7 ms·

Why I'm going back to capturing credit cards up front

72 points by SMrF 13y ago

dmix 13y ago
I also tried every sort of SaaS signup process (CC-first, every type of free-trial, etc) with my app (https://carelogger.com https://carelogger.com). I actually agree CC upfront is better overall than not. Depending on the audience of course (some business users don't have access to CC's without approval from finance dept). That being said. I found a higher conversion rate via what I call "resource-based" trials. One's not based on time ('14-days') but resources/services your app provides. For example, in our app users can create 10 free entries with no time restriction. This sounds like a good deal to the user. But what makes it effective is the type of user who ends up paying for our app, was always creating 10 entries the first day already. So it was essentially getting them to commit and signup for free, then give us their CC the same day. I've been meaning to blog about this for about 2 years now :P
- DenisM 13y ago
  I think it's called "freemium"?
  - dmix 13y ago
    Freemium = offering a free service (sometimes with ads) with premium upgrade options. That's different from a "free trial", because there really is no way to use our app for free on an ongoing-basis without paying for it.
    - sutterbomb 13y ago
      Your explanation made it sound like freemium because many freemium apps use that kind of resource-limited trials - e.g. 3 seats are free, but you pay for more seats. Your "10 free entries" sounded like the same model, but a quick look at your product shows there is no ongoing value to 10 free entries.
- derefr 13y ago
  Another way to think of this is that you're creating a time-based trial, but on a "clock" that only ticks down while the user is getting value from the product. (Not logged in ⇒ trial never expires) = no surprised and pissed-off users.
jrochkind1 13y ago
Another possibility that's not discussed: Get the CC number up front, but still require an 'opt in' after trial expiration to begin charging. You won't start automatically charging, you'll require the user to do something -- but the 'something' is just clicking a single 'yes, start charging me' button, with no need to enter the CC at that point, cause they entered it up front. I have no idea if that will work to get the conversions he's getting with, well, automatic conversion. But I can't help but think products where a free trial automatically starts charging your CC on a certain calendar date if you don't opt out -- are getting conversions via trickery, and is not going to build a sustainable customer relationship.
- Guvante 13y ago
  Most places will refund you if you miss the deadline by a day. As long as you do that it isn't sketchy.
  - bdunn 13y ago
    OP here. I'll refund the last month's payment regardless when canceling, no matter how long you've been a customer. The goal isn't to trick people into paying. The goal is to make it feasible for one person (me) to support a product by attracting those who have a business case for using it.
    - michaelt 13y ago
      Presumably you track user visits/logins/sessions. What fraction of paying customers have never visited/logged in since you started charging them?
    - jrochkind1 13y ago
      It occurs to me I'd have a much less negative reaction to what you're doing if instead of calling it a "free trial", you called it "first month is free" (like landlord rental deals), or "will refund your money in the first month if you aren't satisifed," or something like that. Now, these end up being essentially the same thing, but if you marketted it like that would it hurt conversions? I don't know. But if it _would_ then it would definitely make me suspect that many of your conversions are accidental, and accidental conversions are the shady part, right?
lsc 13y ago
hmm. I've spent more time thinking about the ethics of recurring billing than the effectiveness of recurring billing; The big problem I have with recurring billing is that recurring billing tends to capture money from the 'I forgot about it' customers... users have to take an action to cancel the account. Especially for small-dollar items, a recurring charge can go for months unnoticed. I don't feel good about 'capturing value' from users who forgot to cancel... but the alternative (what I'm doing) is to make them take a positive action every renewal. (In my case, the account auto-renews, but it sends the user a bill that they have to actively pay; if they don't pay, the account goes away.) Now, some people do prefer the 'bill me every month without asking' model... but I think the right thing to do is to make this an option; one option where the account will expire if the user doesn't take positive action to renew the account, and another option to automatically continue billing until the user asks to stop. I don't know if many others feel this way, but as a user of subscription services, this is something I think about. I know that I'm probably going to forget to cancel, and that canceling is often difficult, so generally I consider services that don't autorenew to be much 'cheaper' even if they are the same price in terms of dollars.
- sp332 13y ago
  Yeah, this sentence jumped out at me: (Conveniently, lots of people seem to miss/ignore the “Your trial is expiring and credit card will be billed” emails, but no one ever misses the “Billing receipt” emails that come a few days later!) But of course, people are missing the billing receipt emails!
  - pionar 13y ago
    Either I'm misreading your comment (entirely plausible), or you're misreading the article. I read that as a snarky way of saying that people aren't really missing the "expiration" emails, they're just too lazy to do anything about it.
    - waqf 13y ago
      Right, the article was saying that. But the article was jumping to an unreasonable conclusion, because of course you never hear from the people who missed the "Billing receipt" emails. I assume that was GP's point.
GrinningFool 13y ago
The problem for me as a potential user is that I no longer trust some.random.dude.com with my CC info. I have no way to know if they're storing it locally unencrypted or if they're using a trustworthy third party provider. I'm down to maybe three places that have my CC on file. Everyone else, I enter it - every month - at time of payment. I don't exactly like this, either - there is still the possibility that a poorly written component is logging the card somewhere[1], but it's better than handing over my wallet and walking away. [1] seen it...
- jsonne 13y ago
  Interesting. This is something we've thought about as we're designing our product. Would a little "powered by Balanced" image at the bottom help you think?
  - GrinningFool 13y ago
    For me personally it would - though I don't know to what extent my concern is one for a broader audience. There is still a matter of trust: you can say you're using a given provider, but I can't verify it. It happens that I believe that you actually are - but unfortunately it really is a judgement call that has to be made for each service provider that I want to sign up with. I think it's a larger issue, but the types of solutions that would help have largely been rejected by the market place: centralized storage of payment data with a few trusted providers. I have some good (and I think relatively new) ideas on how to fix it, but it would require a fairly massive buy-in from the industry in order to work. So essentially, DoA.
- kintamanimatt 13y ago
  I'm not sure your concern is warranted. Your bank provides a lot of protection against such fraudulent transactions, both at the time of authorization and after the fact if one does slip through. In any case, if you're really worried about your card number being stolen use a secondary card that you use for internet use only that just lives in your "backup wallet". You're spending more of your life entering your credit card number every month than is likely to be spent dealing with fraud.

