scott mcmullan presentation

business freemium at scale

Scott McMullan (@scottmcmullan)Freemium Summit East

October 25th, 2010

Google Apps Overview

How we go to marketw/freemium

What we've learned about freemium

Messaging & collaboration suite

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In a nutshell, this our freemium

Lots of customers, growing fast

2008 2009 2010

• Over 30M active users• Over 3M businesses• More than 3,000 new

businesses each day

(10M are EDU)30

Rough breakdown of the 30 Million

10 Million are free EDU

"The rest" are free Standard/Other

"Millions" are paid Premier

How we go to market:a) segments & sales teams

5 Editions

8 Customer segments

5 Sales teams

Channel sales too!

Channel +SIs +VARs +VARs +VARs +VARs

Sales

This is our freemium.

Channel +SIs +VARs +VARs +VARs +VARs

Sales

F r e e m i u m F r e e T r i a l

How we go to market:a) segments & sales teams

b) customer lifecycle

Send prospects to web site

EDUs self-select

Smaller prospects can select Standard

Goal: start a Premier trial (or contact sales)

Active selling done here

(1)

(2)(3)

(4)

That's our go to market...

What have we learned about freemium?

Focus on 3 topics

1. Why we like freemium

2. Freemium's impact on direct sales

3. Freemium's impact on channel/ecosystem, including 2 case studies

We like freemium because...

• entered mature, premium market --> help disrupt• large addressable market --> upsell math works• existing, free consumers --> product & support leverage• our apps have network effects --> lower marketing costs• students graduate --> bring expectations to work• we know ads --> additional revenue stream• broad product --> opportunity for differentiation, add-ons

Think "revenue layer cake"

http://www.flickr.com/photos/jamieanne/4657851724/ CC-BY

Freemium: impact on direct sales

3 Sales Teams--------------------Field sales: > 3k usersTelesales: 100 - 3k usersOnline sales: 1 - 100 users

Freemium works because...• user cap on free --> limits conflict with sales teams• big diverse customer base --> more oppty to sell add-ons• self-service DNA --> pilots are easier/cheaper

A challenge• online sales team competes with free

1. Revenue layer cake

Think "use as directed for best results"

FREEMIUM:

Small biz& EDU only

http://www.flickr.com/photos/rapo/2373988909 CC-BY

Freemium: impact on ecosystem

VARs ------------20% discount to VAR

Freemium works because...• larger customer base --> more "air cover"

--> grows appetite for consulting, apps• more cloud-savvy user --> better conversion rates

A challenge• $50/user/year --> pressure on ecosystem prices

Apps Marketplace --------------------------- 20% revshare to Google

1. Revenue layer cake2. Use as directed for best results

Think "helps build multiple channels"

2 ecosystem case studiesfrom Apps Marketplace

Smartsheet.com

3X better paid conversion rates than pay per click

Cloud-savvy users easier to sell/support

Sliderocket.com

2.5X better paid conversion rates from trial

5X increase in seats/company

1. Create a revenue layer cake2. Use as directed for best results3. Helps build multiple channels

Think "You'll find new ways to use it"

1. Create a revenue layer cake (core, add-ons, ads, ecosystem)

2. Use as directed for best results (right size, right segment)

3. Helps build multiple channels (sales teams, vars, isvs)

4. You'll find new ways to use it (awareness, preferences, ecosystem)

Summary: freemium helped us scale

Thanks!@scottmcmullan