A lot of people *think* they know freemium, but their knowledge doesn't go beyond the basics. Insightly's VP of Finance Karl Laughton *knows* freemium, because he's been in the freemium trenches for nearly a decade. Drawing on his experience, Karl walks through how to properly model out freemium across the board to make sure you're taking advantage of the model properly at Price Intelligently's SaaSFest 2016.

1. SaaSFest Conference
December 2016
CONFIDENTIAL AND PROPRIETARY
Lessons learned along Insightly’s journey to model its freemium
business

2. 2
Lessons learned along Insightly’s journey to
model its freemium business
1 • About us
• Founding story
• Our journey thus far
2 • SaaS self service model
• Understanding retention
• Cohorts and their components
3 • Layering on Freemium
• Unit Economics
• Q&A

3. 3
S a a S F e s t 2 0 1 6
CRM AND PROJECT
MANAGEMENT
FOR SMBs

4. 4
One of the largest CRM and Project
Management applications in the world for SMB’s
1.2M USERS
100EMPLOYEES
6 LANGUAGES
+150 COUNTRIES

5. 5
Site Visitors
Accounts Provisioned
New Paid Customers
How does a traditional self serve model work?
$ Branding
$ SEM
$ Display
$ Marketplace
$ SEO/
Content
Marketing
Paid Marketing
Acquisition
1000
Unique website visits per
month
50
Visitors complete the call to
action and register for a
trial account
5
Convert into a paid
customers, which
collectively as a cohort,
generate a new mrr stream
for your business
In any given month
…

6. Dollar retention of your new cohort
You’ve worked hard to acquire this new recurring revenue stream, naturally, you want to
understand how well you retain it over the course of its life for this group, or, ‘cohort’ of
customers!

7. Traditional components of cohort analysis
Monthly Gross Dollar Churn
Monthly Net Expansion
Annual Gross Dollar Churn
Annual Net Expansion

8. Gross $MRR churn – monthly contracts
Analyze gross dollar churn over a cohort’s life for patterns as a cohort matures

9. Net $MRR expansion – monthly contracts
Net MRR expansion = upgrades – downgrades (both plan and seat changes)

10. Net $MRR churn – monthly contracts
Net MRR churn = Gross MRR churn – Net expansion MRR
The quest for ‘net negative churn’ awaits you. Focus on the relationship between each
component of retention across segments in cohorts and work the equation from both
sides

11. Net $MRR churn – annual contracts
At the end of twelve months, this segment retained almost 20% more of it’s beginning
revenue stream. Programs that help influence contract mix should drive churn reduction.
You should factor delinquent based churn on auto – renewal attempts into your
calculation (month 13), being careful not to overstate renewal rates

12. Lessons learned along Insightly’s journey to
model its freemium business

13. Site Visits / Accounts
Provisioned
New Customers
FREE Customers
The Freemium Self – Serve SaaS model
$ Branding
$ SEM
$ Display
$ Marketplace
$ SEO/
Content
Marketing
Paid Marketing
Acquisition
1000
Unique website visits per
month
150
Visitors complete the calls to
action and register either for a
free or a trial account, forming
this period’s cohort together
10
Convert into new paid
customers and generate
a new $MRR stream
140
New free accounts
provisioned – if a customer
completes their trial period
and chooses not to purchase,
their account is converted
into a free instance
In any given month
…

14. Customer retention in a Freemium Cohort

15. $MRR retention in a Freemium Cohort

16. Lifecycle conversion in a Freemium Cohort

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Know your funnel deeply, tailor your
measurement framework to your business

18. SAASFEST, THANK YOU!
DEC 2016
CONFIDENTIAL AND PROPRIETARY