When it comes to feature adoption, free trials and product demos are two tactics that companies commonly use to acquire new users. But how do you decide which approach is more effective?

In this article, we’re going to go over the benefits of each approach as well as explore how using both free trials and demos can benefit most SaaS companies. Let’s get started!

Free trial and product demo overview

• Paid trials will often get fewer signups than a free trial but the conversion rates and ROI will be higher since you’re narrowing it down to qualified leads.
• A freemium approach may convert better if you have a complex product that a potential customer may not grasp right away.
• Combining free trials and demos can reduce the learning curve associated with complex software products.
• Free trials are only effective when you have a good onboarding process to go with them.
• Demos can help users identify which features they’d like to test out during the trial period.
• Using a self-serve onboarding model can increase your trial to paid conversion rate by ensuring free trial users spend their time testing out premium features instead of talking to support agents.
• Pre-recorded demos are often too generalized to appeal to customers with varying use cases so using live demos alongside trials as a differentiated approach can be well worth the time investment.
• Enterprise software is more suited to demos than a free trial since the buyers won’t be the end-user in most cases and may not have the technical background to appreciate the real value through testing alone.
• Taking the free trial approach can be more cost-effective than hiring a sales team to do demos for your software.
• You can use demos to upsell freemium users who didn’t choose a paid plan at the end of their trial.

What is a free trial?

Free trials give prospective customers a chance to test your product out with the hope that they turn into paying customers by subscribing to a paid version at the end of the limited period. SaaS companies can also run paid trials that focus on getting qualified leads at the cost of signup volume.

Ahrefs uses paid trials to let their users test out expensive plans at a reduced cost —thus helping them determine if it’s worth the full subscription price before spending their money upfront.

What is a free demo?

A free demo is different from a free trial in that it shows underserved customers the value they could get with your SaaS product.

The demo process tries to condense these selling points into a short presentation instead of letting users try the features out in their own time.

A SaaS demo can be pre-recorded or live depending on the target audience you’re focusing on.

Userpilot is an example of how live demos can ensure the product makes sense to potential buyers, showcase how it solves their problem, and influence their purchase decision.

Is free trial the same as freemium?

Freemium models differ from free trials because they have no time limit but tend to be more restrictive on which features users can try out. On the other hand, the more complex your product is, the longer users will need to spend on testing it, so freemium can be an attractive choice.

By letting users test your product out with no time limit, you give them more time to repeatedly use the platform whenever they need to complete a task. This habit formation coupled with the eventual AHA moment will encourage them to pay for full access.

Another way to nudge them towards a paid plan would be to implement some restrictions. Slack gets freemium users to upgrade through limitations like capping their chat history at 10,000 messages or not letting them use more than 10 integrations.

The differences between free trial vs. demo

Free trials let users learn by doing while demos take a show and tell approach.

Both approaches on their own can be effective at acquiring potential customers but using the two together may be the best solution for your SaaS business.

Do free trials alone work?

Lead generation gets potential customers on your landing pages but unless you help them experience the value of your product, these visitors will never pay for a subscription or reach out to your sales reps.

This is why a free trial can be so instrumental in improving your conversion rate.

Here are a few things to bear in mind:

• The efficacy of free trials will depend on your onboarding process. Giving leads immediate access to the product won’t do you much good if the SaaS product itself is hard to use and doesn’t offer guidance across every step of the user journey.
• Adding a microsurvey to the welcome screen can help you start the contextual onboarding experience earlier through customer segmentation. By personalizing the journey based on different use cases, you’ll create the shortest path to user activation.
• Using a self-serve model can increase your trial to paid conversion rate since users who aren’t very tech-savvy can just go to your help center for information instead of reaching out to a support agent whenever they require assistance.

Do demos alone work?

Certain software — particularly B2B SaaS products — are rather hard to test using a freemium model or free trial. In such scenarios, using a demo to present more value in a shorter amount of time can help generate more sales.

However, it’s important to realize that you can’t record one video and never have to worry about sales expenses again as some SaaS startups would have you believe. This approach of generalized recordings won’t work, as Mia from Chanty explains:

“We put a lot of time and effort into our Chanty demo as we want to provide the best user experience to all our potential and existing customers. The overall Chanty demo conversion rate over this period of time is 37.5%. Therefore, the demo definitely helped us in welcoming new clients to the Chanty family.”

Your sales team should put their effort into emphasizing the benefits of your SaaS product rather than explaining things like how to set up the dashboard to ensure you get the most out of these demos.

It’s also essential that your sales reps spend time listening to the user’s needs and creating a unique experience instead of becoming a human product tour. Mia delved deeper into how important it is to create this connection:

One thing that we believe determines the effectiveness of a demo is creating a unique experience. This is achieved through establishing a personal connection with the potential clients, and rather than just talking about all the features our product has to offer, we explain to them how Chanty can help them and their business needs.” -Mia Naumoska, Chief Marketing Officer at Chanty

When should you use both a free trial and a demo? Is a trial better than a demo?

Either approach can work but it depends on your product, audience, and how well you execute each respective tactic.

Using them together can be very beneficial since the demo will let users take note of the key features which they can then engage with when using the product for themselves.

