Freemium ain't new. It's just a new word. (Freemium Summit Presentation, Matt Brezina, Xobni)

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This is a slide deck I presented at Freemium Summit on March 26, 2010. An exploration of existing freemium businesses, business/market conditions where freemium can make sense, and finally some …

This is a slide deck I presented at Freemium Summit on March 26, 2010. An exploration of existing freemium businesses, business/market conditions where freemium can make sense, and finally some lessons learned from xobni

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  • $9M operating budget
    1.3 from tea gardens
    400k from gold course
  • $9M operating budget
    1.3 from tea gardens
    400k from gold course
  • $9M operating budget
    1.3 from tea gardens
    400k from gold course
























  • we planned freemium from day 1. We said, let’s us go out and solve a problem for all of these really really valuable business users. And we’ll sell them a lot of stuff in the future
  • we planned freemium from day 1. We said, let’s us go out and solve a problem for all of these really really valuable business users. And we’ll sell them a lot of stuff in the future
  • we planned freemium from day 1. We said, let’s us go out and solve a problem for all of these really really valuable business users. And we’ll sell them a lot of stuff in the future
  • we planned freemium from day 1. We said, let’s us go out and solve a problem for all of these really really valuable business users. And we’ll sell them a lot of stuff in the future
  • we planned freemium from day 1. We said, let’s us go out and solve a problem for all of these really really valuable business users. And we’ll sell them a lot of stuff in the future









  • tod sacerdoti
    made a competition in the company to guess the order of top upsells







  • andrew chen’s blog list of things to a/b test. I”ll be adding to his list on my own blog shortly.

    YOu are doing such high volumes of impressions, it is probably more important in freemium than anywhere else





  • dan airely example of duke basketball tickets. 15x difference in value.



