Don't rely on free trials to bring in new clients.

Posted by Elijah on August 16th, 2022

Freebies are always appreciated. That's probably the reason why so many startups and even established companies frequently use free trials to grab consumers' attention and introduce them to new products. Free trials, however, frequently fail to turn visitors into paying ones. Customers obtained through free trials may be significantly less valuable than other customers, even when they do convert. According to our most recent research, the issue is that far too many free trial campaigns are designed to draw in new customers rather than persuade current ones to make larger purchases. If so, our research can assist marketers in determining the ideal time frame for free trials.

When free stuff works

We worked with a significant mobile phone provider in a developing market for our study, where average mobile data service usage was significantly lower than in a developed market. The company's marketing department offered 60,000 of their mobile phone service subscribers 60MB of free mobile data, which is equivalent to about an hour of low-resolution video streaming over the internet. Random selection was used to select the offer-receiving subscribers from a pool of users of smartphones and SMS services who had varying degrees of exposure to mobile data use, including non-users and heavy users.

We anticipated that after the campaign, non-users of mobile data would be more likely to take advantage of the offer and increase usage. To our surprise, it turned out that the low usage customers were largely unresponsive to the trial offer, and the campaign failed to encourage these customers to use the service more frequently. Although users who are accustomed to using a lot of data took advantage of the trial offer, we discovered that their data usage remained constant throughout the trial period. The customers who use a medium to high amount of data frequently make up our third group, and we discovered that after the campaign, their data usage increased. Finally, we discovered that peer effect is important. Some customers were more likely to take advantage of the offer when the business gave them the option to forward the free trial to peers (who were also existing customers).

Our research shows that free trial campaigns should purposefully target existing customers with medium to high usage levels for "experience" goods, such as vacation spots, movies, or new software, where value is only realised after consumption. According to our research, customers who have used these kinds of goods and services to some extent are more receptive to free-trial campaigns than non-users.

Consequences for marketing managers

Software companies frequently use the "freemium" model, which gives customers a free trial with restricted functionality, to market their products. Customers will need to pay to gain access to features or functions that are more advanced. Because free version users are unfamiliar with using the advanced features that are only available to paid users, these businesses frequently encounter difficulties in transitioning customers from the free version to the paid version. According to our research, software providers may find greater success by giving away or significantly discounting access to the premium version for a limited time. This will probably increase the utility of the product for trial users, encouraging them to later use the paid version.