MBA1057 Free Trials: With or Without a Credit Card Required? + Free Ride Friday!

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Alright, let's jump into today's episode. Hey O. Welcome to the $100 NBA show because your business gets better when you get better. That's why we deliver daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the $100 MBA, a complete business training and community online. And in today's episode you will learn should you run your free trials with or without a credit card required. This is a big debate in the Interweb so I'm going to give you my take based on our own experiences. Of course. If your product can be used and consumed within the trial period, like a course or a book, then maybe a trial is not your best option, maybe a money back guarantee. But if you offer some sort of service, some sort of software where you want them to try it out before they buy, should you require them to give credit card information when they're signing up for this trial, or should you make it as easy as possible for them to sign up for the trial, no credit card required, and when their trial is up or before it's up, they enter that credit card information to become a paying user. I'm going to give you some examples from some great businesses that I look up to. What they do, why they do it, and when is it advantageous to go without credit card required or with credit card required? Let's get into it, let's get down to business. It's funny that today we're talking about choosing between offering a trial with a credit card required or without. There's lots of great companies that do this. Baremetrics does this, no credit card required. They offer a 14 day trial where you just give some basic information like your name, your email, just the name of your company and you're set to go. Basecamp does this as well. So why do these companies choose to do this? Well, a few reasons. Number one, their product really lends itself to this. They have what I call sticky products. Products that are, are hard to kind of get out of once you get started in it. Let's take Basecamp for example. Basecamp is a project management tool, a team collaboration tool. It's how you communicate with your team to do lists, calendar, invites, things like that. Once you get started and start using it, inviting teammates and in fact, inviting teammates is a part of the onboarding sequence when you sign up. So they kind of help you through that or maybe suggest you should do that when you get started. Because once you start collaborating with your team on Basecamp while you're on this free trial, it's going to be kind of hard for you to transition, especially if you like it, if it's working for your team. At that point, it's going to be a no brainer for you to upgrade to a paid user before the trial is up or when the trial's up. Same thing with Podia. Podia is taking care of all your online course needs. So if you want to create and sell an online course, you're going to create materials, you're going to upload videos, you're going to create a pricing page, all that kind of stuff. When your trial is up and you put in some work, it's going to be kind of hard for you to say, you know what? I'm not going to use it. You've already put in all your assets, and that's not a bad thing. It's just that their business, their product really allows you to have a free trial with no credit card required because they're so confident that you're going to use it and you're going to pay. You're going to give your credit card information and pay for the membership when the trial is up. So what are the advantages of having a product that has a trial with no credit card required? Well, number one, it lowers the barrier of entry to, to absolutely nothing. All they have to do is fill out a couple of pieces of information. It's not even that much information. It's like your name, your email, and pretty much it. Depending on the actual app, software product, you can really keep these fields or these options pretty minimal. And that's it. You get started and it's all said and done. They'll have a system within your account to remind you how many days you have left for your trial. They'll probably send you some emails reminding you as well. But the whole point is, is that it really allows you to get more users than if you had a credit card required. Why? Because when you have to give up your credit card, you gotta kind of be mindful that I will be charged when this trial is up. If I forget, I will be charged. So it's a little bit more of a commitment. Plus, taking out a credit card is somewhat of an effort. It's a barrier. I know that sounds like a minimal thing, but if somebody doesn't have to reach for their wallet or, or has to look for their wallet, or maybe they don't have the wallet with them, they can just sign up for a trial and check out your service, your product with no credit card. This makes it super simple. Now, on the other side of this equation, businesses and products that have no credit card required, they really have to work extra hard to make sure they win over their customers. And they use the product before their trial is up. So their onboarding sequence and their tutorials have to be on point. The product really has to be super simple to use so that they jump right in when they sign up and they start creating their first thing in that product, whether it's their first course, their first project in Basecamp, for example, or in Baremetrix's example, start, you know, syncing your Payment gateway, your payment process like Stripe and start getting your data. Because once you get the ball rolling and you're using the product, you're just one step away from saying, hey, I love this, I want to sign up. So in theory, when you offer a trial with no credit card required, the sales process is sort of a two step process. First you gotta get them to sign up for trial. Then you gotta get them to, you know, sign up to pay, because there is a step. They have to go into their account, put credit card information, hit upgrade or hit whatever to say, charge me when my trial is up. Now let's take a look at the other scenario when you actually acquire a credit card for a trial. Now, full transparency. This is the setup we have with our software webinar Ninja. When you sign up for trial, you have to give your credit card information so that we can charge you when the trial is up and we're not alone. Companies like LeadPages or Amazon, when you sign up for Amazon prime, they ask for a credit card so they can charge you after your trial is up. Now, the advantage of this is that you don't need to worry about actually getting that credit card information after the trial is up. You're getting it during the signup. So after the trial is finished and they haven't canceled it, they will be charged. Now, it also raises the barrier of entry, but it also gives you more qualified candidates or customers. People that are willing to take out their credit card to sign up for a trial are probably more committed to staying on. This is going to lower your trial churn, but it's not all sunshine and rainbows. There's a lot of work you may have to do to chase up people when they sign up with a credit card and when it's time to charge them, that credit card fails. Insufficient funds or an expired card or whatever. People get around this hurdle by just putting a credit card they know that's maxed out. This is more common than you think. It also kind of lends itself to more chargebacks than the first scenario. Why? Because with the first scenario where no credit card is required, they enjoy the trial, they don't give a credit card and they actually make a decision to buy when they upgrade from trial to an account. And if the credit card fails at that moment, it will save failure and they won't be able to upgrade. It will save you a lot of headaches that you will endure when you have credit card required. Now, it does streamline the sales process. So once you get them signed up on trial with a credit card required. You kind of have them there, but you still have to win them over. They got to get through the trial period and get charged so that you can actually make them a customer. So you might be asking why did we choose having credit card required with webinar Ninja? Well, we have a live webinar platform. So if somebody creates a live webinar two weeks or past the trial period, they're going to expect that live webinar to be active, especially if they've started marketing it, sending Facebook ads to registrants for any reason. Trial is finished and they forgot they may not be able to use the software. Take the credit card information at the beginning to ensure that there is no interruption of service. Now having said that, we are launching a new product. I know I mentioned this a few times before. I promise you I will give you more details and announce it shortly. But we will go with no credit card required because the product will lend itself to that model. So I wanted to outline today the advantages, the disadvantages of both. But I also want to give you a rule of thumb. If you're getting started and you want to get as many users as possible, growth is your kind of key metric. And it's not revenue. You're just looking to get as many users as possible so you can kind of expand in your market, get feedback and improve your product. Then no credit card required is probably your best choice. But if you're looking to capture as much revenue as possible at the start, then credit card required would be your best bet. Or even charging them and then offering a money back guarantee. I know companies like Convertkit have split tested this. They've done, you know, no credit card required. They've done credit card required and they have found out for themselves which one is the best one for them. You could do the same. It's your business and you need to do what's best for it.

