One of the best side effects of founding a software company is the sheer number of experiments that are required to maintain a healthy growth trajectory.
Do I onboard new users with a video overview, or a guided tour? Should the marketing site target consultants or freelancers? Single page or lots of pages? Screenshot of the app or picture of a smiling family?
These are the sort of things that were almost impossible to explain to my salaried self from just a few years ago. Back then, I was paid to write code, and there was enough middle management in place to mask what the effects of this code were to the business I worked for.
But these days, the experiments I run directly affect my bottom line, which in solopreneur terms means the family budget for buying kids clothes or how often we treat ourselves to a meal out each month. No experiment has been as hard hitting as my last, which was: Should I collect credit cards upfront, or wait until trials expire?
This is a hotly debated and controversial topic in the SaaS world. On the one hand, the window shoppers who tend to bog down support are gone — which is especially nice when you’re also the entire support department. And you get more engagement during trials, as I’ll talk about later. But conversely, some people simply won’t give up their credit card when the outcome is uncertain, no matter how many “we won’t bill you now, promise!” and refund guarantees are in place.
I’ve found, though, that the heart of issue is the fact that if your trial user — who might, like many trial users, sign up and never come back — either misses your trial expiring soon email or ignores their inbox for a few days, they’re going to get billed automatically. And this immediately makes some people feel like you’re the scum of the earth (even though they agreed to be billed if they don’t cancel within X days.)
October, 2012: Switching from no-CC to CC
Last October, I added credit card fields to Planscope’s sign up form. Immediately, my growth rate doubled. Achieving 2x growth didn’t require any special new features or enhancements — just a few backend billing tweaks.
And I let this ride for about a year, and maintained a consistent month-over-month growth rate. I’d occasionally get a refund request, and there was a definite spike in cancelations right after that first payment went through. (Conveniently, lots of people seem to miss/ignore the “Your trial is expiring and credit card will be billed” emails, but no one ever misses the “Billing receipt” emails that come a few days later!)
Gmail’s new tabs made things even worse. My trial expiration emails would end up in either the “Promotions” or “Updates” tab, which by definition are low importance. And since I was emailing 3 days before their 14 day trial expired, the amount of people who flat out missed this email went through the roof. Refunds rose, and since I’m still doing this manually via the Stripe UI, my administrative overhead went up.
September, 2013: Reverting back to no-CC
Around this time, I ditched Mailchimp for InfusionSoft. I’d always been pretty good on the “infoproduct” side of my business when it came to email marketing, but I was lucky to send out one or two emails a year to my Planscope list. And my lifecycle email sequence was pretty much: “Welcome from the founder” -> “Your trial is expiring” -> “Billing receipt”.
I decided to get more customers into Planscope, hook them up on a free educational drip sequence, and get people into the product with as little friction as possible. I spent some time reworking the guided tour, and included a sample project for new users to play with. It seemed bullet proof. I’d get more people to use the software, I’d have more people to teach things to, and once I had people in the software inevitably conversions would skyrocket. Right?
Sure, I’ve been adding a lot more emails to my CRM, but I only added 15 new customers last month — and before the switch, I’d been averaging around 30 to 40. And with churn factored in, I had my first month of negative growth in over a year.
There’s something else I’ve missed over the last month, which has really affected my ability to grow the product. People just… disappear. When asking for credit cards upfront, people need to cancel if they don’t plan on continuing. And when canceling, I ask people why they’re leaving. The amount of data I’ve collected since requiring a cancelation reason has been instrumental in the growth of Planscope. Sometimes the problem was environmental — either the customer didn’t have a new project, or they got a full time job — or something related to the product. But more often than not, they told me what was wrong. “Inviting my clients is confusing” or “I ran into a bug when rearranging tasks”. These are things that I probably wouldn’t have ever heard if I didn’t these cancelations, which are typically written at the high water mark of a user’s emotional relationship with your product.
When trial users just disappear, you have no idea why they didn’t convert. Which severely affects your ability to retain people like them in the future. This alone is enough to cause me to rethink my decision to abandon capturing credit cards upfront.
November, 2013: Returning to capturing CCs upfront
It’s clear that abandoning asking for credit cards upfront has negatively affected my business, even with the added attention given to initial onboarding and the overhaul of my lifecycle sequences.
Here’s my hypothesis: When you ask for a credit card upfront, the trial customer takes your product more seriously. They know the relationship is “I pay you money (as I’ve already intended to do when signing up), and you provide me value.”
They become more engaged. They’re more likely to actually battle test the product and make an effort to incorporate it into their business. Once someone sees the value of your product and is able to fully adopt it, they’re going to convert. When they don’t, they cancel, and have a 90%+ chance of giving you a legitimate reason why.
Rather than making a clean revert to the old registration system, which had new users plug in their credit card and kick off a 14 day trial immediately upon signing up, I’m going to find the middle ground.
1. Keep the current “squeeze page” version of the homepage
The homepage of Planscope makes it super simple to create an account — all you need is an email address and password. I get a handful of fake addresses, but for the most part I capture legitimate email addresses that I can kick off a drip campaign with.
I average about a 8-10% conversion rate on this page, which means I’m getting 10x more email addresses. I can teach these people how to become better consultants, and how Planscope can help them do that. This allows me to build up trust over time, which is often necessary before asking for someone’s credit card.
2. Keep the current onboarding and sample project
The guided walkthrough and sample project are the interactive equivalent of a video walkthrough on the marketing site. People can play with the interface, create tasks and milestones of their own, and more. They can’t, however, create their own projects or estimates or invite anyone — which means it’s impossible to derive any sort of business value out of the sample project.
3. Creating your first project or estimate asks for a CC
When creating your first project or estimate, which will allow you to invite in a client or team member, I’ll then capture a credit card. I’m also betting that people who get to this stage — who have already taken the guided tour and experienced the product — will be much more willing to kick off a trial (vs. someone who’s complete interaction has been screenshots on the features page.)
I’m also going to bump up the trial length to 21 days, and I’ll be sending the trial expiration email 7 days beforehand. This should help eliminate the problem with people not seeing the expiration emails in time, and allow me to expand the trial lifecycle email sequence. (And I’ll finally start getting those cancelation emails again!)
Will this work? I’m not sure. But it’s the next big experiment I’m kicking off, and it’s the result of looking at a lot of data and making assumptions. I was wrong before, and might be wrong again. I might end up reverting back to asking for credit cards on the initial signup form.