Succeeding with Freemium - Sean Ellis
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In recent years freemium has become a leading startup business model. Startups use the pricing model to disrupt existing categories or to prevent a future competitor from disrupting them. But freemium is a difficult model to execute and requires a unique growth strategy. In this session, Sean will share lessons learned from helping to launch and/or grow 15 freemium businesses that are now collectively worth billions of dollars.
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Succeeding with Freemium - Sean Ellis
- 1. Succeeding with Freemium Sean Ellis July 14th, 2011 Founder & CEO of CatchFree Blog: Startup-Marketing.com Twitter: @SeanEllis
- 2. Competing Against Free… Hope nobody discovers free guy? Spend heavily on marketing? HBR “counter with free version” 2
- 3. Agenda Path to Freemium The Freemium Loop Freemium culture is critical Free/paid breakdown Marketing a freemium service 3
- 4. 2003 - 2007 4 Entrenched 800 lbs guerilla Great product/marketing Disrupt/diff with freemium Cashflow positive growth $1B-ish on NASDAQ
- 5. Google Search Volume 5 Years
- 6. 6 Xobni Dropbox Eventbrite Lookout Socialcast 2008 - 2009
- 7. The Freemium Growth Loop 7 Reinvest Premium Upgrade Seed a Free User Get word-of-mouth free users
- 8. Freemium Culture Least recognized necessity Passion to spread “experience” Patience to seed Freeloaders are good Protect culture – greed kills growth 8
- 9. Free/Paid Breakdown Free Version Premium Version Experience creates evangelist Evangelists drive growth Build relationship Free creates need for premium Understand needs Solve problems with premium 9 Experience Relationship Understand Solve
- 10. Free is the MVP Lowers complexity barrier Lowers support cost More version differentiation 10
- 11. Marketing Freemium Promote free version Evangelists for free version Revenue per 100 users Allowable acquisition cost (less marginal cost) 11
- 12. The Freemium Growth Loop 12 Reinvest Premium Upgrade Seed a Free User Get word-of-mouth free users
- 13. Channel Discovery Works with freemium economics Addresses skepticism Leverage good-will asset Seeds freemium growth loop 13
- 14. 14
- 15. Sean Ellis, Founder & CEO CatchFree.com Blog: Startup-Marketing.com Twitter: @SeanEllis
Editor's Notes
- Highly defensible growth engine Requires unique culture (not common in established companies – startups malleable)Not easy to execute – today we’ll talk about best practices.
- Product driven – free has to be good enough to create evangelists; paid needs to be noticeably better…
- LogMeIn examples…Intended use case – free remote access creates need for paid version to print remote doc (especially if app doesn’t exist locally)Unintended use case – 2 problems… 1) setup time consuming 2) fear of re-accessSkype example – free conf – join via phone…
- Minimum feature set to solve key problem