Everything You Need to Know About Free Trials
Should you offer free trials? How can you make sure families to come back? And what about no shows? Your guide to the good and bad of running free trials.
What are free trials?
Free trials offer potential customers the chance to try an activity before committing to more sessions. Loved by parents as they reduce the risk of paying for something upfront that their child may not enjoy, they can pose challenges for organisers that aren’t well equipped to convert free trial customers into paying customers.
Why do parents like free trials?
Parents love the freedom and flexibility of free trials. For a term of classes, especially with a higher price point, parents value the chance to see that their child will enjoy the activity before committing.
How common are free trials?
Approximately 1 in 5 class providers currently offer free trials to customers. These are typically activity organisers who run classes, and are most common for martial arts, dance, music and drama classes.
How many class providers offer free trials?
22.4% of class providers offer free trials. The 77.6% of class providers who don’t, some choose to offer paid trials instead, while others may not use trials at all. Typically, when activity organisers don’t use trials, they have another flexible pricing option available. Read more about different kinds of pricing models here.
Free trials are more common in categories where the activity has potential to continue beyond a single term, and become a long term hobby. This means the new customer has a potential high lifetime value (the total amount they will spend as a customer of your business), which offsets the costs associated with offering free trials.
Popularity of Free Trials By Activity Category
Should you be offering free trials?
Free trials are best suited to classes where there’s an ongoing commitment to participate in the class or activity. Trials allow potential customers to make a more informed decision based on their opinions of the trial class, before they book, and pay for, a full term.
Free trials are most common in termly classes or activities with a monthly subscription, as the price a customer will pay is high enough to accommodate a percentage of non-paying customers in a session. Parents can be unwilling to commit to the expense of booking a full term without being certain that an activity is right for their child, and free trials are one way of making them comfortable that their child will enjoy a high-quality activity.
Some things to consider:
Some spots in your activities will go to families who aren’t paying
Running free trials means that some spots in your activities will go to families who aren’t paying. This will reduce the number of spaces you can offer paying customers.
Think carefully about how many spots each week you’d be willing to offer for free, and how this fits with your class and venue size. Most providers keep just a few spots in each class open for free trial customers.
If the class you’re running isn’t at full capacity, you’ve effectively already got sunk costs (venue hire, staffing) which means opening up your empty spots to free trial customers may not cost you anything.
Running free trials requires extra effort to convert new families
Each week you’ll need to welcome and induct new families and be available to answer parents’ queries and sell them your class. Without dedicating time to this part of the sales process may reduce your chances of success to sign up new families.
Spending time following up with families is an important step in the free trial process - making sure you take the time to do this will give you the best possible chance at getting free trial families to become paying customers
Your conversion rate is important
The success of your free trials will be decided by your conversion rate (the percentage of customers that do a free trial and go on to book after attending the trial)
The higher your conversion rate, the more new customers you’ll generate from free trials.
Figuring out your conversion rate
Keep a record of how many people take a free trial and how many of them go on to become a customer. This will help you work out your conversion rate and plan how many free trial spots you need to offer to result in a new paying customer.
For example, if you get one customer who books the full term out of every four who attend a free trial, your conversion rate is 25%. To fill ten new spots in a class, you’ll need to offer forty free trials.
How much should you pay for a new free trial customer?
Working out how much to pay for a lead (a potential customer signed up for a free trial) will be based on your conversion rate and the value of the class. If you understand these two numbers, then you can work out the rate you can afford to pay for a free trial.
To be able to effectively calculate how much you can afford to pay per lead you need to know:
The price of a term of your class
Your conversion rate from free trial to paying customer
How much you can afford to spend on attracting new customers after paying the costs associated with your class
For example, Rachel runs a ten week term-time class that costs £100 for the whole term. It costs her approximately £30 to cover the costs associated with running a class (venue hire, staff, class materials). This leaves her £70 (£100 - £30) per child to attract a new customer. The difference between how much it costs her to attract a new customer and the £70 she has to spend will be her profit per child.
Rachel’s conversion rate is 33.33%, so 1 in 3 of her free trials goes on to book a term. If she has £70 to attract each new customer, she can afford to pay £23.33 for lead and still break even. Anything less than this that she pays will increase her profit, and anything more will cause her to make a loss.
Rachel pays £10 per lead for advertising in order to secure each free trial, so it will cost her £30 to get a new customer for the term. Her profit will be £40 per customer (the £70 she had to spend on getting a new customer minus the £30 she did spend).
Free Trials: Weighing up the pros and cons
Free trials are an effective way to attract new customers to your classes, especially for higher priced activities’.
Fill empty spots in your classes while getting new customers at the same time
Some parents won’t necessarily become paying customers.
Requires additional work to convert free trial leads to paying customers.
The success of free trials needs to be carefully monitored by tracking your conversion rate.
You may experience no-shows from some customers.
Common questions about free trials
Will I jut get parents who are looking for a free class and have no intention of booking?
Families that try this are the exception rather than the rule, but this is one of the risks of running free trials. It’s rare that a parent would expose their child to a class they might love, only to never take them along again. Simple measures, such as ensuring the same family (or same child) can’t participate in multiple free trials will help you sidestep this issue.
Being confident in your conversion rate will also help put your mind at ease. If you know that your conversion rate is 33.33% (1 in 3 customers), then you’ll know that for every two customers who don’t sign up, one will - and as long as you can afford this, then it’s just part of running trials.
If you feel uncomfortable about the risk of families looking for a freebie, you might want to consider offering paid trial sessions instead.
What about no shows?
A no-show is when a family fails to turn up at the last minute, without getting in touch to cancel the session or rearrange. Without an upfront payment, there is unfortunately not much downside to parents who decide not to attend at the last minute. To avoid no-shows, we recommend sending a reminder email the day before their free trial.
I offer single sessions and termly booking. Can I run free trials?
When you charge for a single session, you begin to lose the marketing effectiveness of the free trial. The exception to this would be classes where the single session price is comparatively high and may be a barrier to some families trying the activity for the first time.