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I have a new bootstrapped web service that targets consumers. It has a free trial offer. The visit to trial conversion is respectable, ranging from 10% to 15% on 300 samples. However, my conversion from trial to paid is insanely low.

Currently I have 6 paying customers with 308 trial sign-ups. My service is very inexpensive at $4.95/month (billed in 1 month, 3 month, or 6 month increments).

My initial target was 1% conversion from unique visit to paid, but now it seems like a pipedream to achieve this figure.

I have a competitor which seems to be doing fine with similar pricing and features. I tried to differentiate my service by targeting a different set of consumers.

Is my sample size too small to draw a conclusion? I can scale up my visit traffic but 0.2% is way too low to make my startup profitable.

Update: I have been following the suggestions given.

I sent out a survey to 300+ users and received 13 responses so far. I also dug up some of my Google Analytics statistics.

My payment process has 3 funnels:

  1. View Cart (Page after user clicks buy)
  2. Check Out (Page where one fills out information)
  3. Completion (Page where one submits order)

From the observed time period: - 2800 unique visitors - 377 trial sign up - 217 used their trial - 42 at my Funnel 1 who clicked "Buy" - 7 actual paid customer

As you can see, there are actually 42 unique users who are interested in purchasing and converts at 1.5%. Unfortunately, I have 60% bounce rate on funnel 1 which dropped the actual conversion rate to 0.25%.

Lastly, should I be alarmed that only 20% of my trial users clicked "Buy"? The reason I'm asking is I want to know if I should spend more of my time improving the actual product or to improve the conversion rate through other means (website tweaking, marketing, etc). I'm bootstrapping with zero resources except myself and my own money.

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Did you mean $4.95/month recurring (rather than non-recurring)? – Alain Raynaud Jun 17 '11 at 13:02
Hi Alain, I meant non-recurring. Maybe my wording was confusing but what I mean is I have 1 month prepaid, 3 month prepaid, 6 month prepaid etc. I don't automatically rebill my customers every month. – Nick Jun 17 '11 at 13:27
Is your offer a B2C or a B2B? – John Bogrand Jun 17 '11 at 13:42
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I wouldn't go with the passive model of letting a customer "take action" to renew. I'd offer a 3, 6, 12 month prepaid with some ramped up discount, but i'd also allow users to go "month by month, cancel anytime". To ensure trust and peace of mind of users going on "automatic payments" i'd create a big graphical tooltip over the word "Cancel Anytime" showing the screenshot of the member settings page with a large, clearly visible "Cancel My Membership" button, in "large friendly letters". This way you can gain trust, and the comfort of 'auto' income that doesn't need users to remember anything – ron M. Jun 17 '11 at 13:57
@John Bogrand: It's a B2C offer. @ron M.: I will put this onto my to-do-list once I gather why my customers are not converting. – Nick Jun 17 '11 at 14:28

3 Answers

up vote 12 down vote accepted

Why ask us? You should ask your customers.

Both converted and non converted. They have the answer. This should be automated:

Each time a trial ends and is not converted, send a friendly email to the prospect asking to answer few questions. It must be simple (limit it to 3 closed questions and one open question).

Ask what you could improve to your paying customers. Since they are involved with you, they will be more likely to give you valuable feedback.

Since you currently have a low number of trials, I suggest you to contact them personally. That's how you will learn and the information you will get is gold.

Some businesses take years before reaching profitability.

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Great next steps. – John Bogrand Jun 17 '11 at 13:42
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offer 30 free extra days for anyone who fills a detailed form specifying why he/she will not convert to a paid customer. At this point in the life of your startup- this information is vital and you should entice people to share it with you. – ron M. Jun 17 '11 at 13:59
I know the previous suggestion will not work for people who abandon the trial, but those who do use it up and won't continue if they're asked to pay, will gladly accept 30 days more for telling you exactly why they won't pay. – ron M. Jun 17 '11 at 14:32
thanks! I will send out individual e-mails to all my trial members. I previously had 200 Beta sign ups and tried to solicit their feedback. Unfortunately, I only got two one-worded responses even though I provided incentives. I could see on my server logs that there were active users but they didn't seem want to provide feedback. What am I doing wrong here? – Nick Jun 17 '11 at 14:38
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Buy 30 $20 iTunes gift cards and promise them to your most active beta users who discontinued in exchange for filling a detailed form as to why they left (detailed == > 100 words). You must gather the info. if they won't share it with you for incentive, the incentive isn't good enough. – ron M. Jun 17 '11 at 15:52
up vote 4 down vote

You said the magic word: new

Give it time, work on marketing via social networks, ads, SEO and constantly improve the looks (aesthetics) and functionality of your web application.

Don't get discouraged now. Keep running it. for two years even if you have to. if your offering is good - "it will come".

Simply keep moving your app onward and upward and never quit (with the exception of damaging your financial life, sanity, family etc). if it doesn't come, get professional help with marketing.

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Thanks Ron. Staying motivated is so important especially at my stage. – Nick Jun 17 '11 at 14:39
tell me about it. I work 18 hour days to get to my launch... – ron M. Jun 17 '11 at 16:02
up vote 2 down vote

Another thing to consider:

How do you charge people? Are you using an "external" company like PayPal or any other payment provider or do you have a secure form that looks as an integral part of your website? What about the design of the payment page? Is it designed to instill trust and peace of mind? Is it bothersome? too hard to follow? Payment pages are very delicate and must be optimized with many factors or they'll bleed our even the users who want to pay. This is why Apple's store is so successful. They created a place where users feel safe to just "click" and buy, hassle free, worry free.

When users reject $5 a month deals on software they use (those who complete the trial fully) it's not the price (software priced @ 1 Venti coffe a month? cheap), it's not the features (or they wouldn't stick with the trial to term). Many times it's simply not trusting the payment method or feeling it's too much of a hassle.

Personally I've been avoiding buying things I wanted many times because the payment mechanism seemed freakish, hectic, bothersome or untrustworthy to me. I did buy from this superb company. Just look at their pay page: https://www.panic.com/transmit/buy.html - It almost makes you want to yank out a credit card and go ahead with it. The product BTW is superb, which also helps. They hav other services too, like Usenet access with a monthly recurring fee. Here's the pay page for that: https://www.panic.com/unison/access.html

This is why I thought you may want to go with a "Month to month, cancel anytime". Lots of people will not pay a year in advance for a new service. They'll want to test drive it a bit and that means month to month. Forcing them to actively pay every month will deter people. Heck, it will deter me. Maybe you should look into fixing that too.

Related to that, do you have the funnel information that shows you where your users "ditch the wagon" on the way to become paid users? Do they actually go into the payment form and never complete it? If you don't have this traffic information, you must arrange for it to start collecting "as of yesterday". Even free tools like www.statcounter.com can help. Google Analytics will handle the job easily. This is vital in pinpointing where you need refinement.

Anyway. Good luck.

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Hi ron, I've emailed you my website. I hope you had a chance to take a look at it. – Nick Jun 24 '11 at 15:43

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