Free is a magic word in direct marketing. Whether you describe it as a free trial or deferred billing, buy now-pay later offers appeal to a wide range of prospects in every media – inserts, catalog, TV, online etc. — by reducing risk. The more perceived risk (i.e. cost) in trying your product – costly cookware sets, pricey electronics, etc. – the more likely you’ll experience positive results free trial/deferred billing offer and installment payments.
The bottom line is allowing prospects to get hands-on experience with your product without risking the full amount of the purchase. Free trial, deferred billing and installment payments all have the impact of removing risk from your prospect, and by doing so, displaying confidence in your product. After all, why would you offer your product without full payment in advance unless you were certain the buyer would be happy and keep the product?
As much as these offers appeal to prospects, they can be challenging to execute and manage. What happens when the trial period is over, what is the timing of billings? And what about getting paid for those future (installment) payments?
Once you’ve convinced the prospect to take advantage of your trial offer, the next step is getting them to actually use the product. Welcome letters, as well as printed or video instructional material can get your customer beyond merely opening the box. And while welcome letters and instructional material are useful for all buyers, it is especially true for those who have purchased on a free trial/deferred installment billing offer because they have less invested. Thus, it is easier for them to never try the product and merely send it back.
The last big hurdle in the purchase cycle for free trial offers is getting fully paid. This challenge increases with the length of the deferred billing period/number of installment payments. The best way to solve that challenge is a combination of screening who you offer free/low cost trail offers to (screen out the poor credit risks) and diligently following-up on declined credit card payments. Follow-up actions include re-attempting charges and calling, e-mailing and mailing notices to obtain other payment methods or correct errors.
Don’t neglect offering “deals” for converting to single payment at any point in the purchase process. One-pay buyers have lower return rates and pose no risk for installment payments being uncollectible. Offer incentives to convert to one pay: discounts, bonus gifts, etc. Identify how much more the one-pay customer is worth than the installment customer and give some of that value back as an incentive for a single payment. Be sure to remind one-pay customers that their guarantees remain in full force.
Free or low-cost trial offers can be a boon to your sales; make sure you take the actions necessary throughout the purchasing cycle to make them a boon to your profits as well.
Shari Altman ([email protected]) is president of Altman Dedicated Direct.