72 points by SMrF 13y ago

dmix 13y ago

I also tried every sort of SaaS signup process (CC-first, every type of free-trial, etc) with my app (https://carelogger.com https://carelogger.com). I actually agree CC upfront is better overall than not. Depending on the audience of course (some business users don't have access to CC's without approval from finance dept). That being said. I found a higher conversion rate via what I call "resource-based" trials. One's not based on time ('14-days') but resources/services your app provides. For example, in our app users can create 10 free entries with no time restriction. This sounds like a good deal to the user. But what makes it effective is the type of user who ends up paying for our app, was always creating 10 entries the first day already. So it was essentially getting them to commit and signup for free, then give us their CC the same day. I've been meaning to blog about this for about 2 years now :P

DenisM 13y ago
I think it's called "freemium"?
- dmix 13y ago
  Freemium = offering a free service (sometimes with ads) with premium upgrade options. That's different from a "free trial", because there really is no way to use our app for free on an ongoing-basis without paying for it.
  - sutterbomb 13y ago
    Your explanation made it sound like freemium because many freemium apps use that kind of resource-limited trials - e.g. 3 seats are free, but you pay for more seats. Your "10 free entries" sounded like the same model, but a quick look at your product shows there is no ongoing value to 10 free entries.
derefr 13y ago
Another way to think of this is that you're creating a time-based trial, but on a "clock" that only ticks down while the user is getting value from the product. (Not logged in ⇒ trial never expires) = no surprised and pissed-off users.

jrochkind1 13y ago

Another possibility that's not discussed: Get the CC number up front, but still require an 'opt in' after trial expiration to begin charging. You won't start automatically charging, you'll require the user to do something -- but the 'something' is just clicking a single 'yes, start charging me' button, with no need to enter the CC at that point, cause they entered it up front. I have no idea if that will work to get the conversions he's getting with, well, automatic conversion. But I can't help but think products where a free trial automatically starts charging your CC on a certain calendar date if you don't opt out -- are getting conversions via trickery, and is not going to build a sustainable customer relationship.

