You've run the numbers.  Plenty of people are hitting your marketing site, plenty of people are signing up for free trials.  The problem is conversion - maybe 3% of your trial users convert to paying user.  Maybe less.

You tried playing around with the payment form.  That didn't work.  You tried adding an onboarding tutorial.  That didn't work.  You even tried adding a phone number to your help section.  That moved the needle a bit, but not nearly enough!  Clearly you're missing something, something that will make a real dent in this conversion rate.  But what it is?

You probably have too many free trials.

Trial-to-Paid Conversion Pillar One: Set Expectations

It might seem counter-intuitive, the idea of reducing your number of trials.  You worked so hard to get that traffic and get those trials.  Why throw all that work away? Well, let's examine an extreme case, to help prove the point.

Pretend you've written some invoicing software, designed to allow your users to send invoices and receive payment.  Thing is, you can only send invoices by email, and you can only accept payment through PayPal after a 30-day anti-fraud confirmation period.  Oh, and you can only send invoices to people in New Zealand.  It's a tax thing, don't ask.

Now, in this example, your website doesn't mention any one of these facts because you're scared about chasing off potential trial users.  Since you're optimizing for trials, that's what you get.  Just hundreds and hundred of trials pouring into your system every month.  This would be great, except that your Trial-to-Paid Conversion rate is hovering around 1%.  Considering you're spending a bundle of money on an affiliate program to get a good chunk of those trials, that's not sustainable.

So what do you do?  You could try all kinds of things to try to raise that percentage, but those efforts will be unfocused and misleading.  Your real problem isn't your Trial-to-Paid Conversion rate, your real problem is that you don't know what your real problem is.

In order to even have a chance of knowing what you need to do to improve your conversion rate, you need to know your trial users and the problems they're encountering. With so many trial users with so many different intents and expectations, it's really difficult – if not impossible – to properly identify the core problems that need fixing.  In fact, it's arguable that your Trial-to-Paid Conversion rate isn't even 1%, because the trials you're accepting haven't been properly qualified – they're almost no better than random people off the street.

If you play poker, think of it like Texas Hold 'Em.  If you played every hand set in front of you, you'd lose a lot of money on the bad hands.  That's why pros only play hands with a good percentage of winning, to conserve resources for the best opportunities to make money.  (If you don't play poker, please skip the preceding paragraph.)

But maybe it still seems a bit academic to you.  Who cares if some made-up number is higher or lower? If 10 people sign up, who cares if they came from 100 trials or 1,000?  What if you just don't give a good gosh-dang what that number on your spreadsheet says?  Well, it turns out that there are:

All kinds of great reasons to pre-qualify your trials

Surprise!  Turns out we're doing this for a reason. Actually a whole bunch of reasons.  Let's check 'em out.

Building trust

When a visitor first hits your site, they likely have a minimum amount of trust in you.  It's possible they found out about you because they're ardent listeners of your startup podcast, but it's more likely that they found you off Google or from an article on your blog. Given that they don't know a whole lot about you, they likely don't trust you all that much, either.  Gaining that trust is essential in order to get them to sign up for your service, especially if you require a credit card up-front.

Setting expectations about what's involved in using your service is a great way to earn that trust.  Sure, you might lose out on a few potential trials from users who don't meet those qualifications (more about what to do about that later), but you might actually increase the number of trials you get from users who do meet those qualifications.  Since those users are way more likely to convert, it's a big win.

Quicker conversions

Properly pre-qualified trials have had a great many of their objections addressed before even starting their trial, and so don't need to spend precious trial time trying to find answers to those questions.  This means they tend to convert quicker, which means you have to spend less time performing high-touch sales or customer support, and you begin earning your recurring revenue sooner.

Easier to predict

When trying to run metrics and make predictions, you'll find that it is much easier to predict the Trial-to-Paid Conversion rate of carefully qualified trials, whereas unqualified trials will have a much broader range.  When trying to calculate things like monthly run rate, customer lifetime value, or if you can afford to keep acquiring customers at your current spend rate, knowing this number more accurately can be invaluable.

Avoiding being spread too thin

Having a lot of trials means having less time for each.  This significantly reduces the amount of care and conversion efforts you can put into helping each trial, especially if you offer concierge onboarding or if your application requires a lot of hands-on sales or customer service during your trial period.

This can be mitigated by automating some of your conversion activities (like setting up automated lifecycle emails, something we'll talk about in a later article) and creating a clear, accurate, and up-to-date knowledge base for you to refer customers to when they have questions.  Additionally, you can set up community tools like a forum or Slack/Discord server where your users can help each other (though those have an ongoing cost of their own).

That said, all of these activities are investments, requiring up-front work before they'll pay off, and if you already have too many trials to spend sufficient time on each already, you may find it difficult to find the time to spend building these tools.

