Seat Management: Member Trials to capture the Long Tail

July 19, 2023
Patrick Rafferty
Co-founder of UserHub

Key Takeaways:

  • For Seat Based SaaS, Member Trials are an underused monetization tactic
  • Member Trials have a different objective than Plan Trials & are best thought of as Grace Period
  • The objective is to efficiently drive seat growth for friction-sensitive segments (e.g., SMB users)

Member Trials Explained

One underused monetization tactic for SaaS companies with Seat Based Pricing is the Member Trial.

B2B SaaS Trial configurations have become more sophisticated in the era of Product Led Growth. Product-level Trials are now standard:

Seat Based Billers increasingly use the Member-level Trial (e.g., Seat Trials or License Trials), which are similar to a Grace Period - here's how it works:

  • A newly invited team member to a workspace is not immediately converted to a paid seat.
  • Instead, the would-be user attains product access for a pre-determined period. If the billing admin does not deactivate the user, the paid license is automatically provisioned & billed to the account.
  • The Member Trial is only possible if the account has a credit card file.

This flow removes "decision friction" from price-conscious billing admins by baking in an "Undo" option.

SaaS companies need a finely tuned seat upsell funnel on par with a consumer-like purchase path if they hope to capture a long-tail audience efficiently. User-level trials are an Account Management optimization that can help.

Member Trial Example: Miro Starter Plan

Miro rolled out member trials 2 years ago and currently offers this feature on their Starter Plan (their lowest-paying plan):

Most Trials drive inter-plan upgrades, while Member Trials unlocks seat-based upsell within the same plan level. Here is Miro's description of Member Trialing.

<div class="quote-blog"><p class="text-box">When inviting members to the team, instead of immediately adding them as a paid seat, they will be added as a Free member. The user's license remains free until the invited user performs any paid action within the team e.g. opens a board/creates their own board/project. Once the paid action is performed, their license is converted to a trial for seven days and no license is consumed at this point. Users can have full paid access for free, allowing collaboration without committing immediately to the cost. Trial members become paid members if no action is taken by the end of the trial (seven days).</p></div>

At the end of the trial, the seat is added by default if no action is taken. However, it would be possible to build Member Trial, which defaults to an approval flow instead.  In any case, the advantage of the Member Trial is choice deferral. The Decision Free Sales Process from Notorious PLG newsletter outlined this concept.

When are Member Trials a good fit?

Plan Trialing and Member Trialing facilitate two different monetization objectives as evidenced by the fact that Miro uses both. Instead, the question is really about how seats are added via the invitation system at a given plan level.

If you are curious if a Member Trial is right for your product, we contrast it with three other self-service flows that drive in-account seat upsell via the invitation system.  Generally, Member Trials are a good fit on lower price plans where the product has a low Cost of Goods Sold (COGS).

We will not focus on licensing strategies for Enterprise Customers that can incorporate other licensing provisioning strategies (e.g., automating licensing with SCIM).
We will not focus on licensing strategies for Enterprise Customers that can incorporate other licensing provisioning strategies (e.g., automating licensing with SCIM).

1) Checkout Based Licensing

Checkout-based licensing is the easiest Seat Expansion flow to implement but is also the lowest-converting. In this flow, SaaS providers disable the invitation system completely if no vacant seats are available to be assigned. Instead, Seats must be purchased via a checkout flow, and then assigned, as depicted in the flow below:

This is frequently an MVP implementation. Stripe’s hosted Customer Portal can facilitate Step 2 of Checkout Based Licensing, although most startups mature out of this flow quickly.

2) Express Licensing

Express Licensing side-steps the checkout flow required above. This flow is the B2B SaaS equivalent of Express Reordering on Uber Eats. If a payment method has been collected, the invitation flow can automatically change the subscription flow, which side-steps the checkout flow:

While this flow is superior to Checkout-Based Licensing, it immediately forces the inviter into a buying decision. Forcing an immediate buying decision is fine when the account has a large base of paying users.

  • For an account with 30 seats, adding the 31st seat is a minor decision.
  • For an account with 2 seats, adding the 3rd user is a more significant expansion decision.

Prices are relative.

We see this with Miro: Member Trialing on their Starter Plan, where customers have lower seat counts, and Express Licensing on their Business Plan, where customers have higher seat counts.

The other factor to consider is if your product has a higher COGS (e.g, Gen AI Products). Providing a Member Level Trial makes conversion of the seat less certain, while also introduce a higher cost.

3) Member Trials

Member Trials, like Express Licensing, have the benefit of eliminating the menu navigation friction associated with a checkout flow. However, they also have the added benefit of removing a section source of friction: choice immediacy. By building a seven-day grace-period for the admin to change their mind, you can remove decision friction.

Of the three Seat Management features referenced above, Seat Trials allow end-users to get the furthest in the product journey before a monetization moment occurs.

We expect Member Trials to become more common on lower-plan tiers designed to capture the price-sensitive long tail. However, Member Trialing is less optimal for Pricing Tiers designed for mid-market or enterprise customers.

Why are Member Trials less common?

Member Trials are less common because subscription management systems like Stripe are built around the account level, making it challenging to develop billing automation at the user level. Only SaaS companies that can afford to invest in monetization can create these customized upgrade flows, which are deeply integrated with user management.

This is why we started UserHub - talk to us if you want to drive seat growth today.

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In this article, we walk through five key questions to help you design a Team Management Portal that unlocks product-led growth:

  • Is every Team Membership role considered billable?
  • How should your Team Management portal behave at each pricing tier?
  • How can users become team members?
  • What is the optimal moment to monetize an end-user?
  • How forgiving are your proration flows to billing admins?
The Case For Free Roles
Examples: Coda, Figma
  • An organization has lower willingness to pay for secondary users; however, these secondary users enhance the product's value for primary users.
  • Since there is a free role for inviting users, SaaS companies tend to feel more comfortable granting user invitation privileges to all users by default, rather than limiting them to only admins.
  • For instance, Figma does not charge an organization for non-editors. This approach enhanced the product's value for designers by providing a platform for collaborative design processes. Subsequently, they monetized these non-designers by cross-selling their whiteboard product, Figjam.
The Case Against Free Roles
Examples: Zoom, GitHub
  • There are no obvious secondary users, so offering a free role may lead to cannibalization of paying users
  • In the case of GitHub, introducing a free role could potentially have more drawbacks than advantages. Unlike Figma, users who cannot read code may not enhance the platform's collaborative utility. Furthermore, attempting to create a free role for non-engineers introduces the risk of cannibalization. GitHub could lose the ability to monetize engineers who do not write code but still provide valuable contributions through code reviews.

[Users with the role of] Viewer can upgrade themselves to a paid Editor role by performing an upgrade action. Admins don't need to approve these upgrades…. This allows people to get the access they need without requiring approval. Figma only includes them in the organization’s billing when they signal their intent and take an explicit edit action. As this is a provisional role, it's not possible to set someone's role back to viewer after they are upgraded. [Instead, they can only be placed back to a Viewer-Restricted Role].

PLG [product-led growth] works when end users experience value and bring their organization on board. That’s not possible in industries where the enterprise buyer holds all the power…. End-users need to have permission from the organization to solve the problem. This includes access to suitable systems/passwords & decision-making ability.

Patrick Rafferty
Co-founder of UserHub

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