KickoffLabs Blog:

SaaS lessons on trials accounts, discounts, & freeloaders

By Josh Ledgard

Nov 7th, 2011

Since we launched KickoffLabs we’ve been experimenting with the pricing/conversion formula. We aren’t done experimenting, but we’ve learned enough to share with the rest of you.

People decide that they are paying or not quickly.

Selling to them after they decided not to pay is almost not worth it. Our data has shown that if people don’t upgrade their KickoffLabs account after a couple of days they aren’t likely to. This means….

The first impressions are critical.

There need to be a hook and an “oh wow” moment in the first 5 minutes of experiencing your product. It has to be an “oh wow” moment that’s meaningful. Make someone say “I never could have X without your product.” and you have a good start.

A FREE TRIAL without a credit card is just FREE RISK for you.

You should make sure you are damn good at selling before you make this leap. In our experience it was easier to upsell from freemium than to convince people to enter their credit card for a service they feel like they are already using. NOTE: We’re only a couple of weeks into this experiment… but so far it hasn’t boosted either our initial conversion OR our paid conversions. In fact it’s lowered paid conversions.

The word TRIAL worked against us.

People were more averse to clicking on a button that had the word “TRIAL” than one that said Sign Up. My theory is that people are averse to the perceived commitment of a trial period or the email spam that comes with it.

Freeloaders don’t ever pay.

This is why I don’t like loss leader based businesses. If someone is intentionally looking for a FREE service or a severe discount then they are never going to shake that attitude. That means that if you got their contact information because they say “FREE” they are not very likely to buy another service from you later. You can lure people in with FREE… but you can’t make them pay.

You can compete against FREE.

But not based on technology alone. Competing against free means you have to provide a premium experience. People need to feel like you are holding their hand, putting out the best china, and making them a partner. Any tech can be copied in a week… your attitude and unique premium experience can’t be.

People WILL share your service… if you ask them.

Our data shows that most of our business has been referral based… but we got more referrals when we just blatantly asked for them. We ask on our dashboard, our discover page, and in our emails.

Don’t give discounts to people that say they “need” them. 

Every time a customer relationship started with them asking for a “special” discount I’ve regretted it. Those customers went on to become problems. Think about it… the relationship started out with them stating “$10.00 a month is too much… we can’t afford that for…”.  The requests only get crazier from there. I imagine these people go into Duncan Donuts and say “I need a pick-me-up, but $1.50 is highway robbery for coffee… How about you throw in a dozen donuts too.”

Give discounts to people that deserve them.

Every time I’ve given a discount to a startup weekend participant, someone building something cool, or someone working for a good cause it’s been worth it. These folks are grateful, refer friends, and create more business for you down the road.

We also take the Netflix approach… not happy with your service this month because of something that was our fault… don’t pay. Want a refund… get it.  These people… even some that ended up canceling their accounts anyway… ended up telling people about the good experience they had with us.

If no one complains your price is too low. 

I get worried when people pay, but no one emails to say the price is too high.  When I get a couple of “too much” comments a week I know that we have better numbers.  Not everyone will like that you’ve decided to build a business as opposed to an investor ponzi scheme… but some people will. :)

What have you learned?

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