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Wednesday, November 22, 2006

The Power of Free Trials

Wednesday, November 22, 2006

Do free trials really work? Are they cost effective? Whether you're considering a free trial or sampling of some kind, keep in mind that many products are best "experienced". For example, its difficult to know whether or not you'll like the flavor of a new toothpaste without trying it. On the service side, you don't know if you'll like a new dry cleaner until you get your shirts pressed.

As a result, many marketers are using free trials to lure new customers. This is particularly effective when the lifetime customer value of a new customer is substantial.

Picking up on our dry cleaning example, once acquired, a customer may stay with the dry cleaner for many years to come. Therefore, offering a free trial for a few shirts equates to a low acquisition cost in relation to the total revenue that can be generated from the newly acquired customer.

Another example is A business-to-business company that specializes in online management solutions has been offering free trials for a long time. These free trials have accounted for significant revenue growth and the addition of more than 40,000 new subscribers per year.

Make Your Free Trial Effective

The key to having a successful free trial program is to make it simple and risk free. For example, don't ask clients for tons of information in order to begin their free trial. Make participation clear and easy requiring only minimal information. Make sure this information allows you to track their participation and follow up with them at a later point in the process.

Solicit feedback from those who participate in the free trial. Ask them, "How's it going?" This can improve your chances of conversion and also give you the information you need to enhance your program moving forward.

Most Popular Free Trials

The most popular free trial is "30-day Free Trial". This is effective for a number of reasons. The first and foremost is that a new habit is formed within three weeks. By getting someone to participate in a program for a minimum of 3 weeks (like subscribing to a cable channel) makes it habit forming and creates some switching costs. Remember the old saying, "I want my MTV". Yeah, of course... because once you've watched it for a while you can't do without it.

Other types of free trials are available as well. The key is to look at what competitors in your industry are offering and finding the offers that have been out there for a long time. This means that the offers are effective. No company can survive by giving their products and services away for free indefinitely.

Is a Free Trial Right for You?

If your product or service is a high price, and a free trial may not be idea. As a result, you many want to consider sampling. Perhaps sampling involves a small portion of the complete service you're going to deliver.

Just the other day, I received a free trial of something for my website. The free trial only included a partial scan of my website. After some items were identified, I had to upgrade to receive the additional benefit. This works extremely well for service businesses or those where products are too expensive for a free trial.

In conclusion, think about the free trial as another marketing tool in your tool chest. Free trials are ideal when selling products and services that can generate an ongoing revenue stream. Don't hesitate to try a free trial offer. If it works, you can have a consistent stream of users and conversions.

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