the state of b2b freemium 2013
DESCRIPTION
Slides from my presentation at the November 8, 2012 Freemium Meetup in San Francisco... this is more like an outline; the important stuff was what I said, not what's on the slides!TRANSCRIPT
The State ofB2B Freemium 2013
A Reality Check
Lincoln Murphy presents...
B2C vs. B2B Freemium
B2C... more TIME than MONEY
B2B... more MONEY than TIME
The State of B2B Freemium 2013 Copyright© 2012 Sixteen Ventures. All Rights Reserved.
• It depends...
• To build a revenue-generating business? Some are finding success
• To build a Profitable business? Jury is still out
• To build a massive user base and sell to someone else who will monetize? Some successes... like the lottery
• Pick one and focus on it exclusively...
Does Freemium Work?
The State of B2B Freemium 2013 Copyright© 2012 Sixteen Ventures. All Rights Reserved.
• ...unless it's designed to!!!!
• Products that grow and “go viral” organically... don’t.
• Behind the curtain is an army of smart people making it happen
• Shouldn't seem forced; the conversion process should be natural
• Spend as much time developing the Customer Acquisition, Engagement, Retention, and Viral Expansion processes as the core functionality of the product
Your Product Won’t Sell Itself
The State of B2B Freemium 2013 Copyright© 2012 Sixteen Ventures. All Rights Reserved.
• Free-to-paid conversion rates are super-low even for "successful" Freemium companies
• In the 3-5% range for the Classic Freemium model
•What’s the quid pro quo; if no value from the free users, why have free users?
The State of B2B Freemium 2013
You need a massive audience
Copyright© 2012 Sixteen Ventures. All Rights Reserved.
• Freemium isn't cheap for the vendor & it’s getting more expensive
• Freemium companies are raising money to steal users from other Freemium companies, not just disrupt the legacy software vendors, or premium SaaS companies
• Evernote $166M funding to date
• Dropbox $257M in funding to date
• Box $284M in funding to date
• Yammer $142M before Microsoft acquired them for $1.2B
The State of B2B Freemium 2013
You need a lot of money
Copyright© 2012 Sixteen Ventures. All Rights Reserved.
• "Free" has been around a while now and isn't as off-putting; still non-starter in some markets
• The "free = zero value" time has passed
• Customers might not "get" the business model, but they trust them more today
• People don't want to invest their time, energy, and resources in a company that won't be there; got big funding? Flaunt it!
• Generational changes are opportunities
• "Let's cannibalize ourselves before others take our market share!" - Legacy Software Vendors
The State of B2B Freemium 2013
Free is more accepted now
Copyright© 2012 Sixteen Ventures. All Rights Reserved.
• Free isn't cool anymore; not a user magnet as before
•Getting free users is becoming more difficult
•Know what you're displacing with your offering
•Once you get a user, get them engaged and use them to spread the word
•Engagement isn't what it used to be; now it's even more important!
The State of B2B Freemium 2013
But free isn’t enough
Copyright© 2012 Sixteen Ventures. All Rights Reserved.
•The complex sale is where different personas within a company are involved in the buying process
• For example you might have an End User, an Influencer, a Technical Buyer, and an Economic Buyer involved
•Works well even where a sales person is still required - by the market - to close the deal
•The Yammer modelThe State of B2B Freemium 2013
Freemium can Streamline the Complex Sale
Copyright© 2012 Sixteen Ventures. All Rights Reserved.
• Don’t “Go Freemium” to avoid selling
• Know your audience
• Free Trials can be VERY effective; should you pivot to profit?
• If your product doesn’t add value why are you in business? If it does, maybe they’ll pay, right?
• If your customers have more money than time...
• Know what your goal as a company is, draw the line in the sand and don’t deviate from that goal...
The State of B2B Freemium 2013
Should you use Freemium?
Copyright© 2012 Sixteen Ventures. All Rights Reserved.
