample time to see just how much time and money it could save their entire company when used in the real world?
SaaS startups are guilty of getting too comfortable with their innovation and believe that their product will solve their pain faster and smoother than their competitor.
The free trial is the preview to show just how sleek the UI and navigation are. The free trial allows for a no-risk sneak preview where the only investment is the user’s time. The free trial is where everyone falls in love at first site and paves a convincing path for trialers to reach in their wallet and sign up for the paid version in droves.
For a minority of SaaS companies, this scenario may be true.
But for others, especially those that are first to market in an industry filled with laggards, or those that offer some not-so-obvious features, relying 100% on free trials, without discussing your prospects’ needs first, can lead to failure.
But Everyone Offers Free Trials…
I’m not here to bash free trials.
Free trials are used by 75% of SaaS companies today (source: Chargify) and I don’t see that trend slowing down any time soon.
I am here, however, to caution SaaS founders of the over-reliance of the free trial, and when it makes sense to spend the extra time and budget on salespeople who can demonstrate the product rather than be 100% reliant on a free trial.
In SaaS Free Trial: To Offer, or Not to Offer – That Is the Question, I cover when it’s appropriate to offer a free trial and when a demo is more suitable. I’m going to expand on the power of the demo and presume your product is more complex than the average $20/month (or less) offering.
For example, multiple departments may have specific needs to determine how useful your cloud-based solution is. Or, your solution may need some additional customizing and/or add-on modules rather than what’s offered right out of the box and a self-driven trial won’t do a good enough job of covering the whole story.
The Power of the Demo – And Where Sales Teams Go Wrong
The goal of the demo is not to demonstrate the product.
Too many SaaS sales teams get the goal of the demo wrong.
A demo goes above and beyond providing your prospect a 30 minute Show & Tell from a screenshare.
Sales teams often get caught up in the features, bells, and shiny whistles rather than focus on selling the outcome.
Rob Gonzalez, co-founder of Salsify, shares, “…the demo is a tool. It is a means to an end, not the end itself. It is a prop. It is the backdrop behind which the main event takes place, where the main event is the conversation.”
If the goal of the demo is to not demonstrate the product, then what’s the point?
The goals of the demo should be to:
- Earn the trust of the prospect (reveal that you’re both knowledgeable and authentic)
- Understand what problem the prospect is trying to solve (where does it hurt?)
- Determine if your product is the right fit that can solve most (or all) of their challenges
Notice I didn’t use the words “train”, “educate” or “show”.
If you carved out 30 minutes on a WebEx to demonstrate your latest version, and 25 of those 30 minutes were used to have genuine dialog about their current pain-points (and only 5 minutes were used to go through the motions of your software), then I congratulate you.
In that example, assuming the prospect was convinced that your aspirin was going to make most (or all) of their headache go away, then you increased the odds of closing the deal even if only 10% of the time was spent actually showing them how the software works.
But 5 minutes isn’t enough time to show everything. How could they be so convinced?
I’m so glad you asked. Remember, the demo isn’t meant to be a tutorial. This is where the free trial comes in. With more complex SaaS offerings, the demo is mightier than the free trial.
But what’s more powerful than the demo?
A hybrid of the two.
But SaaS shoppers expect a free trial and many don’t want to take the time to schedule a demo.
Fair point, we have seen this too. Read on…
How to Provide a Demo By Offering a Free Trial
I’ve encountered SaaS companies that have tested offering the “free trial” vs “get demo” call-to-action buttons (CTAs).
And the “free trial” CTA wins every time.
But I’m also a fervent believer that with more complex SaaS solutions, the software shopper doesn’t have a complete grasp of what they truly need.
They think they want to test drive the product completely on their own without any assistance. After all, technology nowadays has conditioned us to have a DIY mindset.
This is where the “interception” comes into play.
The interception (a.k.a. demo in disguise) is where you lead with a “Free Trial” and you will honor the free trial, but instead of handing over the keys immediately, you intercept it by requesting they get on a quick call so you can show them a few things to unleash the full power of the solution and go over examples on how it can fit their specific industry.
Use caution with the interception.
If the prospect gives you radio silence or is adamant they do not want to speak with a live person, then honor your commitment and hand the keys over before the hot lead turns cold.
When a Demo Is Not Needed
But our average revenue per user (ARPU) is too little to give everyone a demo.
If that’s the case, then your best bet may be to stick to the free trial and pray to the SaaS gods that your software is truly intuitive enough and the competition is not as fierce.
Or raise your price. Or go freemium. The beautiful thing in SaaS is that you have options.
If your product is truly intuitive enough (e.g. Calendly, Slack, Dropbox) and does not need extra handholding, then you may be able to do fine without the demo.
I strongly encourage you to roll out a strong email nurturing campaign, how-to videos, and a robust knowledge base that provides your new customers everything they need so they’ll stick around once the free trial is over.
Which model will land more customers?
There is no one-size-fits-all answer.
SaaS companies that rely purely on a free trial can overwhelm their prospects whenever there is a lot to grasp.
Throwing too much at your new users during their first impressions can lead to dismal conversion rates.
On the other hand, scheduling a 30 or 60 minute demo every time someone shows interest, can be extremely costly and sink margins before your next quarterly board meeting.
To incorporate the demo without breaking the bank, your price-per-user will need to support the expense of a knowledgeable sales team to help newcomers get acquainted with your brand and understand how you add value.
Your Next Customer Doesn’t Care About Features
If your offering comes with a steep learning curve, or perhaps is a new innovation in a particular industry, then make room in the budget for your sales reps to get to know your future-customer and earn their trust.
Empathize with your prospect and discuss real world scenarios on how your product will overcome the obstacles they’re facing.
Remember, your next customer isn’t interested in buying features.
They are buying your trust, and the convincing notion that your solution will solve their pain.