I ran into a question at StackExchange. It came from a founder of a B2B Internet startup, who is tired of following up with unqualified leads. He believes that the low barrier free trial his company is offering is the culprit for their low quality. As a solution, he is contemplating asking for credit card information before the beginning of the free trial and automatically charging his users when the trial ends. He is asking the SE community if this is a good idea.
Hmmm…Let me be really clear:
Only Porn Sites Should Do This
Requiring a credit card for a trial and automatically charging the user when it ends, is just flat out wrong. The practice should exclusively be used by porn sites only. They have every reason to do this because no man without a boner would pay them a dime for their content. As soon as the boner goes, so does the opportunity.
The correlation between someone willing to provide his credit card before a trial and his willingness to be a customer is imaginary. You might just as well carry a condom in your wallet to increase your chances of having sex.
Chasing The Wrong Rabbit
Sadly, the accepted answer to the SE question uses statistics to prove that asking for credit card information is the right approach. It claims that the statistics show increasing conversion rates mainly due to the reduced number of actual sign ups.
This is really great. I am happy for them. The thing is…The goal of a company is not having high conversion rates. It is helping people. If you help people in solving their problems, they will convert to happy customers. Profit is a byproduct.
Filtering through the noise and finding the right users to interact with is a challenge for every company. Turning half of the people, who are interested in your product, away at the door is hardly a solution.
Low Quality Leads Engage Less
I believe the right approach to finding the correct users to follow up with is to measure their engagement with the product during the free trial. Then, one can choose a threshold engagement level, that fits to the stage the startup is at, to pick up the phone.
Just wait till the Ju Ju man comes for you
For example, with our product Formspider, we take it to the extreme. Formspider is at quite an early stage and all we do is buy some Google ads and wait. We literally sit on our asses until someone contacts us. The exception to this rule are the local customers. I wrote about them here. For anyone who finds us online, we do nothing. This is because at this stage we only want to talk to people who are really really interested, feeling the pain we are trying to address, seeing the vision and willing to put up with the product until it matures. In short, we are waiting for the Earlyvangelists.
Above all statistics and economics, not requiring a credit card for a trial sends a powerful message to the user that you are one of the good guys who don’t try to sneak into a credit card statement unnoticed.
No conversion rate beats this message.
Yalım K. Gerger (@yalimgerger)