What if you could make twice as much money for every new member you recruited? And, what if you made more money overall from your membership program? That’s what early indications are showing us when you abandon free trial memberships.
The idea behind free trial memberships was you’d end up with more long-term members because some people would join for free who would never have joined for a paid membership. Then, because they’d joined and fallen in love with the membership, they’d want to stay for life.
I’ve had my doubts since I first heard the free trial offer taught. After all, I discovered long ago that sampling wasn’t an effective membership marketing approach. We used to send copies of newsletters to prospects, to give them an idea of what they’d receive as a member; it never converted as well as other offers. What worked was highlighting a problem they had, helping them understand the importance of solving that problem, and offering them membership as a way of implementing that solution.
Even though I had my doubts from the beginning, I’ve been marketing free trial memberships for more than 10 years myself. Throughout that time, I’ve also had marketing funnels that didn’t include free trial offers, although I didn’t promote them as heavily. I’ve always found those members had a much higher lifetime value (LTV) than free trial members. However, I never did a split test to determine whether or not each offer received the same number of leads or if one grew membership faster than the other.
When I finally began implementing these tests with clients, the results were staggering. What we now offer instead is what I call a “gift with purchase.” The sales message outlines the problem, agitates the problem, and then offers the solution in a small product — something that is usually two to four hours of training.
The training reviews a bit of the membership training, but most importantly, it shows the person how to think about their problem, allowing them to view their problem with a new perspective. This gives them a solution they can easily implement to give them a quick win.
In a “gift with purchase” offer, the new member’s training is offered for free, when they join the monthly continuity membership. This way, there is a big payoff for jumping on board, and it far surpasses the first month’s investment.
Although I’m still working on the “gift with purchase” offer and sales letters, in our preliminary testing, there has been a 10-percent decrease in the number of new members, compared with a two-month free trial offer. By switching from the free trial offer this membership marketer cuts fulfillment costs by 10 percent. He’s no longer paying for fulfillment to the “grab and dashers” who take advantage of the free trial and then quit without generating any value to the program. The best part, membership after five months is the same. Thus all the expenses of fulfilling the free trial generated the same growth rate of members as the gift with purchase offer while the costs and customer service problems were a lot higher.
That’s because the member value at four months is double; the “gift with purchase” members are worth twice as much as the members who joined with the free trial offer. And so far, by the fourth month, membership numbers are comparable.
When comparing free trial offers to “gift with purchase” offers, you end up with similar numbers of members after four months. But your revenue is DOUBLE, and your expenses are 15-25 percent LESS because you didn’t have to fulfill or deal with the customer service hassles that come from a surge of free trial members who ultimately quit anyway.
Also, if you test this, don’t freak out if your “gift with purchase” month one and two churn rates are slightly higher than with the free trial offer. After all, you are asking your new member to pay right away. You should expect to see higher churn compared with members who are riding along on a free trial. Months three and four are where you’ll witness the benefits of the “gift with purchase” offer.
There’s a lot of testing and study to be done before we can officially proclaim the free trial offer is dead, but it’s looking as though the end is within sight. Even then, there will be markets where the free trial offer will continue to grow membership programs faster than a “gift with purchase” offer.
The biggest innovation has been automated systems to pull reliable reports. Even though I’ve created all sorts of reports and dashboards over the years, I’ve only recently obtained the report generator necessary to make these split test calculations. Up until now, the reports we needed required hours of Excel manipulations.
Among our clients, we are producing more than a hundred membership retention reports each week. These reports are like looking at an MRI of your body. With them, you can see clearly what’s going on inside your membership program (and what you must do to decrease churn to maximize program growth). If you’d like us to pull reports for your membership program, just reach out to me via email at RS@RobertSkrob.com.
The biggest problem with membership programs is that members quit. I come alongside you and your team to help stop your members from quitting. You start the process by scheduling an assessment. Next you’ll receive a comprehensive membership program growth plan. Then third, if it would be helpful to you for me to support you and your team implement your plan, I’m happy to set-up to guide you through your membership program transformation. Get started by scheduling an assessment today.