Free Trial vs Demo: The Winner Isn’t Who You Think It Is
As with any Free Trial vs Demo debate, the most immediate answer you can expect is “It depends.”
For us, it turned out that the best solution is…both. But don’t take my word for it. It may change. That’s the thing with ‘it depends’.
However, the business model that works for your product is ultimately chosen by your users. You will see which offer has the highest conversion rate through trial and error and learn how to build a better product for those customers.
That is why we would recommend a mix of both a Free Trial and a Demo sales model when you are an early-mid staged company.
In this ongoing series of ‘Free Trial Vs.’, we will go over the differences between a self-serve trial and demo sales models in SaaS. We will go over the benefits of either model and when is the right moment to commit. In the end, we will use ourselves as a case study for why sometimes you can have the best of both worlds.
What You Need To Know About Free Trial vs Demo
- What is the difference between self-serve trial and demo sales models in SaaS?
- What are the benefits of free trial vs demo and vice versa?
- When should SaaS businesses consider free trial vs demo?
- When should SaaS businesses consider demo vs trial?
- How about demo AND trial? (Userpilot Case-study)
- Wrapping up
- The benefits of a free trial vs demo are: learning about your user’s behavior at scale, immediate growth, and having the users realize the value on their own. Of course, with a little help from a great onboarding experience.
- The cons of a free trial are lower conversion rates due to abandonment, disinterest, or abuse.
- The benefits of a demo are: learning about your users at a human level, disqualifying bad leads, and higher conversion rates.
- The cons of demos: smaller amounts of people entering your product.
- The best time to choose a free trial over a demo is when you want to experiment. The product is accessible to anyone, and the target users don’t have many requirements.
- The best time to choose a demo is when your product is complex, and you are trying to sell in transactional and enterprise markets.
- At Userpilot we have found a nice balance between experimenting with a free trial offering and a demo sales model.
What is the difference between self-serve trial and demo sales models in SaaS?
- A self-serve trial is either a free trial or a freemium business model where the user gets to explore the product on their own and try before they buy.
- A demo sales model is when prospective customers have to sign up for a demo before using the product.
Self-serve trials and demos sales models have a lot in common with…bars. No intention to bring up any nostalgia for those locked in quarantine, but if you did go out, there were probably different bars you visited. There were probably also different bartenders.
A free trial is like the no-nonsense bartender that lets you figure everything out on your own. “Here are the features we have. All you need to do is give me your email address, and you can try anything you want.”
A demo is when salespeople are the gatekeepers to the product. They are like the bartender at an incredibly fancy establishment that tells you they only serve cocktails. “Here is a demo of everything possible with our product.”
Source: Userpilot.com- This is just the tip of the iceberg for the number of product experiences you can create. Schedule a free product consultation today!
A free-trial nets you a ton of users, but just like the no-nonsense bar, they will come in waves and just as quickly move on to the next one if they don’t see the value.
With a demo, you can qualify leads and make prospects see the value quicker, and they are better informed about the product they are consuming.
The benefits of each model will depend on which target audience connects best with your vision and the product you offer.
What are the benefits of free trial vs demo and vice versa?
Benefits of Free Trial
If we are talking about the benefits of a free trial, the first thing you have to begin with is the PQL or product qualified lead. These are leads that have signed up for your self-serve trial. They have the benefit of forming their own opinion about your product and experience the “Aha Moment” on their own.
Thus, they are much warmer than the majority of MQLs that will come into your pipeline. If you have users who convert, you can then actively monitor them and see their specific actions. This information makes it easier to remove any obstacles for other users, so everyone has a uniform and optimized user journey.
You can set your free trial duration based on how long it takes to reach your activation point. Ours, for example, is 14 days.
Depending on the user’s experience, if they perform your key actions and use your key features, they decide if they will buy.
Did your product increase the click rate on an email campaign or increase overall organic traffic? If it solves the job they are trying to get done, they can prove the value to themselves or their decision-makers and justify the costs.
If you can provide engaging onboarding, they may have an even higher conversion rate.
Cons of a Free Trial vs Demo
The problem with Free Trial or Freemium offerings is that they experience a large rate of abandonment, disinterest, or abuse.
There is a reason the average conversion rate for SaaS hovers around 14%. Many users are unable to answer the questions they have from a free trial alone. If they enter your product and it is overwhelming (likely because of an empty state), they will hit the road.
