Acquisition is one of the most challenging strategies in subscriptions. How can businesses reinvent their offerings to beat the competition, subscriber demand shifts, and new buying behaviors? 

Many components create the ideal customer acquisition promotional toolkit. Free trials are one of them. 

This article will answer all your questions about free subscription trials, especially one that haunts product marketers: whether or not to require credit cards for free trials. 

Should you offer free trials? 

In marketing, allowing cautious customers to test your product before buying is crucial to a winning acquisition strategy. For subscription businesses, a free trial subscription is an easy way to achieve that for subscription businesses. In fact, 65.8% of all B2B and B2C subscription businesses offer free trials.

Each subscription business is different. The best to know if you should offer trials is by comparing the retention rate and LTV of subscribers acquired via a trial versus those who didn’t. 

Should free trials be cardless?

There’s always a question subscription companies have: whether or not to request credit cards for free trials. And the answer is: it depends on your business goals.

Cardless Free Trial on Recurly software

Requesting credit cards for free trials

This is a good option if your business wants to grow its revenue per user (RPU). Asking for billing and payment information during a free trial can reduce sign-ups but improve lead quality. Only prospects with serious intent would type in their card number.

However, ensure that your pricing is set to maximize revenue. With a handful of sign-ups, your win ratio and RPU from each subscriber have to be higher.

Not requesting credit cards for free trials 

While requiring a credit card makes the transition from trial to recurring customer easier, cardless trials help increase sign-ups and pave the way for more subscriber acquisition. This option is perfect for companies wanting to increase sign-ups or launch a product's beta version. 

  • Boosting sign-ups: Remove checkout friction and open the doors for a broader audience. However, not all potential consumers are qualified. Your sales team has to qualify them meticulously. 

  • Testing beta products: When launching a new product that hasn’t found its market fit, you’ll want to reach non-paying customers to evaluate and give honest feedback. No credit card, no strings attached. 

When deciding if going cardless or not on trials, consider your ultimate marketing and sales goals. Mandatory credit cards equal fewer sign-ups with a higher RPU. Cardless free trials equal a boost and sign-ups with a potential lower RPU. 

Measuring free trial effectiveness

The only way to know if your free trials are effective is with A/B tests. Do prospects convert more with or without them? Which type of trial is driving more conversions? What is the ideal free trial length? 

To answer these questions, divide your subscribers into smaller groups. Cohort analysis–usually segmented by user acquisition or start date–will help you gather insights on monthly recurring revenue (MRR), subscriber lifetime value (LTV), churn, and retention rates. 

Test engagement and personalization strategies, trial lengths, and card-required vs. cardless trials for each plan. Then use the trial conversion rate formula to seize the effectiveness of your trial strategy. 

Trial conversion rate formula

Track conversion rates over time to get an insight into when your prospects become subscribers. Recurly’s Trial Performance report, for example, shows you the conversion rate for trial to paid subscriptions.

Trial conversion rate report in Recurly analytics

Additionally, you can dig into the trials’ status and understand why customers aren’t converting. Maybe they canceled the subscription before the trial ended, or their payment failed. 

Trial subscription char status report in Recurly Analytics

Understand subscriber preferences & boost your sign-ups

Pricing, packaging, and promotions form a well-rounded subscriber acquisition strategy. The efficacy of these marketing efforts comes down to understanding what competitors are doing and how consumers respond.

Benchmark data is critical to designing specific tactics for your business. Recurly has compiled the data of over 2,200 leading subscription brands to inform your acquisition strategy.

Check out The State of Subscriptions: The acquisition chapter to get the most recent trends, how they impact the subscription industry today, and how Recurly is changing subscriber acquisition as we know it.