To Free or Not to Free

It's pretty common for web based services to offer a free sign-up account as a trial period or self-directed demonstration. An advantage of offering free sign-ups is to give a potential customer a good look at the system in order to make a buying decision. For services with automated enrollment and simple service structures, free sign-ups can be a good idea. Converting a free sign-up customer to a paying customer helps lower sales costs. At ChallengeWave, we've decided not to offer a free sign-ups. Let's talk a little bit about why that is.

Why ChallengeWave does not have free sign-up accounts

Our service is geared to help an entire organization start and stick with healthier lifestyles. The way ChallengeWave works is by creating a private online experience for the organization. The users compete with and against each other to adopt and sustain healthier habits. This reduces medical claims expense as overall employee health increases. Also, organizations see reductions in worker compensation expense and lost work time.

Our actual customer isn't the user, it is the benefits coordinator and the CFO. Both of these client roles are interested in reducing medical claims expense, reducing worker compensation expense and minimizing lost work time. The way our service impacts those expense categories is through services delivered outside of the web-based system. Thus, a free sign-up account would only show the user role and the performance of the user role is not the specific benefit the client is purchasing.

When we first launched ChallengeWave, we offered free sign-up accounts. As we worked through each of the sign-up leads, we realized almost all of the the roles of the demo users was that of the health conscious individual. Of the 200+ free sign-up accounts, only 2 leads were shopping for an organization wide service. Thus, free sign-up accounts were not very well qualified for our business model.

Prospect Interaction

Another benefit of choosing to offer a demonstration over free sign-ups is the opportunity to interact with your prospective customers. Interacting with a prospect is valuable because you glean market intelligence from the sorts of questions asked by a prospect. You can gain much by judging how a prospect reacts to your key points. By using prospect interaction feedback to iterate your business model, you will fine tune your offerings for more conversions. Compare this benefit with what you would get by a free sign-up customer who is confused by your offering, misunderstands your product or doesn't stumble upon a must-have feature.

As an entrepreneur, I often feel like I'm short of ways to validate our strategies. After a bit, I happened upon blog post by Eric Boggs about his decision to drop the "free trial" in favor of a "request a demo" strategy he undertook with his company(Argyle Social). His reasoning is sound and applies to a variety of business types.

Should you offer a free sign-up account or not? Let's talk it out in the comments

If you are interested in a demonstration of ChallengeWave for your organization, let us know.

There are no comments for this entry.

Add Comment Subscribe to Comments

7/6/11 10:09 AM # Posted By andy matthews

Good article Dan. The important thing about your decision is that you thought it through and have cogent arguments for your decision. I hope you're successful. You're a smart guy and very talented.

Miss seeing you at some of the recent conferences.

7/6/11 10:56 AM # Posted By Phillip Senn

The old business adage is Give away razors, sell razor blades.
But I think Google has rewritten the rules on that. Now it's: give away everything and sell ads.