Life also gets busy, so it is common for people to sign up for a free trial, get distracted, and forget about the product. Even worse is if they come back and they don’t know where they left off. Although, a checklist usually mitigates that.
Then you have the cases where half of your userbase is comprised of users using multiple email addresses to continuously get free trials with no intention of buying. If that’s the case, a paid trial might be the solution.
If you find your product experiencing any of these issues, the first place to check is your onboarding. You will have to look into how you help users get from the activation point to using all of your key features and then using your secondary features.
These stages in their customer journey hinge on how well they understand your product, and there are a variety of tactics at your disposal.
However, if you still can’t find a straight answer, the next step would be to look into demo sales model.
Pros of Demos
Many companies have found that demos are the most effective for conversion. This model allows your users to spend the shortest amount of time researching your product while having most of their questions answered. Your sales team can determine if your product solves the prospect’s goals or not.
The beauty of actually having a conversation with someone in those 30 minutes is that they will reveal a lot more tailored information than an automatic email.
A demo is a great opportunity to discover your ideal user’s pain points, and then the account manager can address it accordingly. As much as we rely on automation these days, some important qualifying information will never come from a lead capture form.
Sometimes you want better-informed trial users that get the most out of trials. Not surprisingly, it turns out that most trial users convert higher when using chat support and engaging with customer success teams. For most B2B SaaS companies, demo close rates range between 20% and 50%.
If you sell to larger prospects, you also don’t want decision-makers to stumble into a free trial and feel lost.
So what are the negatives of demos?
Cons of Demos
Demos may not be for you if you have a new product or an established product trying to get lots of people to try a new membership offering.
It takes a lot more effort from your marketing and sales teams to try and get leads to sign up for a demo than a free trial. That leads to higher costs on your sales team to show all these new prospects around and the marketing team to create those assets.
You need the right people to execute these endeavors, which takes more budget and time before you actually have people inside the product. That means developing entire sales processes and marketing campaigns for a product only you and your team really understand if it works.
If you are early-stage, you will want to grow your userbase as fast as possible, so you’ll need people to actually try out your product or feature rather than depending on your sales process. If you are trying to meet growth goals, it puts a lot of pressure on your company to meet them through only a demo sign-up. Offering a free trial or even a beta can alleviate a lot of that stress.
Let’s dive into the right time to implement a free trial.
When should SaaS businesses consider free trial vs demos?
If you look at most SaaS companies that offered only a free trial when they started, like Canva, Airtable, or Notion, you will notice many similarities.
The first is that they were looking for the broadest number of users to start using their product so they could learn what worked and what didn’t. They tested product experiences at scale and saw what the ideal user behavior was.
Source: Canva.com-we all know that their activation point is looking at all the cat gifs you can make.
If you still don’t know where your activation point is or when is the exact moment that user reaches their “Aha moment,” then a free trial is a great way to discover them.
Plus, if you have a great onboarding experience, you can guide your users to these key moments and features. This can be done with an interactive walkthrough, personalized welcome modals, checklists, and email follow-up.
The product is easy to use
The second case when you don’t need a demo is when you have a simple self-serve product where demos aren’t necessary.
The user can successfully set-up and use the product without any outside intervention. The implementation time might just take a couple of minutes. There is a low-price point that creates very little friction in the buying process.
The target user isn’t complicated
The third case is when your target users understand the app and don’t have to be tech-experts to understand the product.
Well, the exception is if you don’t understand Excel – Air Table might be a nightmare to figure out. Regardless, their target audience is mostly one person or a single department that doesn’t require company-wide approval to purchase.
They aren’t security-sensitive products and don’t require top decision-makers’ approval. Most non-decision makers have the time to research various products and spend it on a free trial.
Ex: A marketing manager has the time to explore an email marketing software’s features and come to a conclusion if it will help them automate sending out promotional emails. They probably have access to the company card. All they have to do is let the CEO or their superior know that they will be purchasing it. There is little time to wait for their approval.
Now, let’s see when companies should implement a demo-sales model.
When should SaaS businesses consider demo vs free trial?
A report by Vainu from 2017 found that 37% of SaaS products use a demo-sales model or have it as an option. This number has likely increased in recent years. Why?
Well, it comes down to two reasons:
- Most software is complex
- You can achieve much more revenue through bigger deals and enterprise-level or mid-market customers.
