Recently, a CEO of a major professional association asked me what I thought of a 30 day free trial for new members.

He worried that potential members would sign up for the free trial, binge the value in that free period and then cancel without paying. But his board was concerned that not enough people were joining and thought a free trial could be the solution.

In this case, I agree with the CEO, not the board, about offering a free trial. Here’s why.

A free trial is a taste of the best you’ve got, which you offer because either:

1. They don’t understand what it tastes like

2. They don’t believe it tastes as good as you say

I don’t think the issue preventing people from joining his association is that they don’t understand what it tastes like. Free trial works great for a new kind of cookie, not an annual conference.

If you’re having a problem getting people to join your organization or subscribe to your service, don’t jump to free trial, or even to reducing the price.

Before you use your pricing lever, get as specific as you can in understanding what prevents people from joining and then remedy it.

Here are some of the reasons that people aren’t signing up. This goes for the association, but also for any subscription business that isn’t attracting new members.

  1. Channel Problem. Prospects don’t know about your offer. It could be that your promotional emails are landing in prospects’ junk folders, or that the people it’s reaching aren’t in your target market at all.
  2. Messaging Problem. Prospects don’t understand your offer. In this case, they might not realize that members get unlimited access to training content, or a 20% discount to the annual conference, or a database of their peers. “Oh, I didn’t realize that was all included” or “I didn’t understand what you meant by concierge services–that’s amazing” they might say. In this case, a taste might be useful, but not always.
  3. Product/Market Fit Problem. They understand the offer but don’t want it. For example, they have a substitute option that is free, and don’t see enough difference between what is free and what is paid.

In other words, don’t jump to pricing before you evaluate your marketing and product strategies in total. Your offerings may have less pricing elasticity than you might think. If there’s no fit, or people don’t know about your product, lowering the price or giving it away probably won’t help.

Free is all the rage these days. There is tremendous pressure on companies to offer free trials and freemium subscriptions.

Investors want entrepreneurs to make a land-grab and gain awareness and eyeballs, as quickly as possible. But free has a price to the company, and you should calculate the return on that investment, just like any other investment you’d be making.

First of all, it’s important to understand why so much more value is being given at lower costs than ever before. It’s because the cost to deliver is declining. Today, anyone with a mobile device can film, store, and serve coverage of emerging stories, even as the stories are happening and at minimal cost. We all know that and your customers know that too. And so they expect you to price accordingly. In other words, no one cares that you have expenses. You need to be at least at parity with your market. So anything that’s already been declared free, must be free. And if you don’t want to make it free, stop creating it.

Now, many of you might be thinking that your content is so good that additional fees are justified. I can tell you from experience, this is probably not true, unless you provide an experience that is really unique and there really is no substitute. The point is, most organizations overestimate the uniqueness and the relative quality of their own services. Now, free doesn’t have to be a burden of keeping up with the Huffingtons and the YouTubes. It can also be a really effective tool. And the declining costs of technology mean that many free offerings can have minimal, variable costs. Meaning that you don’t have to lose any money out of pocket by offering them.

Free trials can be really effective as well. This is when you give a prospect a taste of the best you have to offer. A test-drive of your Lamborghini, a bite of your filet mignon. It works great when your prospect doesn’t understand how amazing your offering is and you need to let them experience it for themselves.

Another popular way of incorporating free into your model is through Freemium. Freemium is when you offer (at least) two kinds of subscription: One that is free forever and one that is premium, or paid. Free + Premium = Freemium. Freemium can do three things for your business.

  1. First, help prospects make your offering a habit, so they will upgrade and pay for more and better. This is what Evernote does.
  2. Two, serve as a marketing channel, in which the freemium members, by using your offering, organically build awareness of your offering. Sometimes this is referred to as a viral effect. This idea was popularized by the email service Hotmail, which featured an auto-signature at the bottom of each email that said, “If you want an email account of your own, click here.”
  3. Third, create a network effect, which means that each new free member of your community makes the experience more valuable for the people who are paying a premium. Think LinkedIn or Skype.

In each of these instances, the free subscription is actually serving an important marketing function and there are metrics you can use to track its effectiveness. With the first two, you can measure how many freemium subscribers, or people touched by freemium subscribers, upgrade and compare the effectiveness of these campaigns to other acquisition campaigns, like advertising or direct mail.

With the network effect, it’s a little trickier. You might want to track satisfaction against the size of community, but you can also track behavior and see how many times paying members are accessing the non-paying member or their content.

Not every business can justify a free offering and it’s okay to have a solution that must be paid for. Sometimes, if you offer too much for free, you actually end up training your prospects that your offering should be free. Don’t do that.

But before you write off free as too expensive or too risky, think about what burdens you have in growing your business. Do your prospects understand what you’re offering? Is your membership big enough to have an engaged, active community? Are you struggling to find ways to build awareness at a reasonable acquisition cost? If any of these are an issue, free might be the secret weapon your business model needs.

For those of you who made it to the bottom–thanks for reading! Here is a link to a video I made with LinkedIn Learning on this subject. I was able to make it free for you, even if you don’t subscribe. Enjoy!

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