The business model behind free trials is
simple: Give people a taste of your service, keep your fingers crossed that
they like it, and hope that they stay. Requiring a credit card at sign-up makes
it easier for companies to convert tire kickers into paying customers.
Companies that I spoke with claimed that the requirement was a convenience.
GoToMyPC representatives, for instance, say that the requirement allows the
company to continue service without interruption when the free trial ends.
Internet Movie Database’s reps justify it differently, saying that “a credit
card allows us to verify a user’s identity and avoid multiple sign-ups for free
trial memberships.”
The
economics of free trials?
Who are these companies kidding? The credit
card requirement serves only the companies offering the free trial. Having to
put down a credit card to participate in a free trial is like lending your
friend money for a trip to Las Vegas: Sure, he’ll pay you back, but when? It’s
a risk.
When a company requires a credit card as
part of a free trial, 40 to 45 percent of those accounts become paying
customers, says John Greathouse, a dot-com entrepreneur who was also one of the
original online marketers for GoToMyPC. “Non-credit card trials generally
convert in the low single-digit range – typically 2 to 4 percent,” Greathouse
says.
Another painfully clear truth: The easier
companies make it for people to sign up, the more customers they get. Such
companies may also suppose that the harder they make it for trial users to
unsubscribe, the more customers they’ll keep.
That’s flawed logic, in my opinion. The
more hassles a company gives me, the less likely I am to do business with them.
And the companies that make it easiest to unsubscribe are ones that I would
consider patronizing again.
Free trials we liked
Canceling my 14-day free-trial membership
to Merriam-Webster’s Unabridged Dictionary online took only three clicks,
allowing me to avoid the $30 annual fee that the service would have charged to
my credit card had the trial period expired. My experience in canceling
Merriam-Webster’s free trial was excellent, and stood in sharp contrast to the
dozen sites that made cancellation feel like a hunt for a piece of cheese in a
maze.
Despite the hair pulling that free trials
put me through, eight services – AdaptedMind, Ancestry.com, Britannica Online,
Dr. Laura, Hulu Plus, Merriam-Webster, SugarSync, and The Weather Channel –
proved that it is possible to make parting ways a breeze.
Hulu
Plus
What did those sites have in common?
Intuitive navigation, clear instructions, and no gotchas after you click the
Cancel button. Once I cut ties, these services didn’t send me a barrage of
commercial email and “we want you back” pleas.
Hulu Plus goes a step further and offers
anyone canceling its service the option to scrub their user data, including
credit card information, from its servers.
Making it easy is a choice, not an accident
Many of the services I tested forced me to
scour their FAQs for cancellation instructions. Some of the ones I spoke with
defended this practice, while others simply played dumb.
Ancestry.com did a great job of steering me
to its cancel option in two clicks. All I had to do was visit My Account from
the homepage, and on the next screen under the subscription Options heading was
‘Cancel Subscription’.
Some sites blamed me when I couldn’t find a
cancel option. ESPN Insider’s customer service rep told me that I should have
known where the cancel option was on the site: “It’s up to you to read the
terms and conditions of something you are purchasing,” he said. Later I saw
that he was right: The company’s “Terms and Conditions” document states that
users need to call to cancel. Even so, though I may be guilty of not having
read every terms-of-service agreement at websites, I’m not guilty of failing to
try hard to cancel the services after the fact.
Companies
such as the SugarSync online backup service sent an email reminder several days
before the end of the free trial reminding me that I would be billed if I
didn’t cancel
Companies such as the SugarSync online
backup service sent an email reminder several days before the end of the free
trial reminding me that I would be billed if I didn’t cancel. Sadly, nice
touches like this were the exception, not the rule, in my tests.
I’m guessing that most services spend a
considerable amount of time and money making it easy for visitors to navigate
through the site and sign up for services if they choose to – and that it’s
probably not by accident that sites also make it hard to cancel their services.
But to those sites that make canceling free trials as simple as it is to sign
up for them, my compliments.
How to keep free trials free
Who knew that free trials could cost so
much? Every day, millions of people get sucked into handing over their credit
card numbers for a free trials. After all, signing up for a free trial is
simple and quick. Getting out of a free trial is another story, though. Here are
some tips for ensuring that your free trials stay free.
1. When you see words such as “free trial” on a website, alarm bells
should ring in your head – no matter how credible the site. Take a deep breath
before clicking to commit to any such deal, and be sure to read all of the
terms and conditions carefully.
2. If the description of the free trial is confusing or vague, the
company may be trying to hide something. Skip it!
3. Can’t find the Cancel button? Head to the site’s FAQ section or to
the service’s terms of service, and look for the keyword “cancel: by using your
browser’s search function.
4. Be your own detective. Before signing up for a free trial, try
googling the name of the free trial and “can’t cancel”. Chances are, a bad
actor will have an online reputation.
5. If you are charged, call the company offering the free trial as soon
as possible. Many services I spoke with said that they would give users their
money back if it was an honest mistake. Others, such as ESPN, said that they
would prorate the refund based on how many days of the paid service had passed.
6. If you’re billed for a service that you mistakenly forgot to cancel
on time, or that you couldn’t cancel after your best efforts, call your credit
card company and file a formal claim. Emphasize that you’ve tried to get your
money back from the billing company with no success.
7. Don’t shop online with your bank debit card. Credit card companies
such as American Express, Master-Card, and Visa are protected under the federal
Fair Credit Billing Act. When you dispute a charge on your credit card, you can
ask that the credit card company withhold payment while it investigates. You
don’t have the same protection with a debit card purchase.
