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Scott McMullan Presentation
Freemium has helped Google Apps scale its business. It has over 30 million active users, over 3 million businesses, and signs up more than 3,000 new businesses per day. Freemium allows Google Apps to enter mature markets by helping disrupt premium competitors. It provides leverage through an existing large free user base for product support. Freemium also impacts sales through multiple channels by building a large ecosystem and growing the appetite for consulting services and apps.
Scott McMullan Presentation
- 1. business freemium atscale Scott McMullan (@scottmcmullan) Freemium Summit East October 25th, 2010
- 2. Google Apps Overview Howwe go to market w/freemium What we've learned about freemium
- 3. Messaging & collaborationsuite +
- 4. In a nutshell,this our freemium
- 5. 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
- 6. Rough breakdown ofthe 30 Million 10 Million are free EDU "The rest" are free Standard/Other "Millions" are paid Premier
- 7. How we goto market: a) segments & sales teams
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- 11. Channel sales too! Channel+SIs +VARs +VARs +VARs +VARs Sales
- 12. This is ourfreemium. Channel +SIs +VARs +VARs +VARs +VARs Sales F r e e m i u m F r e e T r i a l
- 13. How we goto market: a) segments & sales teams b) customer lifecycle
- 14. Send prospects toweb site
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- 16. Smaller prospects canselect Standard
- 17. Goal: start aPremier trial (or contact sales)
- 18. Active selling donehere (1) (2)(3) (4)
- 19. That's our goto market... What have we learned about freemium?
- 20. Focus on 3topics 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 freemiumbecause... • 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 layercake" http://www.flickr.com/photos/jamieanne/4657851724/ CC-BY
- 23. Freemium: impact ondirect 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 layercake Think "use as directed for best results" FREEMIUM: Small biz & EDU only http://www.flickr.com/photos/rapo/2373988909 CC-BY
- 25. Freemium: impact onecosystem 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
- 26. 1. Revenue layercake 2. Use as directed for best results Think "helps build multiple channels"
- 27. 2 ecosystem casestudies from Apps Marketplace
- 28. Smartsheet.com 3X better paidconversion rates than pay per click Cloud-savvy users easier to sell/support
- 29. Sliderocket.com 2.5X better paidconversion rates from trial 5X increase in seats/company
- 30. 1. Create arevenue layer cake 2. Use as directed for best results 3. Helps build multiple channels Think "You'll find new ways to use it"
- 31. 1. Create arevenue 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
- 32.
Editor's Notes
- #4 Key Message: Google Apps is a set of collaboration, and compliance tools built specifically for businesses and designed to address the challenges we have discussed. Talking Points: Messaging tools. GMail - Google's wordclass email client with 25GB of storage per user. Google Talk - Real time communication across text, audio, and video right in your inbox. Google Calendar - Enterprise calendering system. Google Groups - Simple, user-managed, searchable, distribution and sharing lists. The best messaging tools available for information workers today. Collaboration tools. Google Docs - Word processing, spreadsheets, and presentation built to enhance collaboration and productivity. Google Sites - Web site creation tool that doesn't involve IT. Allow users to easily create sites for themselves, their teams, their projects. Google Video for Business - Upload and share video within your business, to enhance communication and collaboration. These are next-generation, web-based tools designed for the way we communicate and collaborate today For our businesses, we have a few extra features. Support for managing your identities in an outside service, including Active Directory and LDAP. Connectivity for other clients, like Outlook, Blackberry, and AtiveSync mobile devices. And a 99.9% SLA and 24x7 phone support. Pricing is simple and straightforward. The Apps package is $50/user/year. If you want to add message discovery archiving, it costs $25/user/year for 1 year of retention or $45/user/year for 10 years of retention. [CLICK] We also have an archiving option to meet eDiscovery needs with Postini. This service keeps a full archive of all email traffic for your users (all or some, it's up to you) and allows your administrators to perform eDiscovery searches across them. [CLICK] Pricing here is simple too. An additional $13/user/year for 1 year of retention and $33/users/year for 10 year retention. Transition: We built Google Apps on a new computing model, often called "cloud computing" that we think allows us great economies of scale and a faster pace of innovation.
- #23 Best summarized by a layer cake: tasty for many reasons just like cake starts w/right raw ingredients like sugar, butter, flavorings that all get layered to make a tasty whole we started w/ingredients of large market, network effects and existing assets to create a core revenue stream add-on product revenue streams ad revenue streams http://www.flickr.com/photos/jamieanne/4657851724/
- #25 Best summarized by a prescription: helps, but won't cure all ills, and can hurt if used too much some segments get freemium some segments get free trial http://www.flickr.com/photos/rapo/2373988909/sizes/o/
- #27 Summarized by this picture: you need different mechanisms to reach all the places you want to go. Freemium can accelerate your ecosystem growth to let you reach: different size customer different buying behaviors different customer end-goals
- #31 Summarized by this picture: can use a swiss army knife for a lot of things can help you out in unexpected situations but again, definitely won't save you in every situation!