Dan Martell - May 23, 2016


How To Build a Great Freemium SaaS Company


Episode Stats

Length

4 minutes

Words per Minute

201.16014

Word Count

971

Sentence Count

38


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

Transcript

Transcript generated with Whisper (turbo).
00:00:00.000 Three things that freemium companies do right, you know.
00:00:13.520 Today, I don't know if you've ever thought of building a
00:00:15.720 freemium company, if you want to know what the best do to win
00:00:19.560 or how you should prioritize your resources,
00:00:22.320 that's what I'm going to share in today's video.
00:00:23.720 You know, I had the privilege of being asked to formally advise
00:00:28.320 one of the largest freemium companies out there, HootSuite.
00:00:31.060 You know, they're a billion dollar plus company
00:00:32.920 and I've been working with them for the last seven years.
00:00:34.820 So I've seen them go from, you know, thousands
00:00:37.420 or hundred thousands of users to millions
00:00:39.160 to tens of millions and how they've really leveraged
00:00:41.860 their freemium business model to extract the most value.
00:00:45.080 You know, I'm also blessed to be friends
00:00:47.040 with a guy named Mike McDermott
00:00:48.200 who built an incredible company called FreshBooks.
00:00:50.840 And, you know, over the years watch him
00:00:52.880 how he's evolved his product
00:00:54.540 to really leverage that business model.
00:00:56.140 When I was building Flowtown, you know,
00:00:57.980 My company, it was a social email marketing tool.
00:01:00.620 We integrated with MailChimp and we worked with Ben,
00:01:03.060 the founder and CEO and I understood and we watched
00:01:07.160 that transition from when they were only paid to freemium
00:01:11.300 and it was incredible to watch and how he explained it
00:01:13.820 on his blog and the data that they used to make that decision.
00:01:16.740 I just think that as I've seen all these companies operate
00:01:20.400 in scale, there's really three things that they do right
00:01:23.840 and that's what I want to share with you in this video.
00:01:25.440 The first one is they're free to market
00:01:27.580 and really educate to win Mindshare.
00:01:30.220 You know, at the end of the day,
00:01:31.580 Dropbox and other great freemium companies,
00:01:34.080 they do everything they can to educate the market,
00:01:36.380 to get press, to talk about integrations,
00:01:38.660 to talk about how their product works with other companies
00:01:41.460 so that people recommend them when there's a need.
00:01:44.060 You know, recently my dad reached out and he's like,
00:01:46.060 hey Dan, I'm thinking of starting a newsletter or an email.
00:01:49.200 What tool should I use?
00:01:50.040 Well, obviously MailChimp.
00:01:51.400 I mean, you know, you get 2,000 contacts for free.
00:01:54.060 so if you ever grow past that,
00:01:55.920 then he's gonna be willing to throw down a few dollars
00:01:58.160 to pay for it, and that's the paid part.
00:02:01.060 So I just think that the best freemium companies out there,
00:02:04.240 they really educate the market, they talk about it,
00:02:06.900 they get mentioned in press, you know,
00:02:08.600 think about Evernote, all these incredible companies.
00:02:11.180 They're talked about all the time
00:02:12.820 because it reduces the barrier when you're free
00:02:15.980 to having other people adopt it, right?
00:02:17.820 And it needs to be a very simple, focused solution.
00:02:20.360 The second thing they do is they use data
00:02:22.880 to improve their product, right?
00:02:25.280 So think about segments, cohorts, A-B tests.
00:02:28.660 Because they have so much volume,
00:02:30.560 because the product doesn't cost anything to use,
00:02:32.520 they have so many users coming into the funnel,
00:02:34.860 they're able to run experiments way faster
00:02:37.620 than any other company and get statistical significance
00:02:40.800 on those tests and because of that,
00:02:42.960 their product is evolving and testing and growing
00:02:45.940 and improving at a rate that you wouldn't otherwise
00:02:48.240 be able to do if you didn't have a freedom
00:02:50.300 in business model, so that is, when you think about resources
00:02:52.740 and where you should allocate them,
00:02:53.980 you want to make sure you take advantage of that.
00:02:56.140 And then the third thing they do is they use customer data
00:02:59.420 to improve their sales process, you know?
00:03:01.820 If you've got a bunch of different accounts
00:03:04.620 within a company, if you look and you got, you know,
00:03:07.220 27 users from a big enterprise corporation
00:03:11.120 and there's like four different departments,
00:03:13.660 it makes a lot of sense for your sales guy
00:03:15.400 to reach out to that company and say,
00:03:16.900 hey, you've got four different departments
00:03:18.760 using this product, all separate accounts
00:03:20.760 And wouldn't you want to consolidate billing,
00:03:23.000 save some money, provide you with some extra features
00:03:25.900 like security management or enhanced support
00:03:28.860 or service level agreements?
00:03:30.260 All these things, because you have the data on the users
00:03:33.140 and how they're using it, feeds into the sales process.
00:03:35.640 It helps qualify.
00:03:36.980 It helps create the lead list.
00:03:38.580 It helps ensure that they have the data
00:03:40.220 to talk about the benefits and the features
00:03:42.440 that are gonna be most attractive to those customers.
00:03:44.380 And I've seen companies totally dominate.
00:03:46.680 I mean, Yammer was one that did this at scale.
00:03:49.220 they talked about it, how they looked for the domains
00:03:51.680 of those different company emails,
00:03:53.460 and then reached out to those businesses
00:03:55.860 that were high priority, that were very probable to buy.
00:03:59.160 And that is the third one.
00:04:00.100 So real quick, free to market, educate and win mindshare.
00:04:04.200 That's number one.
00:04:05.040 Second is use data to improve the product
00:04:08.040 through segments, cohorts, and A-B tests.
00:04:10.740 And third, use the customer data
00:04:13.320 to improve your sales process.
00:04:14.980 Because if you think about it, free gives you traffic.
00:04:17.840 Then you want to make sure your product rocks,
00:04:19.880 so you want to use that data to run your experiments.
00:04:21.840 And then third, once you got them,
00:04:23.280 you got to convert them from the free part
00:04:25.180 to the emium or the premium part of, you know,
00:04:27.680 you want four or five percent of your users
00:04:30.260 to end up upgrading to a pro account,
00:04:32.660 so you want to use that data to ensure your salespeople
00:04:35.120 have qualified leads all day long.
00:04:37.260 That's what I want to share with you.
00:04:38.420 If you want access exclusive content or private invites,
00:04:41.960 subscribe to my newsletter right there.
00:04:44.460 And as per usual, I want to challenge you
00:04:46.240 to live a bigger life and a bigger business,
00:04:48.120 and I'll see you next Monday.