The State of B2B Freemium 2013

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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!

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The State of B2B Freemium 2013

  1. 1. Lincoln Murphy presents... The State ofB2B Freemium 2013 A Reality Check
  2. 2. B2C vs. B2B Freemium B2C... more TIME than MONEY B2B... more MONEY than TIMEThe State of B2B Freemium 2013 Copyright© 2012 Sixteen Ventures. All Rights Reserved.
  3. 3. Does Freemium Work? • 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...The State of B2B Freemium 2013 Copyright© 2012 Sixteen Ventures. All Rights Reserved.
  4. 4. Your Product Won’t Sell Itself • ...unless its designed to!!!! • Products that grow and “go viral” organically... don’t. • Behind the curtain is an army of smart people making it happen • Shouldnt 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 productThe State of B2B Freemium 2013 Copyright© 2012 Sixteen Ventures. All Rights Reserved.
  5. 5. You need a massive audience • 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 Copyright© 2012 Sixteen Ventures. All Rights Reserved.
  6. 6. You need a lot of money • Freemium isnt 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 $1.2BThe State of B2B Freemium 2013 Copyright© 2012 Sixteen Ventures. All Rights Reserved.
  7. 7. Free is more accepted now • "Free" has been around a while now and isnt 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 dont want to invest their time, energy, and resources in a company that wont be there; got big funding? Flaunt it! • Generational changes are opportunities • "Lets cannibalize ourselves before others take our market share!" - Legacy Software VendorsThe State of B2B Freemium 2013 Copyright© 2012 Sixteen Ventures. All Rights Reserved.
  8. 8. But free isn’t enough • Free isnt cool anymore; not a user magnet as before • Getting free users is becoming more difficult • Know what youre displacing with your offering • Once you get a user, get them engaged and use them to spread the word • Engagement isnt what it used to be; now its even more important!The State of B2B Freemium 2013 Copyright© 2012 Sixteen Ventures. All Rights Reserved.
  9. 9. Freemium can Streamline the Complex Sale • 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 Copyright© 2012 Sixteen Ventures. All Rights Reserved.
  10. 10. Should you use Freemium? • 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 Copyright© 2012 Sixteen Ventures. All Rights Reserved.
  11. 11. Contact Info Lincoln Murphy http://sixteenventures.comlincoln@sixteenventures.com @lincolnmurphy (972) 200-9317
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