👓 The Ultimate Guide to Reverse Trials

The what, why and how of this effective monetisation vehicle

Good morning, it’s Ben here 👋. I’m back with another edition of The Product-Led Geek, the newsletter where I dive into the strategies and tactics that help you scale your business with Product-Led Growth and Product-Led Sales.

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Here’s what you’ll find in today’s PLGeek:

  • 📰 GEEK DIGEST: Friction-free access to the latest news in PLG

  • 🧠 GEEK OUT: The Ultimate Guide to Reverse Trials

  • 😂 GEEK GIGGLE: 1 thing that made me laugh this week.

  • 📅 GEEKS OF THE WEEK: 5 interesting links for you, curated by me

Total reading time: 10 minutes

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📰 GEEK DIGEST

🧠 GEEK OUT

The Ultimate Guide to Reverse Trials

Bottom-up B2B product-led acquisition vehicles historically came in two flavours:

  • Freemium: A free (forever) plan, with the ability to purchase a paid plan at any time

  • Free Trial: A time or usage limited trial of a paid plan requiring purchase at the end to maintain product access (aka free trial)

But for the last couple of years we’ve seen more and more companies implementing an approach that combines freemium and free trial mechanisms and promises to deliver the benefits of both - the Reverse Trial.

Put my thing down, flip it and reverse it!

Reverse trials may be a relatively new concept, but they are showing up in more and more PLG tools - Loom, Asana, Airtable, Spotify and so on. So what gives? Why are reverse trials becoming more common?

Today’s Geek Out is a collaboration with Jonathan Anderson, co-founder @ Candu, a digital adoption platform for product growth teams. In it you’ll learn:

  • What exactly is a reserve trial?

  • What makes a product a good or a bad fit for a reverse trial?

  • What are the best practices for implementing a reverse trial?

  • What traps and pitfalls should you avoid when implementing a reverse trial?

All important questions, so let’s get stuck in…

Geek fact: The word ‘freemium’ is a portmanteau of ‘free’ and ‘premium’. People often use it to describe a product’s free tier (e.g. “we need to create a freemium plan”, but the correct use is in describing the motion that combines bottom-up adoption of a free tier with the ability to monetise via paid offers.

What exactly is a reverse trial?

A traditional free trial offers access to the features and benefits of a paid plan for a limited time or until some usage limits are reached.

A trial requires a limit, and most trials are time-bound (e.g. 14 days). Others impose a usage limit like Zoom’s 45 minutes of recording (which, if you think about it, is, technically, both a time and a usage limit). 

A reverse trial is a specific type of free trial in which premium features are offered at the outset. By the end of the trial, the user can decide whether to continue using the premium features or downgrade to a less expensive or free plan.

A key aspect of a reverse trial is that it pushes the purchasing decision further down the journey, with the aim that the user/team will have begun to form habits and realised value from the premium features. 

Geek view:

Below are the conversion outcomes I typically see for each of the three major approaches (I love a Sankey / Alluvial diagram).

Not depicted in the above charts is the additional benefit that a reverse trial brings - a second bite of the apple.

Users who drop back to the Free Plan after the trial ends can later be re-enrolled (or offered the opportunity to re-enroll) into the trial when you see behavioural signals that indicate conversion to paid is more likely.

The 2023 Product Benchmarks report from OpenView confirms those paid conversion rates across a larger cross section of companies:

The report also highlights that only 5% of participating companies apply a reverse trial mechanism. While a reverse trial may not be appropriate for some companies and products, I think this suggests that many have an opportunity here.

Is a reverse trial right for my business?

What makes a product or service a good or bad fit for a reverse trial?

Like most things in life, it depends. But it’s easiest to think through when you consider some specific examples. 

Spotify launched a reverse trial for their premium plans. Their free plan has ads.

The user journey for Spotify might work something like this:

  1. A user searches for a specific song or browses the popular playlists.

  2. A user plays songs ad-free.

  3. Spotify begins to recommend new songs.

  4. A user may like a song or add it to a playlist.

  5. Over time, Spotify’s recommended songs improve.

  6. Later, Spotify asks if a user would like to upgrade to premium.

Spotify could have prompted users to upgrade their trial initially, but they wanted to make listening to relevant, ad-free music a habit first. Because the user perceives more and more value over time, it makes sense to ask them to purchase later. 

Let’s try another. 

Loom, a video recording service, offers a reverse trial for its AI transcription features.

The user journey for Loom might go like this: 

  1. A user records a video with Loom. 

  2. Loom suggests removing the ‘ums’ and ‘ahs’ from the video and transcript.

  3. A user then shares the video with a colleague.

  4. A colleague might leave a comment “Great job!” 

  5. A user decides to share their video on social media.

  6. The AI features automatically create and correct the transcript. 

Loom could have asked users to pay for the AI transcription services at the start, but until the user is ready to share the video, the value of those AI features isn’t clear. Again, Loom has pushed the purchase decision down the user journey until the value is felt.

Geek view:

Trials work well because of the principle of loss aversion.

At the end of a trial, users and teams are faced with a choice:

1. Pay for the features they’ve been enjoying, or

2. Lose access to some (or all) of the features they’ve been enjoying

When users and teams realise value from a given feature of your product, their psychological attachment to it will increase.

As such, during a trial, it’s usually beneficial to drive awareness of paid features and encourage the adoption of those features such that the feeling of potential loss is heightened at the end of the trial.

Reverse trials lean into this and push every new user/team to experience the value of the product and also to experience the feeling of potential loss when faced with the possibility that that value will no longer be available to them.

End of trial nurtures are carefully designed to take advantage of the loss aversion principle:

Here are 10 other popular companies/products that implement a reverse trial:

When should you NOT use a reverse trial? 

