This post is by Jason Lemkin from SaaStr
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I don’t like asking for the credit card upfront. What I see time and time again is a short-term boost to short-term metrics, at the cost of longer term revenue and brand building. Why? 90% of the time, asking for a credit card immediately simply adds unnecessary friction to a sales process. It adds, best case, a pause or hesitation before using your product. Your job as CEO is to relentlessly cut friction out. The short-term data often says otherwise. Certainly, if you require a credit card immediately:
- Your conversions go up! But of course they do. Because folks that might have paid if you’d given them more time to use your product … go away.
- “Churn” goes down! Yes because customers self-select out before then.
- Your short term metrics look better. Maybe your VCs are happier at the next board meeting.
- Support is happier. They much prefer not having support a ton of free users, just the paid ones.
- Sales gets better lead scoring data — maybe much better, in fairness. Sales isn’t overloaded talking to tire kickers if you add a credit card gate to start. This does sort of help. They can just spend time with folks that at least have put a credit card number in.