2. What Will You Get From This
Presentation?
Hopefully, An Understanding of the Freemium
Business Model (No FREE Lunch)
Why & How It Works
A Few Examples & Things I’ve Learned
Freemium Conversion Events
Monetizing FREE
Should You Do It? What’s Your DNA?
Building a Culture of Measurement
3. So, What IS Freemium?
Freemium works by offering a basic product or
service free of charge (such as software, web
services or other) while charging a premium
for advanced features, functionality, or related
products.
Jarid Lukin coined the term "freemium,“and
Fred Wilson adopted it for the business model.
HitBox from WebSideStory was one of the first
examples and Jarid a good customer.
5. It Works – But No Cookie Cutter!
Branding/WOMM (B2I instead of B2B – Enterprise Penetration)
Increase Reach & Decrease CP Impression
Lead Generation (B2I instead of B2B – Enterprise Penetration)
Measure Direct-Sales Rep vs. Indirect-Online CP Lead /
revenue
Measure Free to Sales Leads and Free Trials
Cost Deflection Sales / Support
Push Users Online for Purchase/Support
Disruptive
Forces Product & Customer Focus / Rapid Release (30 days)
Measurement / Law of Large Numbers
6. Overview of Conversion Metrics*
Campaign
Site Visit to: (1-25% Conversion)
Conversion
Signup Experience to: (50% Conversion – Funnel
#Fields)
Product Engagement to: (10-20% Conversion)
Increase Re-engagement After 30 Days
(Variable Over Time)
Upsell Premium to: (1-5% Conversion)
Variable Over Time
Revenue to: (80-95% Retention)
By Customer, Seat, Revenue
Renewal (MCV, ACV, TCV)
7. Starting Fresh or Starting Over?
Is FREE too expensive?
Creating a free version of your product to be cheap to
delivery, easy to support & set up is tough!
Do people really love the offering?
The bar for product quality is actually higher for free
products than it is for paid products.
Do you have clear differentiators
from your PAID product?
This one is the hardest things to do!
8. Ten Things I’ve Learned
All Good Things Happen To a Large Network of Engaged
Users!
Invest in People, Process, and Systems
Understand Law of Large/small Numbers
Keep Application, Package and Price Simple
Engage Users – Use Survey and NPR Benchmarks
Build a Community & Love Your Customer
Use Rapid Development Cycles (30 Days or Less)
Price / Package Disruptively (Remember Cable Holidays)
A/B Test Everything
Think Out-Of-The-Box – The Rule is No Rules!
9. You Have Challenges – Free Is
Not For All!
Sales – Will This Potentially Cannibalize Your Revenue
Stream? What is Your ASP?
Marketing – Are There Brand Issues – Free Can Cheapen
the Brand?
IT – Can We Build a Cost Effective Infrastructure?
Processing & Bandwidth.
Finance – Can We Build COGS & LTV Models? Are there
External Licensing Fees – Content, APIs, Code? Where
Are the Inflection Points & How Much Runway?
Bigger Upfront Investment
10. Recent Startup Case Studies
InsideView for Sales
Ubiquitous Deployment Embedded within Major CRMs –
Upsell to Professional & Enterprise – Low Churn – 000’s
First Year – Great Growth Rates
90% Leads - Marketing Generated In Early Years - High
Freemium Contribution (Account Penetration Enterprise
Increase); #1 Rated Appexchange Free
2-4% Conversion from Free to Paid
Important to Engage within First 30 Days
InboundWriter
Throttle on Transactions / Time / Data Sources & Functions
11. Public Freemium Numbers &
Takeaways
Absolute Attribution to FREE is Part of the Marketing
Mix and Complex – Need Good Infrastructure &
Resources
Analysts, Systems, and Processes
BtoB Conversion Rates Higher Than BtoC
Pandora - Conversation to Premium - 1.6 to 1.7%
15/20% of Total Revenue
Evernote (reported) - .5% Conversion 1st Month up to 4%
@1yr
LinkedIn – 3% Conversion to Premium 25% Rev
Logmein – 3-4 % Conversion to Premium
12. The Key - Establishing A
Culture of Measurement
Number of Deals Created by Rep
LEADS Rep Activity Against Pipeline
Total Seats
# of products By Users Conversion by Rep
By Company Lead Source
PIPELINE/OPS
ADOPTION Lead Status
RATE
PENETRATION
RATE
Value of Deals Won
Monthly vs. Quota
SALES
BOOKINGS
ACCOUNT
ACCOUNT MANAGEMENT
HEALTH
By Customer
COMPANY
By Product Type
By Company Size SCORECARD By Channel
Conversions
WEBSITE
PERFORMANCE
PRODUCT
MANAGEMENT
Visits to Site Product Traction
Visits from Campaigns MARKETING Upsell
Pages Visited
Leads from Campaign
CAMPAIGN
ROI for Campaign Engaged Users
PERFORMANCE
Leads by Product Type
13. Establishing A Culture of
Measurement
Total Seats
LEADS
Number of Deals Created by Rep
Rep Activity Against Pipeline
# of products By Users Conversion by Rep
By Company Lead Source
PIPELINE/OPS
ADOPTION Lead Status
RATE
PENETRATION
RATE COMPANY SCORECARD Value of Deals Won
Monthly vs. Quota
FY10
Description Starting Metric
SALES
Goals
BOOKINGS
ACCOUNT
Scale Direct Sales New ACV per Rep
ACCOUNT MANAGEMENT
HEALTH
Efficiency Days to win
By Customer
Scale Marketing COMPANY
Mktg Spend/Inbound Rev By Product Type
By Company Size
Effectiveness
SCORECARD
Lead to Opp Conversion Ratio
By Channel
Engaged Users
WEBSITE
PERFORMANCE FREEMIUM FREE CONVERSION
PRODUCT
Engaged Users MANAGEMENT
Visits to Site Product Traction
Visits from Campaigns MARKETING Upsell
Pages Visited Retain Customers Seat Renewals >90%
Leads from Campaign
CAMPAIGN
ROI for Campaign FREE CONVERSION
PERFORMANCE
Leads by Product Type
