3 reasons why free trial is a vanity metric in a subscription business

17.05.19

by Janis Thomas

17.05.19

by Janis Thomas

The volume of online video continues to grow exponentially. Whether you want to know how to bake a cake or perform brain surgery, you can find a video online. And the consumer’s default expectation is that it will be free.

So, persuading the customer that they should pay for premium sports and entertainment content is inherently difficult. It’s vital to show the customer why an asset is worth paying for - by this logic, doesn’t offering a free trial undermine this crucial argument, right from the start of your relationship?

Probably the most important thing I’ve learned during my career as a marketer is that to acquire and retain subscription customers, you need to provide them with value. Birchbox, a company I previously worked for, has a strong vision for their company -“Forever useful, always delightful”. I think that the balance of providing something the customer needs with something that gives them joy is key to a successful subscription business.

Surely a free trial provides the customer with value? Yes, it does, but it isn’t a value exchange as the customer didn’t pay.

As a result, they may value the content less- resulting in it being more difficult to get them to pay for your service. There’s a danger you’ll never convince them to pay for something they once had free.

There are 3 main reasons why there is no room for free trial in a subscription business. Let’s go through them before we focus on the application of this argument to the field of live sports.

#1. Free trial users don’t even try it!

We constantly strive to improve conversion by reducing friction. A free trial is usually a quick and painless signup process - you often don’t even need to give your credit card details. However, it’s possible that it can be too easy. As many as 80% of free trial users never even use the service during their free trial period. As they’re not invested, they’re not as engaged as paying customers.

#2. It happens at a fixed point in the customer’s journey

Free trial only works if you restrict it to a single use. But it’s a blunt instrument because it treats a first-time visitor to your site the same as someone on their fifth visit. And they are likely at very different points on the path to purchase. First-time visitors are the least likely to convert and their propensity to do so increases with every visit.

#3. You’ll have a hard time at forecasting revenue

It makes performance marketing extremely difficult to manage if a proportion of your paid traffic is resulting in a free trial. The free trial proportion and conversion to paid will not be stable in a digital marketing environment. You are continuously testing new audiences, messages and creative, and your targets are constantly moving along the path to purchase. That means you cannot make stable forecasts of the revenue generated. The relative effectiveness of different channels and execution strategies cannot be measured until months after the campaign has finished. Bidding decisions in real-time become impossible. There’s also more wastage as you’re spending on non-revenue driving customers at the bottom of the funnel. And you’re potentially wasting the opportunity of someone who’s presenting buying signals.

What about live sports content?

In the field of live sports, your target audience knows what the content will be before providing any payment details. Even a casual fan knows what they are getting access to once they sign up.

So what's the alternative to the free trial? Consumers’ appetite for content is voracious. Consumers of all ages spend a huge proportion of their time on social channels. Go to where your audience is already, don’t make them come to you. Show customers what their experience with your service will feel like, don’t tell them.

That means packaging and distributing interesting and engaging content to potential users. If it feels natural, like something a true fan would share on that channel, it will be both shareable and more effective. Provide a window into your experience in a way that’s suitable for that environment. This is so much more than sharing clips of your content. It’s giving potential customers an understanding of the whole experience. Why is your service the best possible viewing experience? You can customise the experience for each audience, compared with a free trial which allows limited personalisation. It allows you to build up a relationship over time with customers who need to be convinced over a longer period. It is absolutely vital to see editorial and social content as a commercial opportunity. Of course, some of it will be more top of funnel and some of it will be more focused on conversion. But the important thing is that there is always an opportunity for conversion, so include a clear, friction-free, benefit-led CTA that links to subscription. 

Data capture still has a role to play, but instead of forcing consumers to give up their data for a free trial, put them in control. In the wake of GDPR, customers are making more conscious decisions about who to share their data with based on the value they will get in return. Make it easy for customers to tell you if they’d like to hear from you. Again, it needs to be a clear value exchange - why should customers want to receive your emails? What’s in it for them?

What’s next?

In the short term, you’re likely to see reduced traffic and subscription volumes. But at the end of the day, a free trial customer is just a vanity metric. Driving revenue and profits are what really matters. 

Does this mean free trials have no role to play in subscription businesses?

No, there are products and services which are new to users that could benefit from the user having a deeper understanding of their potential experience.

But rather than the default starting position being to offer a free trial for every service and to every user, I’d advocate for thinking first about other ways you can bring your experience to life for customers. And then, of course, make it as painless for those who change their mind to cancel. They’re much more likely to remain advocates and return at a later time.

Follow our OTT & Marketing series for more insights on the subscription business. Our next chapter will analyse the best practices for a lean subscription journey.

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