1. business freemium at scale
Scott McMullan (@scottmcmullan)
Freemium Summit East
October 25th, 2010

2. Google Apps Overview
How we go to market
w/freemium
What we've learned about
freemium

3. Messaging & collaboration suite
+

4. In a nutshell, this our freemium

5. Lots of customers, growing fast
30 Over 30M active users (10M are EDU)
Over 3M businesses
More than 3,000 new
businesses each day
2008 2009 2010

6. Rough breakdown of the 30 Million
"Millions" are paid Premier
10 Million are free EDU
"The rest" are free Standard/Other

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

8. 5 Editions

9. 8 Customer segments

10. 5 Sales teams

11. Channel sales too!
Channel +SIs +VARs +VARs +VARs +VARs
Sales

12. This is our freemium.
Freemium Free Trial
Channel +SIs +VARs +VARs +VARs +VARs
Sales

13. How we go to market:
a) segments & sales teams
b) customer lifecycle

14. Send prospects to web site

15. EDUs self-select

16. Smaller prospects can select Standard

17. Goal: start a Premier trial (or contact sales)

18. Active selling done here
(1)
(3) (2)
(4)

19. That's our go to market...
What have we learned
about freemium?

20. 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

21. 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

22. Think "revenue layer cake"
http://www.flickr.com/photos/jamieanne/4657851724/ CC-BY

23. Freemium: impact on direct sales
3 Sales Teams
--------------------
Field sales: > 3k users
Telesales: 100 - 3k users
Online 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

24. 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

25. Freemium: impact on ecosystem
VARs Apps Marketplace
------------ ---------------------------
20% discount to VAR 20% revshare to Google
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

26. 1. Revenue layer cake
2. Use as directed for best results
Think "helps build multiple channels"

27. 2 ecosystem case studies
from Apps Marketplace

28. Smartsheet.com
3X better paid conversion rates than pay per click
Cloud-savvy users easier to sell/support

29. Sliderocket.com
2.5X better paid conversion rates from trial
5X increase in seats/company

30. 1. Create a revenue layer cake
2. Use as directed for best results
3. Helps build multiple channels
Think "You'll find new ways to use it"

31. Summary: freemium helped us scale
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)

32. Thanks!
@scottmcmullan