Guvante 13y ago
Most places will refund you if you miss the deadline by a day. As long as you do that it isn't sketchy.
- bdunn 13y ago
  OP here. I'll refund the last month's payment regardless when canceling, no matter how long you've been a customer. The goal isn't to trick people into paying. The goal is to make it feasible for one person (me) to support a product by attracting those who have a business case for using it.
  - michaelt 13y ago
    Presumably you track user visits/logins/sessions. What fraction of paying customers have never visited/logged in since you started charging them?
  - jrochkind1 13y ago
    It occurs to me I'd have a much less negative reaction to what you're doing if instead of calling it a "free trial", you called it "first month is free" (like landlord rental deals), or "will refund your money in the first month if you aren't satisifed," or something like that. Now, these end up being essentially the same thing, but if you marketted it like that would it hurt conversions? I don't know. But if it _would_ then it would definitely make me suspect that many of your conversions are accidental, and accidental conversions are the shady part, right?

lsc 13y ago

hmm. I've spent more time thinking about the ethics of recurring billing than the effectiveness of recurring billing; The big problem I have with recurring billing is that recurring billing tends to capture money from the 'I forgot about it' customers... users have to take an action to cancel the account. Especially for small-dollar items, a recurring charge can go for months unnoticed. I don't feel good about 'capturing value' from users who forgot to cancel... but the alternative (what I'm doing) is to make them take a positive action every renewal. (In my case, the account auto-renews, but it sends the user a bill that they have to actively pay; if they don't pay, the account goes away.) Now, some people do prefer the 'bill me every month without asking' model... but I think the right thing to do is to make this an option; one option where the account will expire if the user doesn't take positive action to renew the account, and another option to automatically continue billing until the user asks to stop. I don't know if many others feel this way, but as a user of subscription services, this is something I think about. I know that I'm probably going to forget to cancel, and that canceling is often difficult, so generally I consider services that don't autorenew to be much 'cheaper' even if they are the same price in terms of dollars.

sp332 13y ago
Yeah, this sentence jumped out at me: (Conveniently, lots of people seem to miss/ignore the “Your trial is expiring and credit card will be billed” emails, but no one ever misses the “Billing receipt” emails that come a few days later!) But of course, people are missing the billing receipt emails!
- pionar 13y ago
  Either I'm misreading your comment (entirely plausible), or you're misreading the article. I read that as a snarky way of saying that people aren't really missing the "expiration" emails, they're just too lazy to do anything about it.
  - waqf 13y ago
    Right, the article was saying that. But the article was jumping to an unreasonable conclusion, because of course you never hear from the people who missed the "Billing receipt" emails. I assume that was GP's point.

GrinningFool 13y ago

The problem for me as a potential user is that I no longer trust some.random.dude.com with my CC info. I have no way to know if they're storing it locally unencrypted or if they're using a trustworthy third party provider. I'm down to maybe three places that have my CC on file. Everyone else, I enter it - every month - at time of payment. I don't exactly like this, either - there is still the possibility that a poorly written component is logging the card somewhere[1], but it's better than handing over my wallet and walking away. [1] seen it...

jsonne 13y ago
Interesting. This is something we've thought about as we're designing our product. Would a little "powered by Balanced" image at the bottom help you think?
- GrinningFool 13y ago
  For me personally it would - though I don't know to what extent my concern is one for a broader audience. There is still a matter of trust: you can say you're using a given provider, but I can't verify it. It happens that I believe that you actually are - but unfortunately it really is a judgement call that has to be made for each service provider that I want to sign up with. I think it's a larger issue, but the types of solutions that would help have largely been rejected by the market place: centralized storage of payment data with a few trusted providers. I have some good (and I think relatively new) ideas on how to fix it, but it would require a fairly massive buy-in from the industry in order to work. So essentially, DoA.
kintamanimatt 13y ago
I'm not sure your concern is warranted. Your bank provides a lot of protection against such fraudulent transactions, both at the time of authorization and after the fact if one does slip through. In any case, if you're really worried about your card number being stolen use a secondary card that you use for internet use only that just lives in your "backup wallet". You're spending more of your life entering your credit card number every month than is likely to be spent dealing with fraud.