How to boost revenue with free samples
How to boost revenue with free samples
High-quality free samples boost demand and allow you to increase prices and revenue (by 7.7% in this analysis). Make sure to limit their usage, or their effect backfires.
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📝 Intro
Free samples are powerful - whether for a book, a video, or a platform (as a free trial or freemium).
When used well, they’re a powerful driver of conversions (and usually, satisfaction too, since customers know what to expect).
But when designed badly, they can be either ineffective or - worse - cannibalize the paid product (i.e. when the free sample is ‘enough’).
So let’s take a look at the optimal way to design free samples for a digital product or content.
P.S.: You could also call a free sample ‘try it for $0’ instead, which could increase trials.
P.P.S.: The conclusions of this research are similar to those of a study covered in Ariyh’s tip #5, almost 10 months ago.
In that study, MIT researchers analyzed the New York Times’s digital paywall and had similar findings.
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Previous tip: Which review you should show first (All tips here)
Provide limited, high-quality free samples for in-demand products to boost revenue
Impacted metrics: Customer spending | Customer acquisition
Channels: Free samples | Freemium
For: B2C. Can be tested for B2B
Tip type: Existing research (April 2019)
📈 Recommendation
For top-selling and top-rated digital products (e.g. in-demand TV series, a platform like Dropbox), provide free samples at a quality that is as close as possible to the full product.
Limit the free sample’s quantity (e.g. the first episode free at full quality, full features but limited storage, 10 days free trial).
If there is no way to limit the product’s usage or the product is low-quality or in low demand, offer low-quality samples (e.g. low-quality and delayed streaming of a football match).
Free samples generate more demand and allow you to increase the prices of high-quality products.
🎓 Effects
Free high-quality samples increase sales of high-quality digital content.
Free samples need to have limited usage (but not quality). Otherwise, they become substitutes for the full product, especially low-quality products.
In a field experiment with a publisher of academic books:
Providing a high-quality PDF sample of the entire book for the top 30% titles led to a 1.74% increase in sales of the print version
In their analysis, the researchers found they could also increase prices by 2.8%, which would boost overall revenue from those titles by 7.7%
Providing no sample hurt sales, particularly for high demand books
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🧠 Why it works
Free samples give us a preview of the product or service.
When a product is high-quality, the sample ‘taster’ is the final push to make us purchase.
When a product is low-quality, we stop at the free sample - either because we don’t like the product, or the free sample is enough for our purposes and we don’t think it’s worth paying for a higher quality or full version.
✋ Limitations
The researchers focused on one field experiment on an academic publisher. Although their findings should extend to other products and services, the fact that they weren’t verified in different situations makes it riskier to generalize.
The study is based on products that can’t be found elsewhere (i.e. books sold exclusively by the retailer analyzed). We don’t know whether the effect changes for products that can be found from multiple sellers.
🏢 Companies using this
Large companies tend to make good use of high-quality samples, for example:
Amazon offers full-quality samples of books on Kindle (limited to a few chapters)
Record labels release high-quality music videos of single songs on YouTube to boost sales
Microsoft, Adobe, Netflix, and Hulu, offer full access to products and services for a limited time period
The New York Times offers free access to all its content, up to a certain number of articles read
On the other hand, smaller, less experienced businesses sometimes hesitate to offer high-quality free samples for fear - unjustified or justified (if their product is low-quality) - that they would hurt sales.
⚡ Steps to implement
If your product is highly rated or you have a selection of products that are in high demand, think of how you can offer high-quality free samples for them.
Remember to limit the usage of the free sample. For example, you can do this by requiring users to create a free account before they can access the sample.
🔍 Study type
Field experiment (of 540 books on the National Academies Press website for 8 weeks in 2014). United States
📖 Research
Li, H., Jain, S., & Kannan, P. K. (April 2019). Optimal design of free samples for digital products and services. Journal of Marketing Research.
🏫 Affiliations
Fisher College of Business, The Ohio State University; Naveen Jindal School of Management, University of Texas at Dallas; and Robert H. Smith School of Business, University of Maryland. United States
Remember: This research could be disproven in the future (although this is rare). It also may not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.
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