10 Learnings about Free Trials

TOP 10 LEARNINGS ABOUT FREE TRIAL TOMASZ TUNGUZ Managing Director RedpointVentures @ttunguz

Top 10 learnings about free trial Tomasz Tunguz Managing Director RedpointVentures @ttunguz

The Survey

24 Questions 590 Responses 1000+ Lines of Code

Respondents Across ARRs, ACVs, and Customers 599

Respondents Span Many Different Buyers 16% of Respondents Target Marketers

Goals

Contract Length

Annual Contracts Most Common in MidMarket 80% of Respondents with $15-$50k ACV Use Annual Contracts Predominantly

Stick with 1 Annual Contracts

Logo Retention

Two Thirds Retain 80%+ of Logos; One Third Retain 90%+

Larger Customers Churn Less 45% of Respondents Targeting Enterprise Retain 90-100% of Customers/Logos

Strive for 2 90% Logo Retention

Net Dollar Retention

Top Quartile Expand Accounts by 120% or More

Enterprises Expand More than SMBs 34% of Respondents Targeting Enterprise Exhibit NDR of 100%-120%

NDR Target 3 Should be 100-140%

Trial Structure

Time-Based Free Trials Most Common 58% of Respondents with ACVS between $15k-$50k Use Time Limited Trials

Reason: Time & Limited Trials Convert Up to 2x Better 12% of Leads in Usage Limited Trials Convert to Paid

Explore Time 4 and Usage Based Trials

Trial Length

14 Day Trials Most Common; 30+ Days Second Most 47% of Respondents With Time Limited Trials Cap Trial Length at 14 Days

But Conversion Rate Same Across Trial Lengths 16% of Leads in 7 Day Trials Convert to Paid on Average

Trial Length 5 Doesn’t Alter Conversion; Shorten It

Salespeople

Have Salespeople Contact Freemium 75% Leads

For good reason: Salespeople increase conversion 3x 15% of Assisted Leads Convert to Customers for the Median Respondent

Sales Assistance Impact Evident at Every ACV The Median Respondent with 15k-50k ACVs Converts Assisted Leads at 20%

Hire 6 Salespeople to Call Your Leads

Conversion

50th Percentile of Respondents Report 4% Unassisted Conversion 25th 50th 75th 1% 4% 12%

Aim for 4%+ 7 Unassisted Conversion

50% of Respondents Report 15.5% Assisted Conversion 25th 50th 75th 6.8% 15.5% 30%

Shoot for 8 15%+ Assisted Conversion

Activity Qualification

Activity Scoring Effectiveness Decreases with Price 4% of $50-$150k Leads Which Have Been Scored By Activity Convert to Paid

Question 9 Activity Scoring in Enterprise

Payment

of Respondents Require 12% Payment Info

But the Data Suggests Many More Should On Average Unassisted Leads with Payment Collected Before Trial Convert at 10%

Test 10 Requiring Payment at Outset

Summary

Summary 1. Stick to Annual Contracts 2. Strive for 90% Logo Retention 3. Target 100-140% NDR 4. Prefer Time and Usage Based Trials 5. Shorten Trial Length

Summary 6. Hire Sales People to Call Leads 7. Aim for 5% Unassisted Conversion 8. Shoot for 15% Assisted Conversion 9. Question Activity Scoring in Enterprise 10. Test Requiring Payment

tomtunguz.com

APPENDIX (If you need ’em)

When does…? 18.7 = 21.0

When does…? 18.7 = 21.0 No Difference in Conversion Rates When Activity Scoring

True Across Buyers 71% of Respondents Targeting Customer Support Buyers Use Time Limited Trials

Buyers

Contract Length by Buyer - Same!

Net Dollar Retention by Buyer - Same!

All Buyers 11 Behave Similarly

Time-Based Free Trials Most Common; Features and Seats Increase with ACV

Reason: Time Limited Trials Convert Best (put in how much better)

50% of Respondents Report 5% Unassisted Conversion

Time-Based Free Trials Most Common; Features and Seats Increase with ACV

Sales Impacts Conversion Rates Across Segments

Terminology

Words to Know Unassisted Conversion Assisted Conversion

50% of Respondents Report 15% Assisted Conversion

Net Dollar Retention by Buyer - Same!

Conversion Rates by Contract Length - Same!

THANK YOU