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Ask HN: Asking for letter of intent before free trial?

3 points by ckpm ↗ HN
We are doing some pre-sales with enterprise clients. Part of the process is to give the client a 7-day free trial so they can play with our product.

My question is: should I ask the client to sign a LOI (to simplify things, using a Google form) before the 7-day free trial?

Asking for a LOI can test the level of interest but might delay or even kill the trial deal, since some of our clients are big names in the game. Not asking for it seems like giving away free product...

Would love to get advice from founders who are also selling to enterprise.

3 comments

[ 4.4 ms ] story [ 17.1 ms ] thread
mtmail
We've asked in email to agree that an extended trial will cost X USD or that for their billing terms they need to agree to annual pre-payment. It's less formal but with enterprise B2B every sale is a big manual (and hopefully financially worth it). Generally we get a quick 'ok' or find another person (decision maker) added to cc in the reply. All the paperwork and billing comes far later than the trial, we have no problem moving that to the second month of the subscription. Trials with our service often take weeks. If a prospective client doesn't keep part of the deal, e.g. not happy with the trial, we don't charge. LOI (or one sentence in an email) is just a tactic to force a decision or figure out of the opposite party is able to make a decision. I wouldn't overthink every deal, you win some, you loose some and sometimes the company stops replying to emails for no reason.
davismwfl
LOI's for enterprise clients are totally fine and tying it to a trial is common in my experience, although in my experience that is for trials that last months and may take weeks to months to configure and setup. We have used LOI's quite a bit to help us find the right business model and to gather support before we were actively making final sales. It also can help you show intent and early demand to investors.

Overall enterprise clients generally are quite receptive to these, at least for more complex products, as they are not contracts, simply non-binding letters which generally also do not require much if any legal review. If you put detailed terms into the LOI that is when things can get stickier and then legal review becomes necessary at most enterprises.

What are you trying to use the LOI for, if you had 10 in the next 2 months what would change? In my view a product that can be tried by an enterprise in 7 days means there is not a ton of complexity to the product and likely a low barrier to entry so an LOI may be useless or worse delay trails and conversions. If after 7 days you know if they are buying or not then why do an LOI? Reality is it may take 1-2 weeks to get an LOI done at a fast moving enterprise and a month wouldn't be atypical at many.

If the product takes 2-4 weeks of setup or you need to install equipment etc at their site than an LOI would be smart to show intent. But you'd still have to define why you want an LOI and what comes after. Is it just because you want to gauge their interest before spending weeks configuring the product, then ok. Is it to show investors demand? If so then it may not help you a ton, as the investors will wait to see LOI to conversion rates since the trial period is so short.

arjunvpaul
That would be like car dealer asking "should I get a LOI before I let folks drive the new car." For a 7-day trial dont waste your time, or their's, on a LOI. LOI's are not worth the paper its written on.

A no commitment try-before-buy is almost always a great sales strategy for good software. Customers would have a hundred questions when they actually use your product. this is also a good opportunity to learn about how to sell to the next client by improving your sales pitch.

Not sure if your product is amenable to this, but one learning I would share is give a "shared account" for trial. for example the product could be branded in your name, other trialling companies could be using it at the same time etc.

say for example if you were sellling GMAIL, you would give them a 7-day free trial but they have to use an email and password you give them like username: test@gmail.com , password: test123 and other users will be logging in at the same time - trying sending and receving email, tagging mails, suggested replies etc.

I sell a product that allows customers to send messages via WhatsApp. I give them a shared account to play with as long as they like. but if they want a branded account , they have to pay upfront and only then i set it up.

back to the car analogy. Think of it like a demo car http://bit.ly/2ySHeTc . The client get a feel for the car but pays if they need one, all for themselves.