Transcript

  • 1. Freemium ain’t new It’s just a new word Matt Brezina Co-founder, Xobni Twitter: @brezina mattbrezina@gmail.com
  • 2. efax (J2 Com) 1B market cap • 9,9M free users • 1.2M premium users
  • 3. Skype 1.9B market cap efax (J2 Com) 1B market cap • 27B free min • 9,9M free users • 3.1B premium min • 1.2M premium users
  • 4. Skype 1.9B market cap efax (J2 Com) 1B market cap • 27B free min • 9,9M free users • 3.1B premium min • 1.2M premium users LogMeIn 450M market cap • 300k premium users • 27M total registered users
  • 5. 10:1
  • 6. $
  • 7. $ $
  • 8. $ $ $
  • 9. Free - the most powerful word in marketing
  • 10. Free - the most powerful word in marketing • Freemium is a marketing strategy
  • 11. Free - the most powerful word in marketing • Freemium is a marketing strategy • Powerful because of the “penny gap.”
  • 12. 1. Is freemium right for my business?
  • 13. 1. Is freemium right for my business? 2. If it is, how do I make it successful (lessons learned from Xobni)
  • 14. If you make software, you can make money in four ways If you sell software to a business, they don’t want you to make money the last two ways
  • 15. If you make software, you can make money in four ways • Sell your stuff (Premium only) If you sell software to a business, they don’t want you to make money the last two ways
  • 16. If you make software, you can make money in four ways • Sell your stuff (Premium only) • Sell your stuff to some of your users (Freemium) If you sell software to a business, they don’t want you to make money the last two ways
  • 17. If you make software, you can make money in four ways • Sell your stuff (Premium only) • Sell your stuff to some of your users (Freemium) • Sell other companies’ stuff (Advertising) If you sell software to a business, they don’t want you to make money the last two ways
  • 18. If you make software, you can make money in four ways • Sell your stuff (Premium only) • Sell your stuff to some of your users (Freemium) • Sell other companies’ stuff (Advertising) • Sell users’ stuff (Data marketplace) If you sell software to a business, they don’t want you to make money the last two ways
  • 19. If you make software, you can make money in four ways • Sell your stuff (Premium only) • Sell your stuff to some of your users (Freemium) • Sell other companies’ stuff (Advertising) • Sell users’ stuff (Data marketplace) If you sell software to a business, they don’t want you to make money the last two ways
  • 20. If you make software, you can make money in four ways • Sell your stuff (Premium only) • Sell your stuff to some of your users (Freemium) • Sell other companies’ stuff (Advertising) • Sell users’ stuff (Data marketplace) If you sell software to a business, they don’t want you to make money the last two ways
  • 21. Is freemium right for my business? (let’s narrow discussion to freemium vs. premium only)
  • 22. When freemium makes more sense than premium-only
  • 23. When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist
  • 24. When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist ✓ Corollary: channels for buying users are too expensive
  • 25. When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist ✓ Corollary: channels for buying users are too expensive ✓ Premium-only competitor is creating demand
  • 26. When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist ✓ Corollary: channels for buying users are too expensive ✓ Premium-only competitor is creating demand ✓ Your product has (or needs) network effects
  • 27. When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist ✓ Corollary: channels for buying users are too expensive ✓ Premium-only competitor is creating demand ✓ Your product has (or needs) network effects ✓ Cost to offer free service isn’t too high
  • 28. When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist ✓ Corollary: channels for buying users are too expensive ✓ Premium-only competitor is creating demand ✓ Your product has (or needs) network effects ✓ Cost to offer free service isn’t too high ✓ You can get $ to build free product
  • 29. How to make freemium a success (lessons learned from Xobni)
  • 30. How to make freemium a success (lessons learned from Xobni) Paul Buchheit: advice = limited life experience + overgeneralization
  • 31. Why did we go freemium with Xobni?
  • 32. Why did we go freemium withwith Xobni? Why did we go freemium Xobni?
  • 33. Why did we go freemium withwith Xobni? Why did we go freemium Xobni? ✓ Good virality on communication platform
  • 34. Why did we go freemium withwith Xobni? Why did we go freemium Xobni? ✓ Good virality on communication platform ✓ No existing cheap paths to buy Outlook users
  • 35. Why did we go freemium withwith Xobni? Why did we go freemium Xobni? ✓ Good virality on communication platform ✓ No existing cheap paths to buy Outlook users ✓ Low marginal cost per user
  • 36. Why did we go freemium withwith Xobni? Why did we go freemium Xobni? ✓ Good virality on communication platform ✓ No existing cheap paths to buy Outlook users ✓ Low marginal cost per user ✓ Access to VC funds
  • 37. Why did we go freemium withwith Xobni? Why did we go freemium Xobni? ✓ Good virality on communication platform ✓ No existing cheap paths to buy Outlook users ✓ Low marginal cost per user ✓ Access to VC funds ✓ We didn’t want to sell enterprise software
  • 38. Xobni Plus
  • 39. Xobni Plus Xobni for Blackberry
  • 40. Xobni Plus Xobni for Blackberry Xobni One
  • 41. Xobni Plus Xobni for Blackberry Xobni Enterprise Xobni One
  • 42. Xobni Free for Outlook
  • 43. Xobni Free for Outlook
  • 44. Free Premium Xobni Free for Outlook
  • 45. Free Premium Xobni Plus Xobni Free $29.95 for Outlook
  • 46. Free Premium Xobni Plus Xobni Free $29.95 for Outlook Xobni Enterprise $36/user/yr
  • 47. Free Premium Xobni Blackberry $9.99 Xobni Plus Xobni Free $29.95 for Outlook Xobni Enterprise $36/user/yr
  • 48. Free Premium Xobni Blackberry $9.99 Xobni One $3.99/mo Xobni Plus Xobni Free $29.95 for Outlook Xobni Enterprise $36/user/yr
  • 49. Free Premium Xobni Blackberry $9.99 Xobni One $3.99/mo New mobile & email Xobni platforms Plus Xobni Free $29.95 for Outlook Xobni Enterprise $36/user/yr
  • 50. 8 Lessons learned in building Xobni’s freemium business
  • 51. 1. Survey! One huge advantage of free - you’ve got a lot of users to talk to Decisions we made because we understood our users: • Deployed by IT? Our policy doesn’t allow deployment without Xobni Enterprise • One or multiple computers? Extra Xobni plus licenses are $9.95
  • 52. 2. Start with more in-product upsells than you are comfortable with • See what users are clicking on • Determine which upsells convert to sales • Improve or remove
  • 53. Over 14 in-product upsells
  • 54. 3. Tease with data Show the user what they are missing from your premium product
  • 55. Why should I click that button?
  • 56. Tease with data Text
  • 57. 4. Tie message to the user’s action If the user tells you he wants apples, don’t sell oranges
  • 58. I clicked Video So, sell me video!
  • 59. User clicks on autosuggest We sell them autosuggest
  • 60. 5. Obviously, A/B test • High volume in freemium businesses makes a/b testing more important than ever • We got 50% improvement in premium conversion by a/b testing our in-product upsells and messages
  • 61. 25% improvement on this upsell
  • 62. 6. Not all channels are created equal (and that can be okay)
  • 63. 7. Users conditioned to free product convert poorly to premium • Existing free users converted poorly when we launched premium • New users that only see Xobni Free when installing convert poorly
  • 64. Users that see a homepage with only our free product
  • 65. Convert to premium more poorly than users who see both free and premium initially
  • 66. 8. Free trials are the freemium business’s best friend Cost of losing X is perceived higher than the value of gaining X
  • 67. 1B market cap 1.9B market cap 450M market cap
  • 68. 1B market cap 1.9B market cap 450M market cap Time will tell...
  • 69. Freemium ain’t new It’s just a new word Matt Brezina Co-founder, Xobni Twitter: @brezina mattbrezina@gmail.com