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Try It, You’ll Like It—Or Will You? The Perils of Early Free-Trial Promotions for High-Tech Service Adoption

Author

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  • Bram Foubert

    (Department of Marketing and Supply Chain Management, School of Business and Economics, Maastricht University, 6200 MD Maastricht, Netherlands)

  • Els Gijsbrechts

    (Department of Marketing, Tilburg School of Economics and Management, Tilburg University, 5000 LE Tilburg, Netherlands)

Abstract

The proliferation of free trials for high-tech services calls for a careful study of their effectiveness, and the drivers thereof. On one hand, free trials can generate new paying subscribers by allowing consumers to become acquainted with the service free of charge. On the other hand, a disappointing trial experience might alienate potential customers, when they decide not to adopt the system and are lost for good. This dilemma is particularly worrisome in early periods, when service quality has not been “tried and tested” in the field, and breakdowns occur. We accommodate these phenomena in a model of consumers’ free-trial and regular adoption decisions. Among other effects, it incorporates usage- and word-of-mouth-based learning about quality in a setting where quality itself is evolving. Consumers are forward-looking in that they account for changes in quality and anticipate uncertainty reduction due to trial usage. We estimate our model and run simulations on the basis of a rich and unique data set that incorporates customers’ trial subscription, adoption, and usage behavior for an interactive digital television service. The results underscore that free trials constitute a double-edged sword, and that timing and consumers’ usage intensity during the trial are key to the effectiveness of these promotions. Implications for managers are also discussed.Data, as supplemental material, are available at http://dx.doi.org/10.1287/mksc.2015.0973 .

Suggested Citation

  • Bram Foubert & Els Gijsbrechts, 2016. "Try It, You’ll Like It—Or Will You? The Perils of Early Free-Trial Promotions for High-Tech Service Adoption," Marketing Science, INFORMS, vol. 35(5), pages 810-826, September.
    • Handle: RePEc:inm:ormksc:v:35:y:2016:i:5:p:810-826
    DOI: 10.1287/mksc.2015.0973
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    5. Sadat Reza & Hillbun Ho & Rich Ling & Hongyan Shi, 2021. "Experience Effect in the Impact of Free Trial Promotions," Management Science, INFORMS, vol. 67(3), pages 1648-1669, March.
    6. Appel, Gil & Libai, Barak & Muller, Eitan & Shachar, Ron, 2020. "On the monetization of mobile apps," International Journal of Research in Marketing, Elsevier, vol. 37(1), pages 93-107.
    7. v. Wangenheim, Florian & Wünderlich, Nancy V. & Schumann, Jan H., 2017. "Renew or cancel? Drivers of customer renewal decisions for IT-based service contracts," Journal of Business Research, Elsevier, vol. 79(C), pages 181-188.
    8. Yu Wang & Minqiang Li & Haiyang Feng & Nan Feng, 2019. "Optimal sequential releasing strategy for software products in the presence of word-of-mouth and requirements uncertainty," Information Technology and Management, Springer, vol. 20(3), pages 153-174, September.
    9. Hema Yoganarasimhan & Ebrahim Barzegary & Abhishek Pani, 2020. "Design and Evaluation of Personalized Free Trials," Papers 2006.13420, arXiv.org.
    10. Angela Aerry Choi & Daegon Cho & Dobin Yim & Jae Yun Moon & Wonseok Oh, 2019. "When Seeing Helps Believing: The Interactive Effects of Previews and Reviews on E-Book Purchases," Information Systems Research, INFORMS, vol. 30(4), pages 1164-1183, December.
    11. Peng, Ling & Cui, Geng & Chung, Yuho, 2020. "Do the pieces fit? Assessing the configuration effects of promotion attributes," Journal of Business Research, Elsevier, vol. 109(C), pages 337-349.
    12. van Ewijk, Bernadette J. & Gijsbrechts, Els & Steenkamp, Jan-Benedict E.M., 2022. "The dark side of innovation: How new SKUs affect brand choice in the presence of consumer uncertainty and learning," International Journal of Research in Marketing, Elsevier, vol. 39(4), pages 967-987.
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    14. Yanqing Han & Zongming Zhang, 2018. "Impact of free sampling on product diffusion based on Bass model," Electronic Commerce Research, Springer, vol. 18(1), pages 125-141, March.

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