Credit Card Required? Or Not?
Hey IH, I have a question for you all.
For the last three months, I've seen steady growth with my Poshmark automation tool.
At this moment in time, they cannot use the tool without signing up for a free 7-day trial that requires them to put in their CC info. After 7 days, it automatically charges them.
I'm very explicit about letting them know it will auto charge them, and out of 100 customers I haven't had a single refund. But, I have had several people put in CC info that points to a card with no funds available, meaning my charge bounces and I have to manually suspend their account (I just haven't automated it yet).
There's two parties when it comes to requiring the CC for the free trial. It does act as a filter, and only serious customers have the drive to put in their CC info. On the other hand, I am definitely scaring away potential customers by asking them for trustworthy information so early in the process.
I'm leaning towards changing this process to a no CC onboarding and allowing users to upgrade after the free-trial without auto-charging them.
What do you think? Should I keep it as-is, or should I remove the CC requirement?
P.S. - Does anyone have experience with Stripe enough to know how to start a free-trial without a credit card?
*Edit - Found the answer to my P.S.: "When creating a subscription with a trial period, no payment method is required for the customer. An immediate invoice is still created, but for $0."
I would never use a service which requires a credit card for the trial period. I've been burned in the past by unscrupulous companies which simply use the information to charge with or without my permission - and I run a mile from anyone who wants to charge me automatically before I know whether I want to continue to use the service.
That particular scam, by the way, predates the internet. Discount book clubs used to do it (there was a particularly nasty one called Book Club Associates which, thankfully, is no more: see https://www.wikiwand.com/en/Book_Club_Associates ).
I would remove the credit card requirement for two reasons.
A. As explained above, a lot of people are rightfully chary of such methods because they don't know the organisation on the other side.
B. It displays confidence in your product / service.
I agree with @thomasm1964 , if a service requires me to enter CC details just for a free trial, I don't use it.
The most notable company that requires a CC up front would be Amazon (for Prime, and Audible). And it's not because of a lack of confidence. But, they have the brand that allows them to call the shots.
True. I'm not sure you have quite the same global reach or clout as Amazon though!
One can dream 🦄
Be careful what you wish for!
Personally, I would hate to lead that sort of life where I am tied to the business every day, where I am criticised around the globe for my behaviour and where I have to answer to shareholders no matter how rich I am.
My dream is to build a business big enough to look after me and my partner, give us the lifestyle we desire and fade into history after we have both crumbled into the dust from which we came!
That's somewhat my dream as well! I want to be able to crush my debt, and then invest enough to live a healthy lifestyle. Then I want to help other people do the same, and leave an inheritance to future generations.
What's the more honest and human thing to do? That should give you your answer.
Think about the business YOU want to run.
Anecdotally, if I try a piece of software and it truly makes my life or business easier, I'm more than happy to whip out my credit card. The moment of payment is actually an emotionally positive experience. I don't think I've ever had a positive emotion when having to enter CC info upfront for a 'free' trial. That only creates anxiety and resentment.
It seems like this whole debate can be boiled down to the level of belief in ones product. The less value you believe your product holds, the more likely you may be tempted to lock people into it.
Definitely. That's a good perspective, and I plan on switching it to a non-cc required free-trial.
But, it's definitely a tool that saves people time and makes them more money, so I think that's why it has had any success up to this point.
I've just changed www.siteguru.co to a paid subscription service with a free trial, and I encountered the same question: ask for a CC right away, or only when the trial ends.
I made a long list of SaaS products and found almost all of them let you do a free trial without a creditcard, so I went with that option - wisdom of the crowd:-)
Makes sense!
"In general, requiring a credit card upfront will, on net, increase the number of new paying customers you get" - check out the benchmarks to know section from this Stripe guide: https://stripe.com/atlas/guides/business-of-saas
Depends on your customers as well I imagine though, the guide is aimed at normal B2B I believe.
I see this as well, but I think it reduces the number of people that even try the product in the first place. I don't think it's inherently wrong, just different.
It certainly does reduce the number of people who will try it, quite significantly. It depends how valuable the extra feedback is to you vs the potential increase in revenue from requiring cards upfront. The guide referenced is looking at averages for B2B SaaS. The customers of Closet Tools don't look like standard B2B customers to me (that's based on a very quick and shallow evaluation though), so I don't know how well the conclusions apply to them anyway.
For my new business and current/previous ones I have no credit card upfront. After creating account and log in, they can use the product for for free for a period of time. After this period they are asked once on the site and by email to add a card (and x days beforehand).
For Muna I now ask the user to select a plan first though, so their limits after different and this also works a bit as a filter.
While the CC on signup thinking might makes sense, but if you ask me, mostly for cheaper plans (<$50 or so).
My thinking is once they have an account I can easily target/communicate with them (either through email or the chat).
So as always the answer is: it depends. Also above is not tested, it's just my experience and go-to workflow.
Methinks this is something you should test.
Personally I would never use a service that requires a CC upfront and which does an auto charge. It's a pressure tactic aimed at creating artificial commitment and relies on customer forgetting about the auto charge.
I believe that the whole 'just test it' attitude is correct more often than not... but in this particular case I think the data can come up short.
In this case the data fails to capture the negative goodwill (badwill?) that comes from the scenario of asking for the CC upfront. Might you make more money in the short term? Sure, hell, you may even make more money in the medium term. But the effect this scenario has on your brand and the way people discuss you through thousands of un-captured discussions fails to be exhibited in the data.
Although testing gets you data, it's not always complete.
I think you're like most people. I'll definitely be testing it!
And I wasn't using it as a tactic, I actually thought I needed the info to start a trial using Stripe.