While there aren’t any hard and fast rules, we’ve found a few patterns.

  1. When the product’s premium value is easily understood at the outset

  2. If there isn’t a ‘good enough’ free plan for a user to fall back into if they opt out of the premium features

  3. If setting up premium features requires a lot of user effort

If your competitors are offering a reverse trial, your hands might be tied. When the competition lets users try out all the bells and whistles, you may need to follow. Always consider your potential buyer's context. 

Here’s a reverse trial decision tree:  

We asked for input from a number of founders and leaders. Here’s what they had to say:

❝

It's very context-dependent … The first question you need to ask yourself: Why exactly are you doing it? What is the problem that you're trying to solve with reverse trial? In our case, we were trying to solve the problem of habit formation in this first initial period. If you're trying to solve for monetization, then [a reverse trial] might not be as good.

Karapet Gyumjibashyan, Sr. Director of Product at Krisp
❝

I want our users to get the best version we have to offer in their first couple of experiences with us. And we've seen that improve activation rates. We could count retention rate and also obviously monetization. But honestly, monetization was not the goal. We want people to not have to do a bunch of research and make a difficult decision before they even know what they're deciding.

Richard White, Founder / CEO at Fathom 
❝

We run a Reverse Free Trial and can absolutely echo the challenges of balancing excitement with overwhelm. It's a long iterative process to optimizing in-app tutorials and onboarding emails, to nail the "aha" moment without a sales-led demo.

Devin Riker, Head of Business Operations at Shortcut
❝

We've tried reverse trials and it has its pros and cons. It didn't work for us because our users already got a free experience and they wanted to "save" their trial for when they were ready - and when they did, we saw much higher conversion rates.

Caroline Clark, CEO of Arcade

How do I implement a reverse trial?

So you’ve decided you want to implement a reverse free trial. How do you go about it? 

Put aside any technical considerations; the hardest part of implementing a reverse trial might be convincing your team. We interviewed seven SaaS companies and, only two had changed their pricing model / mechanics once established. Everyone else made the key decision when they launched their product and had since optimised around it. The exceptions were founders who had conviction in the change.

Let’s say you have convinced your team you want to try a reverse trial. What’s next? 

Operationalising a reverse trial is like designing a video game. Start with the simplest user journey and gradually unveil complexity. Loom didn’t lead by telling new users about its incredible AI features. It only offered the feature after a user had recorded her first video. It’s best to sequence messaging by lifecycle or workflow stage. Sequencing messaging ensures users aren’t overwhelmed and each feature is introduced at the right moment. 

❝

What you would normally do with a sales team, but it's just implemented in software. It follows those same tactics with as low stakes as possible. You're getting lead information. You're starting to pull the customer in. You get them used to the product, you get them seeing it in detail, and you get them getting value out of the product as soon as possible. You ramp up the value… and then you close.

Timothy Olds, Group Product Manager at Dropbox Docsend

One important caveat: It’s important to set the right user expectations at the outset. Moving users from a traditional freemium or upgrade model requires crystal clear communication. 

Users on your free plan may not expect they’ll need to pay for anything, ever.

❝

Users can get stuck in this “free forever” mindset, especially if they don’t know what they are missing. If that’s the case, you can think of a reverse trial as putting your best foot forward and giving users the opportunity to be wowed early on, without paying you a dime (yet!)

Melissa Ross, GTM at HeyGen

Paid users, on the other hand, might feel you’re nickel and dining them. “Is this not already included in my plan?” 

Finally, a rich understanding of user journeys is crucial. You’ll need to understand the different journeys your users can take in your product to find value to know when to pop the question: Are you ready to pay?

Geek tip:

Exclude any premium features that would restrict access to the free plan and/or be high effort to setup and remove. Custom SSO is a good example here. Despite it being a key requirement for widespread company adoption in enterprise it

a) unnecessarily increases friction in the trial process and delays time-to-value, and

b) is messy and high effort to unwind should a trialling account fall back to the free plan.

Also, consider your COGS. If much of your premium value is in extended usage limits, but those usage limits are costly to you to provide, then a reverse trial may not be appropriate.

Geek gotcha:

If you have a free plan with a reverse trial, it’s important that your activation definition is not contingent on any paid/trial features. The goal of activation is to build habits that drive retained usage, and even if taking that paid path isn’t right for a user/team at the end of their trial, you want to retain them on the free plan to potentially monetise them later, and to fuel further acquisition and engagement loops.

Conclusion: A reverse trial is a bet on your product

At its core, a reverse trial is when a product is betting on itself. Moving the purchase decision back as far as possible is placing a wager that by experiencing more, users will stick around and be more willing to pay. 

When implemented thoughtfully, reverse trials are a powerful tool for PLG teams. They give users the best possible initial experience and can help convert them into advocates for your product.

However, reverse trials carry risks. If the onboarding isn’t straightforward, if users don’t find what they’re looking for, or if they don’t form habits early on, waiting to ask for money won’t improve your product’s chances.

7 Takeaways on reverse trials

  1. Reverse trials move the purchase decision until after users experience a product’s full value

  2. Reverse trials reduce cognitive load, allowing users to experience premium features without having to make a payment decision.

  3. Reverse trials are best suited for products with phased "activation moments" that are habit-forming and reveal more value over time.

  4. Operationalising a reverse trial requires clear communication and setting the right expectations with users. Perfectly timed, personalised nudges can help.

  5. Users must not feel overwhelmed at any point. Otherwise, you risk losing more users than you’ll ultimately convert. 

  6. By the end of a reverse trial, a user should feel "locked in" because of the value they’ve accrued and the habits they’ve formed. They won’t want to lose the benefits they have access to.

  7. Reverse trials test your mettle. They focus on knowing exactly where, when, and how your users see the most value.

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