The Psychology of Free Trials in SaaS

Ever wonder why so many SaaS companies offer free trials?


Digital human with idea coming out of head


Although there are many good reasons to do so, human psychology may shed some light on an important aspect. To begin, most people tend to believe their decisions are entirely rational, but the truth is that decisions are often emotionally driven. For potential B2B SaaS prospects, uncertainty in the evaluation process can induce many negative emotions. Personal and professional risks associated with making the “right decision” can give rise to anxieties, especially for larger companies where the impact of their decision will be widespread.

As a former Psychology Professor, I think about free trials through the lens of behavioral science:

      1. What are the psychological factors behind the effectiveness of free trials?
      2. How can free trials turn potential customers into paying customers?

    1.  

    The answer, in part, lies in their ability to reduce the emotional anxieties associated with risk and uncertainty and tap into the human tendency to reciprocate positive actions in kind.

    Free trials are a significant “risk reduction” technique that works to subdue the negative emotions of uncertainty through familiarity.

    Analogous to test-driving a new car, the prospect can directly evaluate the product’s performance before making a substantial financial commitment. This phenomenon has real-world implications and is rooted in tangible neuroscientific principles.

    Free trials can also evoke a well-known Social Psychology phenomenon called the “reciprocity effect.” The reciprocity effect posits that people are more trustworthy and cooperative when they receive positive actions from others. This effect is deeply rooted in our evolutionary past when survival was often contingent upon reciprocal altruism. As the old saying goes, “one good turn deserves another.” Show your prospects a good turn, and set the stage for an honest, open, and giving relationship. They’re likely to reciprocate in kind.

    In addition to the above, free trials demonstrate confidence and transparency while promoting meaningful dialogue between the buyer and seller. Anyone worth their salt in business knows interpersonal relationships and communication lay at the core of any successful business. Evoking positive emotions and experiences while subduing negative emotions early in the buyer journey is crucial in generating ARR and brand loyalty.

    A free trial and personalized support during the evaluation stage are positive actions that prospects may reciprocate by converting to a paid plan.

    Remember, that at the core of any business decision is a human being, just like you and me.

    Yellow brain in place of an animated light bulb with the words 'FREE' all on a pink background

    BONUS SCIENCE

    Recent studies in neuroeconomics reveal that negative emotions involved in purchasing decisions are linked to increased neurological activity in the insula, a brain region known for processing physical and psychological pain. Studies have also demonstrated that decreased insula activity corresponds to a perceptual decrease in the “pain of paying” during the product evaluation stage.

    These results strongly suggest that free trials can dampen activity in the insula through their mechanism of delayed payment. This, in turn, will provide the prospect with the time necessary to formulate an unbiased assessment of your product. 

    By providing a free trial, you are allowing your product to demonstrate its full value while simultaneously suppressing the neurological effects of negative emotions. Now that’s what I call happy users!

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