Selling or taking investment

Aside from just having inspiring metrics to post on Indie Hackers, you're going to want to have a solid conversion rate if you ever want to sell your company or take investment.  A good rule of thumb for conversion rates is between 5-15% if you don't require a credit card up front, and between 40-60% if you do require one.  Your New Zealand-centric, 30-day delay, Paypal-only, email-only invoice company will never hit those numbers so long as you're not properly qualifying your trials. Investors will notice, and while not every investor will be a stickler for the rules, anything hinky could cause them to back off or reduce their offer.

Okay, so if you are in a situation where you're letting in a lot of unqualified trials (which you now know why is a bad thing), what exactly can you do?  Thankfully, there are a variety of options that can be explored, with a range of time investment and bravery required.

Bravery?  That's right. You're going to see trial numbers go down, and important metrics going down can be scary!  But you have to hang on and evaluate what happens to your trial conversions, your customer LTV, your churn, and all the follow-on numbers before you balk.  With some careful effort and a little luck (which is required for nearly every serious endeavour), you can lower the number of poorly-qualified trials you accept while seriously improving the health of your business.

How to pre-qualify customers

Be clear about your service

Let your customers know about your service, warts and all! I mean, obviously don't tell them about the weird bubble-gum and duct-tape behind-the-scenes scripts you have that run statistics calculations every night. Every service of some note has technical debt they'd love to get around to but haven't found time yet, but that's not anything that customers need to know about.  You mainly need to let them know about the features you have as well as the ones you don't have.

There are good ways to do this, and there are bad ways to do this.  A bad way would be to list on your front page, above the fold, all the countries you don't offer service to.  Another bad way would be to make the information available, but buried deep in the fine print of a hard-to-find knowledge base article.  But a good way would be to turn a weakness into a strength.

For the example above of the invoicing software that only works in New Zealand, well, that's a differentiator you can market on.  The Big Guys offer service internationally and focus on the USA or EU.  New Zealand won't ever be a priority to them, but it is your top and only priority.  Let people know that!

That's a little harder to do with your other limitations, but still possible.  Instead of explaining sheepishly over customer service emails that users will have to wait 30 days to accept payments to ensure nobody is scamming anybody, you can boast about your commitments to fighting fraud on the sign-up form.  That said, this is more of a product limitation you would be better-served by working on fixing than marketing.  You have to be able to tell the difference.

Don't starve your users for information, either.  Offer screenshots and video explaining your most-valuable offerings, and PDF whitepapers about successful customer cases if you have them.  You don't want to clutter your home page, but that's what links are for.  Make sure the information is available for interested researchers.  Frequently, the people browsing your site won't be actual purchasers, but people looking to convince their bosses to purchase.  Make sure to give those people ammunition.

Be up-front about your requirements

If you bought a video game and got it home and installed, only to discover that it requires a video card released literally yesterday in order to play at a decent framerate, you'd be upset, right? Well, the same goes for users of your service. If you can only accept payments through PayPal, don't hide that fact. Again, you don't have to advertise it front and centre, but it shouldn't be obscured until after your customer is five days into their trial and trying to accept payment on an invoice.

Be up-front about customer investment

If it takes your customers a solid forty minutes to fully set up their trial account, don't go around promising them "setup in a snap" or similar lies. By being honest (or at least reasonably honest, you don't have to list the exact average number of minutes required), you allow your customers to plan their investment in your trials. Someone expecting a ten-minute trial might kick things off just before a meeting or getting back from lunch.  Going beyond that might mean they wander off, never to return.

If you have a service that has an API that people integrate with, you can save them a lot of time by letting them know what's involved in that integration.  Make your developer docs publicly available instead of behind a paywall or on a frequently-outdated PDF that you email to customers that remember to ask.  This can allow people to schedule their trial when they have time to perform the integration, as well as increasing trust, along with the likelihood that they'll begin a trial at all.

Be up-front about your prices! Sure, for Enterprise levels where you need to hammer out custom service agreements and do custom paperwork, you can require a phone call/email/videoconference/carrier pigeon.  But for "regular business" levels, make sure that your prices are available and the differences between tiers are clear and easily understandable. I'll be writing more on creating clear & effective pricing tiers at a later date, but at a minimum, make sure your prices are available and sensible.

Build a knowledge base

Whether this takes the form of a simple FAQ page or an in-depth, tagged, searchable, illustrated, accessibility-oriented, mail-orderable knowledge base system, you should make the answers to common questions and objections available publicly. Not only will this help you qualify customers who might have limitations that they'd otherwise have to take a chance on, but it will help build trust with customers who do qualify.

Actually, it helps build trust with customers who don't qualify as well.  There are all kinds of examples I can personally think of where a service wasn't available in Canada, and I was able to come back and check on them (or sign up for a mailing list or follow them on Twitter - more on that later!) until they did finally launch.

A well-written knowledge base also helps reduce your customer service load as well. Many customers will choose to self-help, and if they can search and find their answer already written for them on your site, that saves both of you potentially lots of time and effort. Even for customers that don't choose to self-help, you can email them a link to the appropriate KB article, which is way quicker than writing out the same answer over and over.  Plus, you can update the article with new information as it becomes available, improving its value over time.

