Startups trying to convert their trial, whether free or discounted, to paid subscriptions or signed revenue can be one of the hardest hurdles to overcome, especially if it is the first – the first one for your company, the first one in a new vertical, the first one after a pivot, or the first one into a new international market. Allied Legal’s Sales-as-a-Service team often assists startups with structuring, implementing and converting their trials. In this article on startup sales, we will discuss the art and science of trials.
If you are a business that has been around for a while, and you have already built solid brand recognition in the marketplace, then chances are you may not have to give away a trial to prove that your solution actually works for your next client. New startups, on the other hand, whether a SaaS, hardware device, platform or marketplace are charged with pushing the boundaries of innovation and disruption — and that can come with a lot of unknowns, not only on your end, but on your customer’s end as well. Unknowns of who you are, your startup and what you are about. A trial gives you the opportunity to validate your offering, and your customer the opportunity to develop a relationship with your offering. However, giving away a trial may require allocation of company resources, investment in time and with no guarantees that it converts into a sale. It also may take away from conducting other real business, so its important to do it right.
What is a Trial?
Trials, Proof of Concept, Pilot or Beta are all examples of a customer trying before buying. Trials have been popular in many industries and some have made it into and art & science. There are facets of trials that we can draw upon from everyday life. Take a gym membership that may start off with a complimentary 1-day trial, or a 14-day discounted paid trial. The gym trial will include certain conditions such as hours you can use the gym, use of gym equipment only versus group fitness classes. There may be documents or agreements that needs to be signed for health and safety, or even an agreement that shows the pricing you will pay after the trial. The experience of the gym trial may include 1:1 consultation with a personal trainer on your health and fitness goals. You may even get a call on the first day of the trial confirming your training session. Along the way, during the trial there may be staff that make you feel welcome and check-in with you as to how the trial is going and if there are any concerns or feedback. Membership sales may reach back out to you, just prior to the trail ending with special limited offers for an annual membership.
There is a lot that startups can learn from the gym trial model when designing their own trial. For example, both trials have the same goal – converting the trial into revenue through product validation. Further, both trials should be implemented in a way that makes the customer feel valued and welcomed and makes them feel as though they will be missing out if they lose their access to the offering. Finally, both trials should come with a degree of conditionality and limitation. If the customer is already receiving everything for free, what motivation will they have to purchase?
Trial Qualification
You may be so excited that you have a client that is meeting with you, that you are readily prepared to offer a trial. Stop. It’s important to qualify your potential client. What you have to offer may be solving a very real pain for the client. Prior to offering the trial and as part of the sales qualification process, use qualifying questions such as:
- What pain points is the customer experiencing? Can your solution or offer help to solve that? If so, how? How much will it mean to them by solving it?
- Quantify and qualify the value add of your offering.
- Have they ever purchased from a startup or small vendors, or just the large vendors?
- What are the priority initiatives they have underway, and how does your offer fit in with those?
- What types of budgets have they allocated to these initiatives?
- Are there milestones or key dates for those projects? What happens if those dates are missed?
Sales qualification not only helps determine if they may purchase from you, but also helps to weed out those that may not. The purpose of this process is to help determine whether a trial is even necessary to land you customer, as they may already be eager to pay. This is particularly true when your sales model is 1:1, as opposed to 1:many. If you are selling on a 1:1 basis, that gives you the valuable opportunity to assess your customer’s needs and expectations before reaching an arrangement.
Structuring the Trial for Success
Once you have qualified your customer and made the decision to offer a trial, then it’s time to get into how to structure the trial. You should be considering both what structure is most likely to convert the client, and also what structure is most commercially viable for your startup. Following are some considerations for the structure of a trial, POC or pilot.
- Will it be paid trial, if so, how much should it cost?
- How will you know it is successful, and what key criteria will the client use to gauge success?
- The length of the trial – keeping in mind that the longer the trial, the longer the sales cycle.
- Who from the client, and who from the startup will participate in the trial?
- If there may be sensitive information whether from the client or the startup, are there confidentiality agreements that might be a pre-condition for the trial?
- Will the decision makers have visibility or participate in the trial?
- What happens if the pilot is successful, are there agreements ready to go and what are the next steps?
- Will there be agreements that need to be signed (perhaps not legal agreements), but mutual agreements of understanding? Who has signing authority for that, and who has signing authority once the trial concludes?
A trial is not only value for the potential customer, but a trial is also of great value for the startup. You get to see your product or service firsthand in the customer’s environment. This can help with further identifying, refining or building features to solve for relevant pain points and improving your offer to the market.
Implementing your Trial
Structuring a trial for success only helps to increase the chances that the trial will convert to paid revenue that will help with cash flow and extend your runway. Here at Allied Legal, we help our clients consider the legal, commercial, and sales aspects of their startup’s trial. If you want to design and implement a trial offering for your startup, give us a call on 03 8691 3111, or send us an email at hello@alliedlegal.com.au for a consultation.