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Of course there are advantages and disadvantages to both options, but take a look at your product. Take a look at how sticky it is. Take a look at your revenue goals. Take a look at if you're trying to grow and expand in the market, if you have a product that they have to install on their website, you have a product that they actually put a lot of information. The Podia example we gave or even a website builder. If you have a product that you can onboard your customers quickly with no credit card required, might be the way to go. If you have a high priced product or a high value product and you need qualified candidates, I definitely look into having the credit card required in the signup process for the trial. All right, that wraps up today's lesson. But today's episode's not over. It's Free Ride Friday. I gotta give away a lifetime membership to ezcourse. Let's see who won this week's Free ride. And the winner is. Cherry Lynn the sky. Cherry Lynn the sky all the way from the uk. Cherry Lynn says very helpful. Five stars. A really fun way to learn things to help you run your own business. Hundreds of easy to understand tips from Omar. He's a great teacher and it's one of my favorite shows. The sponsors are also good to know about too if you're starting a business. Well, thanks Cherilyn for that great, great review. Yes, we try to get sponsors that are a good match for our audience. Sponsors that can help you during your journey as an entrepreneur. Congratulations. You are our winner. Your mission is to email me at omar00mba.net so I can hook you up with the free membership to easy course. If you are listening right now and you want to win a free ride to one of our courses, then just leave us an iTunes rating and review and you enter our weekly random draw. It's our way to say thanks for showing us love on itunes. Before I go, I want to leave you with this. If you don't want to offer a free trial for your product, it doesn't work out for your product. It's not a good fit, then don't feel like you have to force it. A money back guarantee is still a tried and true way to have some sort of risk reversal for your product for your offering. It also kind of prevents the failed credit card thing. So if the card fails, they will not be able to, you know, receive the actual product. As long as you make that process easy to return or get a refund, then you should be good to go. People just want to know that you have their back and that you're not going to take their money if it's not a good fit for them. Alright, thank you so much for listening. I'll check you in Monday's episode. I'll see you then. Take care.

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