Ask IH: Would you ask for credit card upfront or after trial period?
I'm wondering which way is more efficient - asking for credit card upfront might scare away a couple of users, but then only the serious ones stay. On the other hand, asking after trial period might result in a few extra customers since they might have been scared away at the beginning... so I can't really decide.
I'm building a SaaS that is for monitoring different services so it's not the type of SaaS that you deal with every day, basically you set it up and go on with your life, so asking credit card details upfront might be better in this case I guess?
There is nuance to this question, and the answer in my experience is, "it depends."
ENTERPRISE
If you are selling into the mid-market or enterprise (and I'm guessing you are not yet), then removing CC allows someone at a big company without access to a card to try the software. This is good.
But if you are selling into those markets then your trial volume is low, contract value is high, and I would recommend making it "Request a Demo" rather than having a CC-based trial at all.
LOW-TOUCH SALES
If you are instead selling to no- or low-touch customers, in the early days as a solo founder I asked for CC to keep trial volume down and trial to paid conversion rates up. As a solo founder it can be tough to handle no-CC trial volume (which is often 5-15x your trial volume if you ask for CC).
But if you hire a support/onboarding person and can handle more support requests, and your app can handle the scaling, then not asking for CC is not a bad choice. Just know that more trials != more customers.
MY DEFAULT
Personally, I've always defaulted to asking for CC up front, and then removed that requirement once I had P/M fit and really knew my numbers. I would remove CC for a 7-day stint and watch the numbers for that cohort.
That gave me an indication of which approach worked best at that point in time given my price points, onboarding flow, brand equity, etc. All of which change over time (so you can't run this test once and be done for good).
In the end, with either scenario it's up to you to build a killer product that people want and go out of your way to onboard them well.
THIRD OPTION - NO TRIAL
There's also a third option - no trial. Charge right away up front, with a 30-day money back guarantee. Hard to do before you have any kind of brand, as the trust is not there. But it's a good strategy if you are selling through affiliate webinars and/or are a trusted brand in the space that people are recommending.
MORE INFO
For more depth and nuance, I talk about this for 30-40 minutes (recorded more than a year apart), in these 2 podcast episodes:
https://www.startupsfortherestofus.com/episodes/episode-179-when-to-ask-your-customers-for-credit-cards
https://www.startupsfortherestofus.com/episodes/episode-291-freemium-asking-for-cc-up-front-and-a-big-mistake-first-time-founders-make-with-guest-david-cancel
And about free trials vs. money back guarantees here:
https://www.startupsfortherestofus.com/episodes/episode-415-product-founder-fit-stairstepping-free-trials-vs-money-back-guarantees-and-more-listener-questions
Wow, this is golden. Really appreciate it Rob. I've been a fan since Start Small, Stay Small!
I remember reading your book on a sunny Saturday in the garden and dreaming about launching a product! :)
Congrats on your progress so far and good luck making it to launch :-)
I think you understand the problem well enough. I would lean towards asking afterward, but it is worth asking ourselves why. Why do most companies require it upfront? Is it because they want people who are serious about the solution? Or just tricking users into getting billed even if they don't find value? And on the opposite end, is it to lie to ourselves about actual interest, or to give people a chance to experience the product?
A somewhat related detail you may want to consider: Shorter trial period. An IHer has a marketing hacks e-mail that's pretty handy - @slash007 of spacedoo.com. Hope he doesn't mind me pasting this one here :)
Marketing Hack - Trial length.
You would think that the longer your free trial is, the better, Right.
When the co-founder of KISSmetrics tested 14-day free trial versus the 30-day free trial, the same number of people signed up for each trial length.
But 102% more people used the product when they signed up for the 14-day trial versus the 30-day trial.
They have learned that with the 30-day trial, people felt that they had a lot of time, and they forgot about using the product.
@AndrewV thanks for sharing, I'm glad you found it useful.
Thanks, this is very valuable. Initially I planned 14 days trial but then raised it to 30 days because I imagined that a monitoring tool can only be "tested" in a longer run - it is much more likely that the tool will save anybody from a long downtime etc and therefore provide real value in twice as much trial period. But it's a fair point.
Yeah, when you mentioned monitoring, I was thinking the same thing, but still thought it was a valuable tip :) A couple more thoughts:
Depends hugely on the product.
For some, value is obvious before signup and credit card from start is not a deterrent.
For others, you need to get going before you would consider paying.
Also need to take into account cost and need of support during the onboarding process, along with potential cost if any of high volumes of trial users.
End of the day, it depends on your product and your users.
Yes, unfortunately I'm not at the stage yet where I'd need to worry about huge loads of signups, so probably as others suggested as well, I will ask for the cc info afterwards and try to get as much feedback as possible up until then!
Not sure if the reason you mentioned is the best for asking a credit card upfront.
If you can handle the load technically and deliver decent support for your customers I would suggest to ask the cc afterwards because you will get more feedback and more data to make your further decisions on.
In case your not sure if you can handle it start with a cc upfront.
"If you can handle the load technically" - or manually.
I ran a SaaS with completely manual invoicing for a year longer than I expected to!
When it becomes a problem you will fix it, until then, just get it out to users.
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Thanks Jason, makes sense - what you describe is probably applies to most of the "technical" customers, I tend to forgot about this. I'm not selling a monitoring service to barber shops and fitness coaches :)
This comment was deleted 6 years ago