In this way, demos can serve as the instruction manual that sends trial users in the right direction. Many SaaS companies, including Userpilot, take this approach because it helps customers fully understand the product before their trial ends.

However, every sale process is different so let’s look at a few factors that you should take into consideration.

Which target audience would prefer a free trial vs. demo?

A rule of thumb is that trials are most effective when you’re dealing with customers who are technically proficient enough to recognize the value of your product on their own. This is why you often see enterprise software taking the demo route since the buyer and decision-makers aren’t the end-user.

How easy-to-use is your product?

If your product is simple enough for self-serve onboarding to work then a free trial may suffice. That doesn’t mean you can’t add in a demo during the trial period to address any concerns they may have and emphasize the value of your software one last time to get them to convert.

How big is your sales team?

When you start scaling your company and generating more leads, you may have to upsize your sales team as well to keep up with demo requests. This will increase the customer acquisition cost and impact your LTV:CAC ratio.

Tip. you can still offset some of these costs and increase customer lifetime value by using expansion MRR strategies.

What growth stage is your company in?

Where you are in the SaaS company lifecycle will also play a role in which strategies to use:

• Pre-startup
• Startup
• Growth
• Maturity

Companies that have just released their minimum viable product would likely be better off with trials since feedback is crucial to the development process. Pre-recorded demos will also become outdated very fast in this stage.

In contrast, companies who are in the growth or maturity stage can justify the cost of live demos since it exposes their SaaS products to a wider audience which can grow their customer base over time. Furthermore, the revenue from existing users will cover the demo costs.

Identifying use cases for a free trial vs demo — and both

When to use a free trial only

If you have a simple product that users will be able to use to its full potential with in-app guidance alone then a free trial should be enough.

In fact, forcing a demo into the sales cycle of a simple product can actually just increase the amount of time it takes before a lead turns into a paying customer.

Monday.com is a prime example of letting users try out the straightforward features on their premium plans to get more acquisitions and upsells.

The company has used free trials and other tactics to become one of the fastest-growing SaaS companies with 75% YOY revenue growth in 2021.

When to use a demo only

Not having a free trial for your product could be detrimental to signups in most cases. The clear exception to this would be enterprise solutions as they often take a fairly long time to set up and implement.

Assigning your product team to handle installation isn’t viable if the use is yet to commit.

Instead, you can use a demo to help users realize the value your product holds before going through the lengthy installation process — or even to upsell them down the line.

If your sales team receives a lot of demo requests and can’t handle them all then pre-recorded demos might be a great alternative. With this approach, you can both go beyond acquiring new users and also help existing customers find value in the product.

When to use a free trial and then offer a demo

If your product doesn’t have a steep learning curve then you can start with a free trial and let your in-app guidance work its magic.

However, users with more complex needs or those exploring a plan with more features could benefit from a demo to ensure they don’t get stuck during the trial period.

ActiveCampaign is a great example of this. Since their email marketing automation software isn’t too hard to use, the free trial is enough for most of their users.

However, enterprise customers get to see the “request a demo” page on the main website as they tend to be less tech-savvy than other users — but have the highest potential to provide a large ROI!

When to use a demo and then trial

If you cater to multiple use cases and your signups need help getting started then putting a demo at the start of the user journey is definitely the right move.

You’ll get the chance to understand their needs and whether or not the features your platform offers will help with their JTBD (job-to-be-done.)

In the same way that paid trials filter traffic down to qualified leads, talking to people can accomplish the same goal.

There’s nothing wrong with sending potential customers to competitors if they aren’t a fit for your product.

This gains their trust and increases the odds that they’ll come back to you when they need the solution your product provides.

We guide potential customers to the best solution for the job whether that’s Userpilot or an alternative that might be more applicable to their needs.

What about a freemium model and a demo?

Companies that use a freemium business model need to minimize sales costs since a large portion of their user base won’t be paying for the software.

Using a pre-recorded demo can help you acquire new customers without hiring a sales team that will cut into your already-low profit margins.

The demo can also advertise premium features to encourage users to upgrade so you have more cash flow to spend on marketing. HubSpot uses personalized demos to get freemium customers with complex use cases to upgrade to plans that meet their specific needs, the perfect upsell.

In the newsletter pictured below, HubSpot finds the one acceptable exception to the rule against having two CTAs in a single email since both buttons target customers in the same stage of their user journey.

Conclusion: using both a free trial and demo can benefit your sales process

Many companies get caught up in the question of free trial or demo and whether a freemium model is worth it when, really, all these strategies have merit to them.

There are many scenarios where you can use both: a free trial to help users get acquainted with the UI before committing to a plan and a demo to highlight the key features of your product

Hybrid approaches can help users reach their AHA moment faster even if the product is complex since the demo is like a crash course while the trial is a hands-on test run

It’s like letting someone test out an RC helicopter but giving them an instruction manual first

However, there is no universal truth when it comes to this. Testing different methods out or even combining them is the best way to see what works for you and what’s not.

Are you ready to implement both trials and demos in your user acquisition strategy? Don’t forget to streamline onboarding as this will maximize conversions. Get a Userpilot demo today to see how a product adoption tool can benefit your next campaign!