Why this bootstrapped SaaS requires a credit card to signup for a trial
Over the last few years we've received a bunch of angry emails about why we ask for a credit card to trial Nusii. It's by far the biggest drop off point in our funnel. So why the hell do we keep asking for one?
Let’s start with what others tell you
Most startups don't publicly address this question, and prior to this post, neither had we. The few startups that do try to deal with the sticky issue of why a credit card is required to trial their service usually default to the following:
“A credit card is required to ensure your service remains uninterrupted after your trial ends”.
The only problem with this is that it's complete crap!
Asking for a credit card during signup has nothing to do with ensuring a smooth crossover from trial to paying customer. It does however, have everything to do with increasing the chances of converting a potential customer into an actual customer. We are very open about the whys and wherefores.
If you take a look at our pricing page you'll notice a few things:
- Although we require a credit card, our 14 day trial is indeed free.
- We email you twice before your trial ends to ensure you have plenty of time to cancel.
- We offer a 30 day money-back guarantee. We lose money on every refund, so false signups are not our goal… ever.
But it works for Freshbooks, Zoho and countless others!
Back in the early days of Nusii I would sporadically chat with a successful SaaS owner. Eventually the topic of our signup process came up. What he said made a ton of sense…
“Nathan, get rid of the credit card requirement. Make it easier for people to get in. Reduce the friction”.
On the surface it was glaringly obvious. Reduce the friction, get more trials and retire to the Bahamas. We decided to test it. After all, what’s was the worst that could happen?
So what happened?
Overnight things blew up and suddenly we'd 5x’d the number of trials. We got excited, very excited! It didn't take long to see results. And boy, did we see results!
This one little experiment directly cost us a month's growth.
Of course we had expected the conversion rate to suffer, but we'd hoped that the sheer volume of trials would compensate. However our conversion rate suffered to the point of being downright depressing.
Support requests shot up, along with our frustration. There was a direct correlation between the number of trash email addresses (and here I include Gmail) in our system and the amount of time we spent answering support requests. It wasn’t a fun four weeks.
Our conversion rate fell from 30% to a measly 3%. This is not something a bootstrapped business can afford.
The thing is, creative folks (especially designers, like myself) love to browse. We’re always looking for the next greatest thing. Unfortunately lowering the barrier to entry put us briefly on the “free to get in” radar.
So why was "free to get in" a bad move for Nusii? Browsing by it's very nature is rarely accompanied by the intention to buy.
Nothing says I’m serious like putting money on the table. When we pull out our wallets what we're really saying is “I want this”… not, “Let’s see how cool this is”.
So how does this benefit me, the customer?
As I mentioned, we’ve had plenty of emails (even angry ones telling us in no uncertain terms how we should run our business) asking us to remove the need for a credit card. In some cases these emails come from people who are legitimately searching for a proposal solution. However we’ve seen that generally, lowering the barrier to entry doesn’t attract a more serious customer. The chances of converting someone who is casually browsing are far lower. We cannot focus our attentions on a long-shot.
Nusii is a small business that is 100% funded by paying customers. 100%. We have no outside investment, nor do we have any intention of taking any. You could say that Nusii is an Army of Two. What does this mean other than the fact that we're a couple of entrepreneurial scrappers?
- We have been profitable since 2014 and will never need to close down because we do don't hit someone else's projected growth rate. You're safe with us .
- By letting in fewer trials we can invest more time in making sure you get the most out of Nusii. Seriously, we don't need someone else's hockey stick curve to grow and be happy.
- You'll only ever speak to Michael or myself. We are 100% approachable and ready to listen.
In short, asking for a credit card upfront means we can spend the necessary time with each new customer.
No one else asks for my credit card!
When we hear about how Freshbooks doesn't ask for a credit card, or how Zoho offers a free-forever plan, all we can say is "Good for those guys"! But those strategies belong to a world we’re happily not a part of. We're something else. We're independent.
Of course each and every service, business and startup is different. After all, my friend was convinced this approach would work for Nusii, as it had for him. But what works for one business might not work for another. If only it was that easy.
We're happy with our decision. We'll continue to let folks self-select, which means we can carry on building proposal software on our own terms and as we intended. No outside influence or pressure. Nusii is 100% bootstrapped and proud!
P.S. When our experiment ended, we reverted to our previous and current signup process. We subsequently had our largest month’s growth, ever.