The Death of the Free Trial Offer?

Whether available for one week, one month, or even longer, free trials have traditionally been known as a helpful tool to encourage customers to ultimately purchase services in order to unlock additional functionality or continue accessing features. 

Right? 

Maybe. But the necessity of the free trial offer is beginning to shift, according to our latest Odin SMB Cloud Insights™ reports.  

In mature markets, the percentage of SMBs that purchase services after a free trial is decreasing, as the percentage of SMBs who purchase without a free trial is increasing at a double-digit rate. While this trend is not consistent worldwide, it appears that more mature markets are relying less on the typical free trial offer. 

For example, two of the most mature markets for internet services (United States and Germany) have experienced the following behavior:  

  • United States: 
    • Purchased without a free trial (2013-2014): 41%
    • Purchased without a free trial (2015): 52% (Increased 11 percentage points over one year) 
  • Germany: 
    • Purchased without a free trial (2013-2014): 23%
    • Purchased without a free trial (2015): 42% (Increased 19 percentage points over two years) 

However, less mature markets are still more likely to rely on a free trial to purchase services: 

  • Indonesia (2014):
    • Purchased after a free trial: 58%
    • Purchased without a free trial: 15%
  • Turkey (2014): 
    • Purchased after a free trial: 55%
    • Purchased without a free trial: 22%

One thing is certain – SMBs in mature markets are becoming more and more confident about purchasing a service without a free trial offer. As a service provider, this is a win-win. 

First, offering anything for free can lead to the item being perceived as less valuable. No-cost or low-cost trials also may encourage a “culture of free,” where the customer begins to believe that a free or low price is not only fair but expected. 

Second, this trend also shows that SMBs in mature markets are being persuaded to buy through other ways without needing to initially try services for free. While other factors are likely in play, here are a few that might be playing an increasingly larger role in helping SMBs pull the purchasing trigger: 

  • Maturity of products: Many services are no longer considered “new” in established markets; rather, these services are considered less risky because they have been accessible and in use for a number of years. 
  • Peer pressure: Whether through online reviews or by analyzing their competitors’ use of services, SMBs now have access to word-of-mouth and other resources that can help ease their hesitation. 
  • The “network effect:” This phenomenon occurs when the value of a network (such as those who use a certain technology) grows exponentially as the number of possible connections between users grows. While the number of connections often begins by climbing slowly, a boom in value happens after a certain number of people have joined the network or subscribed to the service.  

While it might be too early to call the time of death for the free trial, service providers should consider carefully if a free trial offer is truly necessary in their target market. 

To learn more about other trends taking place in the cloud services market – and how to use them to meet the evolving needs of your SMB customers – make sure to view the latest Odin SMB Cloud Insights™ reports. 

 

Posted on May 26, 2015 and filed under Industry & Market Insights.