Consider a chat widget

Some people love 'em, some hate 'em, but they can be very effective if you have the time to tend to them. Getting real-time feedback on questions or objectives you may have is very convincing to a lot of people, but if you don't have the free time to reply (or are in a different time-zone than your target market), the fact that there is a chat widget right there and that it doesn't seem to do anything can be more frustrating that fulfilling.

Many chat widgets now integrate into Slack, letting you know with @channel announcements when someone has a question.  If you have a remote team already using Slack, spread out over a few different time zones, this can be an ideal way to make sure that the chat widget is always attended.

Consider requiring a credit card

Okay, this is the big scary one. While requiring a credit card can seriously reduce your Visit-to-Trial Conversion rates (from 10-20% down to 0.5-2%), it definitely signifies serious intent, and if you don't have a strong trial conversion process in place, you may not be converting too many customers that didn't have serious intent in the first place.

While those numbers may be spooky, this is also the biggest "win" in terms of qualifying your trials.  If someone enters a credit card, it indicates that you are not only dealing with someone who is seriously considering purchasing your service, you're also dealing with someone who is capable of it.  Very frequently, it can be difficult to ensure that you are in contact with someone who is not just interested in your software, but has the authority to spend money on it. If they already have or have secured access to a credit card, you can be almost guaranteed that they are authorized to pull the trigger if you convince them.

One thing you'll need to be certain of before going down this route is that you have sufficient information on your sales site for potential customers to make that that commitment. You need to make the value of your service clear before asking for a credit card, or people will bounce off you into low-earth orbit, never to be seen again. If you've already implemented the stuff in the rest of this article then you're off to a good start, but there's always room to improve.

It's also important to keep in mind that this suggestion isn't always strictly necessary!  (In point of fact, none are strictly necessary, but many of them can be good to evaluate, at least.) Not every audience or service will need action this drastic, and there's research showing that having credit card-less trials results in higher overall conversion. But if you've gotten yourself into a situation where you have incredibly poorly-qualified trials, it may call for drastic action. Growing your trial numbers doesn't really help if those trials aren't likely to convert.  Get your trial quality under control, then go back to trying to grow those numbers.

Don't throw those "bad fit" trials away

Just because some of your users may not be ready to start a trial (at least not one they're likely to convert from), doesn't mean you should throw them away. While some visitors will bounce off your site because they've determined that they're a bad fit for you, a great many of them just aren't ready for you yet. They may be anticipating an upcoming business need, or waiting for you to hit that particular combination of features they require, or simply be in the process of getting educated about your industry, and don't yet recognize that they need you.

Offer alternative conversion avenues for visitors like this.  Set up a mailing list, Twitter, Facebook, Slack, Discord, YouTube channel, or heck, even Twitch stream, and point your less-engaged visitors that way. Make sure they have the ability to continue to engage with you as you grow, and when they're ready to have a go, they'll remember where you are and what you do.

You want to try to direct your visitors to the most-appropriate location, based on their level of interest and likelihood of converting.  If they're ready to rock and roll, send them to the signup page.  If they need more information, make sure you have the required information easily-available on-site and in supplemental locations (YouTube channels, Medium posts, etc). If they require more hands-on interaction, consider offering demos or running webinars. And if they're just kicking the tires, make sure to "give them your card" so they can come back when they're more serious.

Improving from here

After a significant round of improvements, KiwiCharge, as you've now re-christened your New Zealand-centric invoice sending service, has some much healthier numbers. Instead of hundreds of trials every month, you pull in around a hundred.  You've significantly lowered the affiliate payout for trials, but increased the payout for converted trials, and the quality of the visitors they've sent your way has improved substantially. You're still not requiring credit cards, but your Trial-to-Paid Conversion rate is hovering around 9%. Better than that, your absolute number of conversions is actually higher than before! Combine this with a lower cost per trial and a lower churn rate from users encountering frustrating limits months after they've signed up, and your financials have never looked better.

You can be confident now that a sudden spike in visitors from a press release or popular article will properly segment the traffic into trials, newsletters, and your very popular Twitch stream, and won't lower your Trial-to-Paid Conversion rate for that cohort of users significantly. Even better, you're starting to get coherent feedback from the users who don't convert: Only being able to accept payments from PayPal is a real pain point, so you've prioritized your other gateway integrations, and should be launching Stripe, Chargebee, and Authorize.net within a month.

Now that you have a handle on the quality of your trials, there are a variety of things other than new features that you can do to help improve your Trial-to-Paid Conversion, though they're outside the scope of this article.  In my "Trial-to-Paid Conversion: Your SaaS Superhero" article, I split the process up into five pillars, representing five different categories of concepts that are important to keep in mind when trying to optimize your trials.  We covered some of the first one, Setting Expectations, here, but there's a lot more to explore.  That article is good for a solid overview, but if you're interested in going more in-depth, stay tuned for more on the other four pillars!