Most Software is complex
As a result, many SaaS products have a ton of features and require assistance from a customer success manager or IT professional to get a new user set up.
If the user has to load a lot of data to understand how the product works- a self-service track may leave a new customer scratching their head.
So, many companies opt to go the demo route to answer any questions a prospect might have. Now there is no confusion when they enter the product; they understand the basic concepts and how it will help them get their job done. They also understand what makes your product different.
Mid-Market and Enterprise Customers have different requirements
The more complex your product is, the higher up-market you will have to go and the higher the value of the average contract. If you have an average ACV (Annual contract value) of more than $1K, a demo is the right choice. However, now you are dealing with a completely different market and a whole different breed of prospects.
This is either a transactional market for medium-sized companies or an enterprise market for large corporations. You will be talking with decision-makers who don’t want to do the work for these types of organizations. They don’t have time to figure out a product on their own and actually want a demo.
Well, the price point is higher, so it takes much more consideration from the buyer, and they need consensus from the entire company before they pull the trigger. As a result, the average sales-cycle for mid-market customers is 30 days.
An example of this is a product like Salesforce that will impact the organization as a whole. It requires integrations with the company’s tech stack and approval and coordination from the sales, marketing, and IT departments. It’s a huge time commitment on the whole company’s part. Buyers want to be absolutely certain when they are making that kind of an investment.
If your product hits either of those two main points, you probably already have a demo or should implement one immediately. Now, let’s look at our own use case and why experimenting with both options leads to better results.
How about demo AND free trial? (Userpilot case-study)
Regardless of your pricing or company size, people like to learn about products in different ways.
Some people are completely content to hit the “demo” button on your site and go through the process with a salesperson to learn more. Other buyers want to use their own time to see if the product solves their problem before speaking to anybody.
Surprisingly, Asana has 40% of its revenue from sales and 60% from self-service. Like us at Userpilot, they follow a more transactional model and try to accommodate both types of buyers.
It makes more sense to have this combination until you figure out what most of your customers prefer or continue to offer a healthy mix.
At Userpilot, we have always had the demo sales model because we are a more mid-market solution with a more complex product. It’s not a UX issue – it’s simply that digital adoption platforms like ours consist of several products catering to very different use cases. And having a chrome extension running on our users’ products did not exactly help make the onboarding easier. But once customers did onboard with the help of a Customer Success Manger-boy did you see those activation rates increase!
We ran an experiment (and recently brought it back) when we had developed the UX for a free-trial offering.
We included a small start a free trial button in the main menu as a secondary call to action, with the main one being a book a demo.
We wanted to see the difference in the conversion rates.
Key Takeaways From Our CEO and Head of Sales:
- From the times we tried it, it worked better when the product was cheaper and had fewer features. We closed smaller deals.
- We converted relatively well with the free trial users but elected to focus on the demo because the product wasn’t mature enough to offer self-service.
- We had to improve the functionality and the UX a bit so users could figure everything out on their own. Ultimately we would like to always include the free trial as a secondary option.
- In a perfect world, we offer three entry options… free trial, demo, and a call/meeting…. based on a mix of who they are (large vs small) and how they want to go about their learning/buying process. Balancing some control from our side and also accommodating their wishes.
Deciding if Free Trial vs Demo is right for you
There will always be a mix of prospects. These are the people who ultimately decide to use your product. By catering to both parties, you can provide even more personalized product experiences that engage users and enable customer retention.
Our recommendation is to find something in between or a mix of both for mid-market companies. This allows each group of users to see the end product and choose how they would like to learn if it is the solution they need.
Free Trial vs Demo
- If the customer can actually successfully deploy on their own or not
- A large sales team isn’t necessary
- Low-price point
- If you want the broadest number of customers
- If the target market isn’t tech-savvy
- Very few steps in the buying process
- If it just requires one department or one person to approve buying the product
- It isn’t security-sensitive and doesn’t need to be enforced across the organization
- If you’re working more with non-decision makers
- Short implementation time
Demos vs Free Trial
- Transactional market-mid market
- Enterprise product
- Numerous features. You have to load a lot of data just to understand how the product works
- Requires help from customer service professional or IT engineer to get customer set up
- High price point-sales cycles are long
- Hard to buy-company wide approval and implementation
- Long implementation times
- Driving customers largest practical ACV / deal size vs. the most customers
- Will there be a lot of questions if they are on their own?
- Are you working directly with decision-makers?