Are Paid Pilots or Free Trials Better for B2B?

I have recently read two great posts about the over-use and ultimate lack of effectiveness of the free trial as a marketing tactic in B2B SaaS sales organizations. Both Jep Castlestein of LeadSloth and Amanda Ferrante of DemandGen Report talk about alternatives to the ubiquitous trial and each provided great food for thought on a topic that is often dismissed by SaaS vendors. Most vendors I have seen, even those with extremely complex solutions (CRM, accounting, marketing automation, content management systems, etc.), seem to funnel everyone towards a free trial, shake the bucket up a bit, and then see which clients stick it out. While this has no doubt been effective for many organizations, especially simpler, less expensive solutions (see Basecamp, Constant Contact, etc.), I think it can simply add to the marketing and sales noise for many B2B organizations.

Problems with B2B free trials:

  1. The prospect has little skin in the game and may not be in a hurry to implement the trial solution during the assigned peirod. Other priorities come up
  2. The corporate sponsor may have difficulty getting buy-in from her internal team ( administrator, IT, etc.) in making changes that may be temporary
  3. The product is likely to be too vast for the client to be able to wander her way through it (imagine how many or NetSuite trials feel) without significant guidance from the vendor
  4. To be most effective in terms of converting the prospect, the vendor must fully implement, train, and support the free trial as though they were a full-paying client

I have been on both sides of this game. As a B2B buyer, I am relatively poor at dealing with the free trials for which I sign up. I sign up for them and then other priotities quickly come up. Since I have nothing invested (in terms of time, money, or stakeholder buy-in), I often wind up shelving the evaluation until a later date. What typically works best for me is a situation where I am paying for the solution but I have an out-clause if I am not satisfied after a certain period. That gives me the incentive to get things integrated quickly but also minimizes my risk as a buyer.

Advantages of a Paid Pilot Approach:

  1. The prospect has a sense of urgency when implementing the product -she is actually paying for it
  2. The vendor has a sense of urgency when  supporting the client — the prospect in this case is actually a paying customer and could become one on a recurring basis
  3. Increases likelihood of the prospect getting buy-in from other stakeholders at her company. She can tell them that she has selected a product but that it comes with an out-clause if needed.
  4. The vendor is able to at least partially compensate his sales rep; making the paid pilot feel like much more of a “win” than a trial would

At my marketing automation company we do a bit of both but the vast majority of our clients are month-to-month and have the option to cancel their service at any time. This has been a tremendous model for both our sales team (reduced risk is a nice message) as well as our support team. Since our clients can leave at any time, we have to constantly be on our “A game” in terms of the level of service we provide to our customer base. In a sense, all of our clients always in a paid pilot and we love it that way.

If you are only using the free trial method currently, I encourage you to also take a look at paid pilots. You may find that it works out better for both you and your prospects.

The end of installations?

Seth Godin predicts the end of installed software in a recent post and really hits the nail on the head. popularized this craze in the CRM world and rivals soon emerged (see Netsuite’s impending IPO). You know they are on to something when Microsoft, king of the installed software world, enters the space. Microsoft has announced an on-demand version of it’s CRM offering, Dynamics. Not only will it have functionality mirroring salesforce’s, but they will price it at roughly 40% less in a bid to capture market share.

The success of these solutions is no surprise. There are many compelling reasons for B2B marketers to turn to hosted solutions, and indeed most email, analytics, and ad serving solutions are on-demand. Obvious benefits include:

  • no (or lower) capital outlay
  • less (or no) IT involvement needed
  • more likely to work out of the box
  • seamless upgrade process as everything is done on the provider’s end

A common theme to the above mentioned benefits is that the marketer is put in control of the marketing software. This is a simple idea, but it is not always the case with heavier, server installed applications where budget and IT approval often kill any hope of integration. By lessening IT involvement, and splitting payments into monthly fees, a marketer is much more likely to be able to implement a new solution without jumping through hoops for approval.

If only I could find an on-demand operating system before Vista crashes my computer again. Service Pack 2… where are you?